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How To Amend A Tax Form

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How To Amend A Tax Form

How to amend a tax form 4. How to amend a tax form   Transportation Table of Contents Parking fees. How to amend a tax form Advertising display on car. How to amend a tax form Car pools. How to amend a tax form Hauling tools or instruments. How to amend a tax form Union members' trips from a union hall. How to amend a tax form Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. How to amend a tax form These expenses include the cost of transportation by air, rail, bus, taxi, etc. How to amend a tax form , and the cost of driving and maintaining your car. How to amend a tax form Transportation expenses include the ordinary and necessary costs of all of the following. How to amend a tax form Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. How to amend a tax form Tax home is defined in chapter 1. How to amend a tax form Visiting clients or customers. How to amend a tax form Going to a business meeting away from your regular workplace. How to amend a tax form Getting from your home to a temporary workplace when you have one or more regular places of work. How to amend a tax form These temporary workplaces can be either within the area of your tax home or outside that area. How to amend a tax form Transportation expenses do not include expenses you have while traveling away from home overnight. How to amend a tax form Those expenses are travel expenses discussed in chapter 1 . How to amend a tax form However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. How to amend a tax form See Car Expenses , later. How to amend a tax form Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. How to amend a tax form However, there may be exceptions to this general rule. How to amend a tax form You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. How to amend a tax form Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. How to amend a tax form Illustration of transportation expenses. How to amend a tax form    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. How to amend a tax form You may want to refer to it when deciding whether you can deduct your transportation expenses. How to amend a tax form Temporary work location. How to amend a tax form   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. How to amend a tax form   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. How to amend a tax form   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. How to amend a tax form   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. How to amend a tax form It will not be treated as temporary after the date you determine it will last more than 1 year. How to amend a tax form   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. How to amend a tax form You may have deductible travel expenses as discussed in chapter 1 . How to amend a tax form No regular place of work. How to amend a tax form   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. How to amend a tax form   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. How to amend a tax form   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. How to amend a tax form These are nondeductible commuting expenses. How to amend a tax form Two places of work. How to amend a tax form   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. How to amend a tax form However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. How to amend a tax form   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. How to amend a tax form You cannot deduct them. How to amend a tax form Armed Forces reservists. How to amend a tax form   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. How to amend a tax form You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . How to amend a tax form   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. How to amend a tax form In this case, your transportation generally is a nondeductible commuting expense. How to amend a tax form However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. How to amend a tax form   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. How to amend a tax form   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. How to amend a tax form These expenses are discussed in chapter 1 . How to amend a tax form   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. How to amend a tax form For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. How to amend a tax form Commuting expenses. How to amend a tax form   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. How to amend a tax form These costs are personal commuting expenses. How to amend a tax form You cannot deduct commuting expenses no matter how far your home is from your regular place of work. How to amend a tax form You cannot deduct commuting expenses even if you work during the commuting trip. How to amend a tax form Example. How to amend a tax form You sometimes use your cell phone to make business calls while commuting to and from work. How to amend a tax form Sometimes business associates ride with you to and from work, and you have a business discussion in the car. How to amend a tax form These activities do not change the trip from personal to business. How to amend a tax form You cannot deduct your commuting expenses. How to amend a tax form Parking fees. How to amend a tax form    Fees you pay to park your car at your place of business are nondeductible commuting expenses. How to amend a tax form You can, however, deduct business-related parking fees when visiting a customer or client. How to amend a tax form Advertising display on car. How to amend a tax form   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. How to amend a tax form If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. How to amend a tax form Car pools. How to amend a tax form   You cannot deduct the cost of using your car in a nonprofit car pool. How to amend a tax form Do not include payments you receive from the passengers in your income. How to amend a tax form These payments are considered reimbursements of your expenses. How to amend a tax form However, if you operate a car pool for a profit, you must include payments from passengers in your income. How to amend a tax form You can then deduct your car expenses (using the rules in this publication). How to amend a tax form Hauling tools or instruments. How to amend a tax form   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. How to amend a tax form However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). How to amend a tax form Union members' trips from a union hall. How to amend a tax form   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. How to amend a tax form Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. How to amend a tax form Office in the home. How to amend a tax form   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. How to amend a tax form (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. How to amend a tax form ) Examples of deductible transportation. How to amend a tax form   The following examples show when you can deduct transportation expenses based on the location of your work and your home. How to amend a tax form Example 1. How to amend a tax form You regularly work in an office in the city where you live. How to amend a tax form Your employer sends you to a 1-week training session at a different office in the same city. How to amend a tax form You travel directly from your home to the training location and return each day. How to amend a tax form You can deduct the cost of your daily round-trip transportation between your home and the training location. How to amend a tax form Example 2. How to amend a tax form Your principal place of business is in your home. How to amend a tax form You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. How to amend a tax form Example 3. How to amend a tax form You have no regular office, and you do not have an office in your home. How to amend a tax form In this case, the location of your first business contact inside the metropolitan area is considered your office. How to amend a tax form Transportation expenses between your home and this first contact are nondeductible commuting expenses. How to amend a tax form Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. How to amend a tax form While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. How to amend a tax form Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. How to amend a tax form You generally can use one of the two following methods to figure your deductible expenses. How to amend a tax form Standard mileage rate. How to amend a tax form Actual car expenses. How to amend a tax form If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. How to amend a tax form See Leasing a Car , later. How to amend a tax form In this publication, “car” includes a van, pickup, or panel truck. How to amend a tax form For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. How to amend a tax form Rural mail carriers. How to amend a tax form   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. How to amend a tax form Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. How to amend a tax form   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). How to amend a tax form You must complete Form 2106 and attach it to your Form 1040, U. How to amend a tax form S. How to amend a tax form Individual Income Tax Return. How to amend a tax form   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. How to amend a tax form It is given as an equipment maintenance allowance (EMA) to employees of the U. How to amend a tax form S. How to amend a tax form Postal Service. How to amend a tax form It is at the rate contained in the 1991 collective bargaining agreement. How to amend a tax form Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. How to amend a tax form See your employer for information on your reimbursement. How to amend a tax form    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. How to amend a tax form Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. How to amend a tax form For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. How to amend a tax form If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. How to amend a tax form You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. How to amend a tax form See Choosing the standard mileage rate and Standard mileage rate not allowed, later. How to amend a tax form You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. How to amend a tax form See chapter 6 for more information on reimbursements . How to amend a tax form Choosing the standard mileage rate. How to amend a tax form   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. How to amend a tax form Then, in later years, you can choose to use either the standard mileage rate or actual expenses. How to amend a tax form   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. How to amend a tax form For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. How to amend a tax form   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. How to amend a tax form You cannot revoke the choice. How to amend a tax form However, in later years, you can switch from the standard mileage rate to the actual expenses method. How to amend a tax form If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. How to amend a tax form Example. How to amend a tax form Larry is an employee who occasionally uses his own car for business purposes. How to amend a tax form He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. How to amend a tax form Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. How to amend a tax form   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. How to amend a tax form Standard mileage rate not allowed. How to amend a tax form   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. How to amend a tax form (See Rural mail carriers , earlier. How to amend a tax form ) Note. How to amend a tax form You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. How to amend a tax form Five or more cars. How to amend a tax form   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. How to amend a tax form However, you may be able to deduct your actual expenses for operating each of the cars in your business. How to amend a tax form See Actual Car Expenses , later, for information on how to figure your deduction. How to amend a tax form   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. How to amend a tax form   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. How to amend a tax form Example 1. How to amend a tax form Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. How to amend a tax form She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. How to amend a tax form Example 2. How to amend a tax form Tony and his employees use his four pickup trucks in his landscaping business. How to amend a tax form During the year, he traded in two of his old trucks for two newer ones. How to amend a tax form Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. How to amend a tax form Example 3. How to amend a tax form Chris owns a repair shop and an insurance business. How to amend a tax form He and his employees use his two pickup trucks and van for the repair shop. How to amend a tax form Chris alternates using his two cars for the insurance business. How to amend a tax form No one else uses the cars for business purposes. How to amend a tax form Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. How to amend a tax form Example 4. How to amend a tax form Maureen owns a car and four vans that are used in her housecleaning business. How to amend a tax form Her employees use the vans, and she uses the car to travel to various customers. How to amend a tax form Maureen cannot use the standard mileage rate for the car or the vans. How to amend a tax form This is because all five vehicles are used in Maureen's business at the same time. How to amend a tax form She must use actual expenses for all vehicles. How to amend a tax form Interest. How to amend a tax form   If you are an employee, you cannot deduct any interest paid on a car loan. How to amend a tax form This applies even if you use the car 100% for business as an employee. How to amend a tax form   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. How to amend a tax form For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). How to amend a tax form You cannot deduct the part of the interest expense that represents your personal use of the car. How to amend a tax form    If you use a home equity loan to purchase your car, you may be able to deduct the interest. How to amend a tax form See Publication 936, Home Mortgage Interest Deduction, for more information. How to amend a tax form Personal property taxes. How to amend a tax form   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. How to amend a tax form You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. How to amend a tax form   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). How to amend a tax form If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). How to amend a tax form Parking fees and tolls. How to amend a tax form   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. How to amend a tax form (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. How to amend a tax form ) Sale, trade-in, or other disposition. How to amend a tax form   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. How to amend a tax form See Disposition of a Car , later. How to amend a tax form Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. How to amend a tax form If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. How to amend a tax form Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. How to amend a tax form Continue to keep records, as explained later in chapter 5 . How to amend a tax form Business and personal use. How to amend a tax form   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. How to amend a tax form You can divide your expense based on the miles driven for each purpose. How to amend a tax form Example. How to amend a tax form You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. How to amend a tax form You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. How to amend a tax form Employer-provided vehicle. How to amend a tax form   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. How to amend a tax form You cannot use the standard mileage rate. How to amend a tax form See Vehicle Provided by Your Employer in chapter 6. How to amend a tax form Interest on car loans. How to amend a tax form   If you are an employee, you cannot deduct any interest paid on a car loan. How to amend a tax form This interest is treated as personal interest and is not deductible. How to amend a tax form If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. How to amend a tax form Taxes paid on your car. How to amend a tax form   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. How to amend a tax form Enter the amount paid on line 7 of Schedule A (Form 1040). How to amend a tax form Sales taxes. How to amend a tax form   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. How to amend a tax form Fines and collateral. How to amend a tax form   You cannot deduct fines you pay or collateral you forfeit for traffic violations. How to amend a tax form Casualty and theft losses. How to amend a tax form   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. How to amend a tax form See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. How to amend a tax form Depreciation and section 179 deductions. How to amend a tax form   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. How to amend a tax form Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. How to amend a tax form However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. How to amend a tax form Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. How to amend a tax form The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. How to amend a tax form   Generally, there are limits on these deductions. How to amend a tax form Special rules apply if you use your car 50% or less in your work or business. How to amend a tax form   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. How to amend a tax form   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. How to amend a tax form Car defined. How to amend a tax form   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. How to amend a tax form Its unloaded gross vehicle weight must not be more than 6,000 pounds. How to amend a tax form A car includes any part, component, or other item physically attached to it or usually included in the purchase price. How to amend a tax form   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. How to amend a tax form Qualified nonpersonal use vehicles. How to amend a tax form   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. How to amend a tax form They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. How to amend a tax form Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. How to amend a tax form More information. How to amend a tax form   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. How to amend a tax form Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. How to amend a tax form If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. How to amend a tax form There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. How to amend a tax form See Depreciation Limits, later. How to amend a tax form You can claim the section 179 deduction only in the year you place the car in service. How to amend a tax form For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. How to amend a tax form Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. How to amend a tax form A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. How to amend a tax form Example. How to amend a tax form In 2012, you bought a new car and used it for personal purposes. How to amend a tax form In 2013, you began to use it for business. How to amend a tax form Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. How to amend a tax form However, you can claim a depreciation deduction for the business use of the car starting in 2013. How to amend a tax form See Depreciation Deduction , later. How to amend a tax form More than 50% business use requirement. How to amend a tax form   You must use the property more than 50% for business to claim any section 179 deduction. How to amend a tax form If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. How to amend a tax form The result is the cost of the property that can qualify for the section 179 deduction. How to amend a tax form Example. How to amend a tax form Peter purchased a car in April 2013 for $24,500 and used it 60% for business. How to amend a tax form Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). How to amend a tax form But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. How to amend a tax form Limits. How to amend a tax form   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. How to amend a tax form Limit on the amount of the section 179 deduction. How to amend a tax form   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. How to amend a tax form   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. How to amend a tax form If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. How to amend a tax form   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. How to amend a tax form   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. How to amend a tax form   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. How to amend a tax form You must allocate the dollar limit (after any reduction) between you. How to amend a tax form   For more information on the above section 179 deduction limits, see Publication 946. How to amend a tax form Limit for sport utility and certain other vehicles. How to amend a tax form   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. How to amend a tax form This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. How to amend a tax form However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. How to amend a tax form    Limit on total section 179, special depreciation allowance, and depreciation deduction. How to amend a tax form   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. How to amend a tax form The limit is reduced if your business use of the car is less than 100%. How to amend a tax form See Depreciation Limits , later, for more information. How to amend a tax form Example. How to amend a tax form In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. How to amend a tax form However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). How to amend a tax form Cost of car. How to amend a tax form   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. How to amend a tax form For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. How to amend a tax form Your cost includes only the cash you paid. How to amend a tax form Basis of car for depreciation. How to amend a tax form   The amount of the section 179 deduction reduces your basis in your car. How to amend a tax form If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. How to amend a tax form The resulting amount is the basis in your car you use to figure your depreciation deduction. How to amend a tax form When to choose. How to amend a tax form   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. How to amend a tax form How to choose. How to amend a tax form    Employees use Form 2106 to make this choice and report the section 179 deduction. How to amend a tax form All others use Form 4562. How to amend a tax form   File the appropriate form with either of the following. How to amend a tax form Your original tax return filed for the year the property was placed in service (whether or not you file it timely). How to amend a tax form An amended return filed within the time prescribed by law. How to amend a tax form An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. How to amend a tax form The amended return must also include any resulting adjustments to taxable income. How to amend a tax form    You must keep records that show the specific identification of each piece of qualifying section 179 property. How to amend a tax form These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. How to amend a tax form Revoking an election. How to amend a tax form   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. How to amend a tax form Recapture of section 179 deduction. How to amend a tax form   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. How to amend a tax form If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. How to amend a tax form Any section 179 deduction claimed on the car is included in calculating the excess depreciation. How to amend a tax form For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. How to amend a tax form Dispositions. How to amend a tax form   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. How to amend a tax form You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). How to amend a tax form For information on the disposition of a car, see Disposition of a Car , later. How to amend a tax form Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. How to amend a tax form The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). How to amend a tax form The special depreciation allowance applies only for the first year the car is placed in service. How to amend a tax form To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). How to amend a tax form Combined depreciation. How to amend a tax form   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). How to amend a tax form For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). How to amend a tax form See Depreciation Limits , later in this chapter. How to amend a tax form Qualified car. How to amend a tax form   To be a qualified car (including trucks and vans), the car must meet all of the following tests. How to amend a tax form You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. How to amend a tax form Election not to claim the special depreciation allowance. How to amend a tax form   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. How to amend a tax form If you make this election, it applies to all 5-year property placed in service during the year. How to amend a tax form   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. How to amend a tax form    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. How to amend a tax form Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. How to amend a tax form This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. How to amend a tax form You generally need to know the following things about the car you intend to depreciate. How to amend a tax form Your basis in the car. How to amend a tax form The date you place the car in service. How to amend a tax form The method of depreciation and recovery period you will use. How to amend a tax form Basis. How to amend a tax form   Your basis in a car for figuring depreciation is generally its cost. How to amend a tax form This includes any amount you borrow or pay in cash, other property, or services. How to amend a tax form   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). How to amend a tax form However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). How to amend a tax form For one of these situations see Exception under Methods of depreciation, later. How to amend a tax form   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. How to amend a tax form Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . How to amend a tax form Placed in service. How to amend a tax form   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. How to amend a tax form Depreciation begins when the car is placed in service for use in your work or business or for the production of income. How to amend a tax form   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. How to amend a tax form Car placed in service and disposed of in the same year. How to amend a tax form   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. How to amend a tax form Methods of depreciation. How to amend a tax form   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). How to amend a tax form MACRS is discussed later in this chapter. How to amend a tax form Exception. How to amend a tax form   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. How to amend a tax form You must use straight line depreciation over the estimated remaining useful life of the car. How to amend a tax form   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. How to amend a tax form The rate per mile varies depending on the year(s) you used the standard mileage rate. How to amend a tax form For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. How to amend a tax form   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . How to amend a tax form You must use your adjusted basis in your car to figure your depreciation deduction. How to amend a tax form For additional information on the straight line method of depreciation, see Publication 946. How to amend a tax form More-than-50%-use test. How to amend a tax form   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. How to amend a tax form You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. How to amend a tax form   If your business use is 50% or less, you must use the straight line method to depreciate your car. How to amend a tax form This is explained later under Car Used 50% or Less for Business . How to amend a tax form Qualified business use. How to amend a tax form   A qualified business use is any use in your trade or business. How to amend a tax form It does not include use for the production of income (investment use). How to amend a tax form However, you do combine your business and investment use to compute your depreciation deduction for the tax year. How to amend a tax form Use of your car by another person. How to amend a tax form   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. How to amend a tax form It is directly connected with your business. How to amend a tax form It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). How to amend a tax form It results in a payment of fair market rent. How to amend a tax form This includes any payment to you for the use of your car. How to amend a tax form Business use changes. How to amend a tax form   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. How to amend a tax form See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. How to amend a tax form    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. How to amend a tax form Use for more than one purpose. How to amend a tax form   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. How to amend a tax form You do this on the basis of mileage. How to amend a tax form Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. How to amend a tax form Change from personal to business use. How to amend a tax form   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. How to amend a tax form In this case, you figure the percentage of business use for the year as follows. How to amend a tax form Determine the percentage of business use for the period following the change. How to amend a tax form Do this by dividing business miles by total miles driven during that period. How to amend a tax form Multiply the percentage in (1) by a fraction. How to amend a tax form The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. How to amend a tax form Example. How to amend a tax form You use a car only for personal purposes during the first 6 months of the year. How to amend a tax form During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. How to amend a tax form This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. How to amend a tax form Your business use for the year is 40% (80% × 6/12). How to amend a tax form Limits. How to amend a tax form   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. How to amend a tax form The maximum amount you can claim depends on the year in which you placed your car in service. How to amend a tax form You have to reduce the maximum amount if you did not use the car exclusively for business. How to amend a tax form See Depreciation Limits , later. How to amend a tax form Unadjusted basis. How to amend a tax form   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . How to amend a tax form Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. How to amend a tax form   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. How to amend a tax form Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. How to amend a tax form Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. How to amend a tax form Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. How to amend a tax form 1, 2006), and alternative motor vehicle credit. How to amend a tax form   See Form 8910 for information on the alternative motor vehicle credit. How to amend a tax form If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. How to amend a tax form See Car Used 50% or Less for Business, later, for more information. How to amend a tax form If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. How to amend a tax form Improvements. How to amend a tax form   A major improvement to a car is treated as a new item of 5-year recovery property. How to amend a tax form It is treated as placed in service in the year the improvement is made. How to amend a tax form It does not matter how old the car is when the improvement is added. How to amend a tax form Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. How to amend a tax form However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. How to amend a tax form Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. How to amend a tax form See Depreciation Limits , later. How to amend a tax form Car trade-in. How to amend a tax form   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. How to amend a tax form You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. How to amend a tax form If you make this election, you treat the old car as disposed of at the time of the trade-in. How to amend a tax form The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. How to amend a tax form You then figure your depreciation deduction for the new car beginning with the date you placed it in service. How to amend a tax form You make this election by completing Form 2106, Part II, Section D. How to amend a tax form This method is explained later, beginning at Effect of trade-in on basis . How to amend a tax form If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. How to amend a tax form You must apply two depreciation limits (see Depreciation Limits , later). How to amend a tax form The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. How to amend a tax form The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. How to amend a tax form You must use Form 4562 to compute your depreciation deduction. How to amend a tax form You cannot use Form 2106, Part II, Section D. How to amend a tax form This method is explained in Publication 946. How to amend a tax form   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). How to amend a tax form Otherwise, you must use the method described in (2). How to amend a tax form Effect of trade-in on basis. How to amend a tax form   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. How to amend a tax form For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. How to amend a tax form 168(i)-6(d)(3). How to amend a tax form Traded car used only for business. How to amend a tax form   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. How to amend a tax form Example. How to amend a tax form Paul trades in a car that has an adjusted basis of $5,000 for a new car. How to amend a tax form In addition, he pays cash of $20,000 for the new car. How to amend a tax form His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). How to amend a tax form Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. How to amend a tax form Traded car used partly in business. How to amend a tax form   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. How to amend a tax form This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. How to amend a tax form (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. How to amend a tax form See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. How to amend a tax form )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. How to amend a tax form Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. How to amend a tax form For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. How to amend a tax form Modified Accelerated Cost Recovery System (MACRS). How to amend a tax form   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. How to amend a tax form   The maximum amount you can deduct is limited, depending on the year you placed your car in service. How to amend a tax form See Depreciation Limits , later. How to amend a tax form Recovery period. How to amend a tax form   Under MACRS, cars are classified as 5-year property. How to amend a tax form You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. How to amend a tax form This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. How to amend a tax form Depreciation deduction for certain Indian reservation property. How to amend a tax form   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. How to amend a tax form The recovery that applies for a business-use car is 3 years instead of 5 years. How to amend a tax form However, the depreciation limits, discussed later, will still apply. How to amend a tax form   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. How to amend a tax form Depreciation methods. How to amend a tax form   You can use one of the following methods to depreciate your car. How to amend a tax form The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. How to amend a tax form The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. How to amend a tax form The straight line method (SL) over a 5-year recovery period. How to amend a tax form    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. How to amend a tax form This is because the chart has the switch to the straight line method built into its rates. How to amend a tax form   Before choosing a method, you may wish to consider the following facts. How to amend a tax form Using the straight line method provides equal yearly deductions throughout the recovery period. How to amend a tax form Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. How to amend a tax form MACRS depreciation chart. How to amend a tax form   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . How to amend a tax form Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. How to amend a tax form A similar chart appears in the Instructions for Form 2106. How to amend a tax form    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. How to amend a tax form   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. How to amend a tax form You file your return on a fiscal year basis. How to amend a tax form You file your return for a short tax year (less than 12 months). How to amend a tax form During the year, all of the following conditions apply. How to amend a tax form You placed some property in service from January through September. How to amend a tax form You placed some property in service from October through December. How to amend a tax form Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. How to amend a tax form   You placed qualified property in service on an Indian reservation. How to amend a tax form Depreciation in future years. How to amend a tax form   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. How to amend a tax form However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. How to amend a tax form In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. How to amend a tax form See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. How to amend a tax form    In future years, do not use the chart in this edition of the publication. How to amend a tax form Instead, use the chart in the publication or the form instructions for those future years. How to amend a tax form Disposition of car during recovery period. How to amend a tax form   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. How to amend a tax form See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. How to amend a tax form How to use the 2013 chart. How to amend a tax form   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. How to amend a tax form Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. How to amend a tax form If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. How to amend a tax form    Your deduction cannot be more than the maximum depreciation limit for cars. How to amend a tax form See Depreciation Limits, later. How to amend a tax form Example. How to amend a tax form Phil bought a used truck in February 2012 to use exclusively in his landscape business. How to amend a tax form He paid $9,200 for the truck with no trade-in. How to amend a tax form Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. How to amend a tax form Phil used the MACRS depreciation chart in 2012 to find his percentage. How to amend a tax form The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. How to amend a tax form He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. How to amend a tax form In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. How to amend a tax form His records show that the business use of his truck was 90% in 2013. How to amend a tax form Phil used Table 4-1 to find his percentage. How to amend a tax form Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. How to amend a tax form He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. How to amend a tax form Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. How to amend a tax form The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. How to amend a tax form The maximum amount you can deduct each year depends on the year you place the car in service. How to amend a tax form These limits are shown in the following tables. How to amend a tax form   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. How to amend a tax form 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. How to amend a tax form 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. How to amend a tax form 4$7,660 if you acquired the car before 5/6/2003. How to amend a tax form $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. How to amend a tax form 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. How to amend a tax form Trucks and vans. How to amend a tax form   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. How to amend a tax form A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. How to amend a tax form For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. How to amend a tax form Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. How to amend a tax form 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. How to amend a tax form Car used less than full year. How to amend a tax form   The depreciation limits are not reduced if you use a car for less than a full year. How to amend a tax form This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. How to amend a tax form However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. How to amend a tax form See Reduction for personal use , next. How to amend a tax form Reduction for personal use. How to amend a tax form   The depreciation limits are reduced based on your percentage of personal use. How to amend a tax form If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. How to amend a tax form Section 179 deduction. How to amend a tax form   The section 179 deduction is treated as a depreciation deduction. How to amend a tax form If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. How to amend a tax form Example. How to amend a tax form On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. How to amend a tax form He used it 80% for his business, and he chooses to take a section 179 deduction for the car. How to amend a tax form The car is not qualified property for purposes of the special depreciation allowance. How to amend a tax form Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. How to amend a tax form This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). How to amend a tax form Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). How to amend a tax form He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. How to amend a tax form Jack has reached his maximum depreciation deduction for 2013. How to amend a tax form For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. How to amend a tax form Deductions in years after the recovery period. How to amend a tax form   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. How to amend a tax form If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. How to amend a tax form Unrecovered basis. How to amend a tax form   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. How to amend a tax form The recovery period. How to amend a tax form   For 5-year property, your recovery period is 6 calendar years. How to amend a tax form A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. How to amend a tax form   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. How to amend a tax form You determine your unrecovered basis in the 7th year after you placed the car in service. How to amend a tax form How to treat unrecovered basis. How to amend a tax form   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. How to amend a tax form The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. How to amend a tax form For example, no deduction is allowed for a year you use your car 100% for personal purposes. How to amend a tax form Example. How to amend a tax form In April 2007, Bob bought and placed in service a car he used exclusively in his business. How to amend a tax form The car cost $31,500. How to amend a tax form Bob did not claim a section 179 deduction or the special depreciation allowance for the car. How to amend a tax form He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). How to amend a tax form For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. How to amend a tax form Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. How to amend a tax form      MACRS     Deprec. How to amend a tax form Year % Amount Limit Allowed 2007 20. How to amend a tax form 00 $6,300 $3,060 $ 3,060 2008 32. How to amend a tax form 00 10,080 4,900 4,900 2009 19. How to amend a tax form 20 6,048 2,850 2,850 2010 11. How to amend a tax form 52 3,629 1,775 1,775 2011 11. How to amend a tax form 52 3,629 1,775 1,775 2012 5. How to amend a tax form 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. How to amend a tax form   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). How to amend a tax form If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. How to amend a tax form   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. How to amend a tax form However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. How to amend a tax form For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. How to amend a tax form Table 4-1. How to amend a tax form 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. How to amend a tax form ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. How to amend a tax form   First, using the left column, find the date you first placed the car in service in 2013. How to amend a tax form Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. How to amend a tax form For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. How to amend a tax form Refer back to the MACRS Depreciation Chart for the year you placed the car in service. How to amend a tax form (See Car Used 50% or Less for Business . How to amend a tax form )  Multiply the unadjusted basis of your car by your business use percentage. How to amend a tax form Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. How to amend a tax form (Also see Depreciation Limits . How to amend a tax form )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. How to amend a tax form 1—Sept. How to amend a tax form 30 percentage instead of the Oct. How to amend a tax form 1—Dec. How to amend a tax form 31 percentage for your car. How to amend a tax form               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. How to amend a tax form If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. How to amend a tax form 1—Sept. How to amend a tax form 30 for figuring depreciation for your car. How to amend a tax form See Which Convention Applies? in chapter 4 of Publication 946 for more details. How to amend a tax form               Example. How to amend a tax form You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. How to amend a tax form You
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Understanding Your CP108 Notice

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What you need to do

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Tips for next year

If you paid electronically, ensure that you enter a valid tax period end date.  Review Appendix A of the EFTPS Payment Instruction Booklet to determine the proper tax form code.

In addition, review the instructions for determining the correct tax period end date (e.g., for quarterly returns, Forms 720, Forms 941, etc., March 31, June 30, September 30, December 31). Enter as the MM in the YYMM format as:

Quarter Format
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The How To Amend A Tax Form

How to amend a tax form 6. How to amend a tax form   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. How to amend a tax form Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). How to amend a tax form You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. How to amend a tax form The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . How to amend a tax form What is the tax benefit of the tuition and fees deduction. How to amend a tax form   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. How to amend a tax form   This deduction is taken as an adjustment to income. How to amend a tax form This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). How to amend a tax form This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. How to amend a tax form You can choose the education benefit that will give you the lowest tax. How to amend a tax form You may want to compare the tuition and fees deduction to the education credits. How to amend a tax form See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. How to amend a tax form Table 6-1. How to amend a tax form Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. How to amend a tax form Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. How to amend a tax form Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. How to amend a tax form You pay qualified education expenses of higher education. How to amend a tax form You pay the education expenses for an eligible student. How to amend a tax form The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. How to amend a tax form The term “qualified education expenses” is defined later under Qualified Education Expenses . How to amend a tax form “Eligible student” is defined later under Who Is an Eligible Student . How to amend a tax form For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. How to amend a tax form Table 6-1. How to amend a tax form Tuition and Fees Deduction at a Glance Do not rely on this table alone. How to amend a tax form Refer to the text for complete details. How to amend a tax form Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. How to amend a tax form What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). How to amend a tax form Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. How to amend a tax form For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. How to amend a tax form What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. How to amend a tax form Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. How to amend a tax form Your filing status is married filing separately. How to amend a tax form Another person can claim an exemption for you as a dependent on his or her tax return. How to amend a tax form You cannot take the deduction even if the other person does not actually claim that exemption. How to amend a tax form Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). How to amend a tax form You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. How to amend a tax form More information on nonresident aliens can be found in Publication 519. How to amend a tax form What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. How to amend a tax form Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. How to amend a tax form For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. How to amend a tax form Academic period. How to amend a tax form   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. How to amend a tax form In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. How to amend a tax form Paid with borrowed funds. How to amend a tax form   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. How to amend a tax form Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. How to amend a tax form Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. How to amend a tax form Student withdraws from class(es). How to amend a tax form   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. How to amend a tax form Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. How to amend a tax form Eligible educational institution. How to amend a tax form   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How to amend a tax form S. How to amend a tax form Department of Education. How to amend a tax form It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How to amend a tax form The educational institution should be able to tell you if it is an eligible educational institution. How to amend a tax form   Certain educational institutions located outside the United States also participate in the U. How to amend a tax form S. How to amend a tax form Department of Education's Federal Student Aid (FSA) programs. How to amend a tax form Related expenses. How to amend a tax form   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. How to amend a tax form Prepaid expenses. How to amend a tax form   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. How to amend a tax form See Academic period , earlier. How to amend a tax form For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). How to amend a tax form You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). How to amend a tax form In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. How to amend a tax form Example 1. How to amend a tax form Jackson is a sophomore in University V's degree program in dentistry. How to amend a tax form This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. How to amend a tax form Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. How to amend a tax form Example 2. How to amend a tax form Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. How to amend a tax form The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. How to amend a tax form Charles bought his books from a friend, so what he paid for them is not a qualified education expense. How to amend a tax form Donna bought hers at College W's bookstore. How to amend a tax form Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. How to amend a tax form Example 3. How to amend a tax form When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. How to amend a tax form This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. How to amend a tax form No portion of the fee covers personal expenses. How to amend a tax form Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. How to amend a tax form Therefore, it is a qualified expense. How to amend a tax form No Double Benefit Allowed You cannot do any of the following. How to amend a tax form Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. How to amend a tax form Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. How to amend a tax form Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). How to amend a tax form For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. How to amend a tax form See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. How to amend a tax form Deduct qualified education expenses that have been paid with tax-free interest on U. How to amend a tax form S. How to amend a tax form savings bonds (Form 8815). How to amend a tax form See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. How to amend a tax form Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. How to amend a tax form See the following section on Adjustments to Qualified Education Expenses. How to amend a tax form Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. How to amend a tax form The result is the amount of adjusted qualified education expenses for each student. How to amend a tax form You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. How to amend a tax form Tax-free educational assistance. How to amend a tax form   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. How to amend a tax form See Academic period , earlier. How to amend a tax form   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. How to amend a tax form This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). How to amend a tax form   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. How to amend a tax form If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. How to amend a tax form   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How to amend a tax form Generally, any scholarship or fellowship is treated as tax free. How to amend a tax form However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. How to amend a tax form The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. How to amend a tax form The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. How to amend a tax form You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. How to amend a tax form For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. How to amend a tax form Refunds. How to amend a tax form   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. How to amend a tax form Some tax-free educational assistance received after 2013 may be treated as a refund. How to amend a tax form See Tax-free educational assistance , earlier. How to amend a tax form Refunds received in 2013. How to amend a tax form   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. How to amend a tax form Refunds received after 2013 but before your income tax return is filed. How to amend a tax form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. How to amend a tax form Refunds received after 2013 and after your income tax return is filed. How to amend a tax form   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. How to amend a tax form See Credit recapture , later. How to amend a tax form Coordination with Coverdell education savings accounts and qualified tuition programs. How to amend a tax form   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). How to amend a tax form For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. How to amend a tax form Credit recapture. How to amend a tax form    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. How to amend a tax form You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. How to amend a tax form You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). How to amend a tax form Include that amount as an additional tax for the year the refund or tax-free assistance was received. How to amend a tax form Example. How to amend a tax form   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. How to amend a tax form You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. How to amend a tax form The reduction reduced your taxable income by $3,500. How to amend a tax form Also, you claimed no tax credits in 2013. How to amend a tax form Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. How to amend a tax form Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. How to amend a tax form The refigured tuition and fees deduction is $1,500. How to amend a tax form Do not file an amended 2013 tax return to account for this adjustment. How to amend a tax form Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. How to amend a tax form You cannot file Form 1040A for 2014. How to amend a tax form Amounts that do not reduce qualified education expenses. How to amend a tax form   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. How to amend a tax form   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. How to amend a tax form The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. How to amend a tax form The use of the money is not restricted. How to amend a tax form Example 1. How to amend a tax form In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. How to amend a tax form The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. How to amend a tax form To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. How to amend a tax form The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. How to amend a tax form University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. How to amend a tax form Jackie does not report any portion of the scholarship as income on her tax return. How to amend a tax form In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. How to amend a tax form The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. How to amend a tax form Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. How to amend a tax form Example 2. How to amend a tax form The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. How to amend a tax form Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. How to amend a tax form Jackie is treated as having paid $3,000 in qualified education expenses. How to amend a tax form Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. How to amend a tax form This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. How to amend a tax form Sports, games, hobbies, and noncredit courses. How to amend a tax form   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. How to amend a tax form However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. How to amend a tax form Comprehensive or bundled fees. How to amend a tax form   Some eligible educational institutions combine all of their fees for an academic period into one amount. How to amend a tax form If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. How to amend a tax form The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. How to amend a tax form See Figuring the Deduction , later, for more information about Form 1098-T. How to amend a tax form Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). How to amend a tax form Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. How to amend a tax form For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. How to amend a tax form You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. How to amend a tax form IF your dependent is an eligible student and you. How to amend a tax form . How to amend a tax form . How to amend a tax form AND. How to amend a tax form . How to amend a tax form . How to amend a tax form THEN. How to amend a tax form . How to amend a tax form . How to amend a tax form claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. How to amend a tax form Your dependent cannot take a deduction. How to amend a tax form claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. How to amend a tax form do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. How to amend a tax form do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. How to amend a tax form Expenses paid by dependent. How to amend a tax form   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. How to amend a tax form Neither you nor your dependent can deduct the expenses. How to amend a tax form For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. How to amend a tax form This rule applies even if you do not claim an exemption for your dependent on your tax return. How to amend a tax form Expenses paid by you. How to amend a tax form   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. How to amend a tax form Expenses paid under divorce decree. How to amend a tax form   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. How to amend a tax form Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. How to amend a tax form Expenses paid by others. How to amend a tax form   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. How to amend a tax form In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. How to amend a tax form If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. How to amend a tax form If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. How to amend a tax form If the student is your dependent, no one can deduct the payments. How to amend a tax form Example. How to amend a tax form In 2013, Ms. How to amend a tax form Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. How to amend a tax form For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. How to amend a tax form If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. How to amend a tax form If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. How to amend a tax form Baker's payment. How to amend a tax form Tuition reduction. How to amend a tax form   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. How to amend a tax form If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. How to amend a tax form For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. How to amend a tax form Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. How to amend a tax form See Effect of the Amount of Your Income on the Amount of Your Deduction , later. How to amend a tax form Form 1098-T. How to amend a tax form   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). How to amend a tax form Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. How to amend a tax form An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. How to amend a tax form However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. How to amend a tax form When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. How to amend a tax form   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. How to amend a tax form    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. How to amend a tax form Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. How to amend a tax form If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. How to amend a tax form No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). How to amend a tax form Modified adjusted gross income (MAGI). How to amend a tax form   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. How to amend a tax form However, as discussed below, there may be other modifications. How to amend a tax form MAGI when using Form 1040A. How to amend a tax form   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). How to amend a tax form MAGI when using Form 1040. How to amend a tax form   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. How to amend a tax form   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. How to amend a tax form   You can use Worksheet 6-1. How to amend a tax form MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. How to amend a tax form Table 6-2. How to amend a tax form Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. How to amend a tax form . How to amend a tax form . How to amend a tax form AND your MAGI is. How to amend a tax form . How to amend a tax form . How to amend a tax form THEN your maximum tuition and fees deduction is. How to amend a tax form . How to amend a tax form . How to amend a tax form single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. How to amend a tax form more than $65,000  but not more than $80,000 $2,000. How to amend a tax form more than $80,000 $0. How to amend a tax form married filing joint return not more than $130,000 $4,000. How to amend a tax form more than $130,000 but not more than $160,000 $2,000. How to amend a tax form more than $160,000 $0. How to amend a tax form Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. How to amend a tax form Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. How to amend a tax form A filled-in Form 8917 is shown at the end of this chapter. How to amend a tax form Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. How to amend a tax form This is the first year of his postsecondary education. How to amend a tax form During 2013, he paid $3,600 for his qualified 2013 tuition expense. How to amend a tax form Both he and the college meet all of the requirements for the tuition and fees deduction. How to amend a tax form Tim's total income (Form 1040, line 22) and MAGI are $26,000. How to amend a tax form He figures his deduction of $3,600 as shown on Form 8917, later. How to amend a tax form Worksheet 6-1. How to amend a tax form MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. How to amend a tax form Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. How to amend a tax form 1. How to amend a tax form Enter the amount from Form 1040, line 22   1. How to amend a tax form         2. How to amend a tax form Enter the total from Form 1040, lines 23 through 33   2. How to amend a tax form               3. How to amend a tax form Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. How to amend a tax form               4. How to amend a tax form Add lines 2 and 3   4. How to amend a tax form         5. How to amend a tax form Subtract line 4 from line 1   5. How to amend a tax form         6. How to amend a tax form Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. How to amend a tax form         7. How to amend a tax form Enter your foreign housing deduction (Form 2555, line 50)   7. How to amend a tax form         8. How to amend a tax form Enter the amount of income from Puerto Rico you are excluding   8. How to amend a tax form         9. How to amend a tax form Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. How to amend a tax form         10. How to amend a tax form Add lines 5 through 9. How to amend a tax form This is your modified adjusted gross income   10. How to amend a tax form     Note. How to amend a tax form If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. How to amend a tax form       This image is too large to be displayed in the current screen. How to amend a tax form Please click the link to view the image. How to amend a tax form Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications