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Hrblock Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Hrblock Publication 946, How To Depreciate Property, contains information on depreciation. Hrblock However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Hrblock The new provisions are in the Supplement to Publication 946, which is reprinted below. Hrblock Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Hrblock The new law made several changes in the tax rules explained in the publication. Hrblock Some of the changes apply to property placed in service during 2001. Hrblock This supplemental publication describes those changes and explains what you should do if you are affected by them. Hrblock The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Hrblock The new law contains the following provisions. Hrblock 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Hrblock An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Hrblock A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Hrblock An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Hrblock If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Hrblock If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Hrblock See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Hrblock Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Hrblock The allowance is an additional deduction of 30% of the property's depreciable basis. Hrblock To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Hrblock See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Hrblock The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Hrblock There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Hrblock In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Hrblock Example 1. Hrblock On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Hrblock You did not elect to claim a section 179 deduction. Hrblock You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Hrblock You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Hrblock Example 2. Hrblock The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Hrblock You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Hrblock You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Hrblock Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Hrblock It is new property of one of the following types. Hrblock Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Hrblock See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Hrblock Water utility property. Hrblock See 25-year property on page 22 in Publication 946. Hrblock Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Hrblock (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Hrblock ) Qualified leasehold improvement property (defined later). Hrblock It meets the following tests (explained later under Tests To Be Met). Hrblock Acquisition date test. Hrblock Placed in service date test. Hrblock Original use test. Hrblock It is not excepted property (explained later under Excepted Property). Hrblock Qualified leasehold improvement property. Hrblock    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Hrblock The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Hrblock That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Hrblock The improvement is placed in service more than 3 years after the date the building was first placed in service. Hrblock   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Hrblock The enlargement of the building. Hrblock Any elevator or escalator. Hrblock Any structural component benefiting a common area. Hrblock The internal structural framework of the building. Hrblock   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Hrblock However, a binding commitment between related persons is not treated as a lease. Hrblock Related persons. Hrblock   For this purpose, the following are related persons. Hrblock Members of an affiliated group. Hrblock The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Hrblock An executor and a beneficiary of the same estate. Hrblock Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Hrblock Acquisition date test. Hrblock    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Hrblock   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Hrblock Placed in service date test. Hrblock   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Hrblock   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Hrblock Original use test. Hrblock   The original use of the property must have begun with you after September 10, 2001. Hrblock “Original use” means the first use to which the property is put, whether or not by you. Hrblock Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Hrblock Excepted Property The following property does not qualify for the special depreciation allowance. Hrblock Property used by any person before September 11, 2001. Hrblock Property required to be depreciated using ADS. Hrblock This includes listed property used 50% or less in a qualified business use. Hrblock Qualified New York Liberty Zone leasehold improvement property (defined next). Hrblock Qualified New York Liberty Zone leasehold improvement property. Hrblock   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Hrblock The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Hrblock The improvement is placed in service after September 10, 2001, and before January 1, 2007. Hrblock No written binding contract for the improvement was in effect before September 11, 2001. Hrblock Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Hrblock If you make this election for any property, it applies to all property in the same property class placed in service during the year. Hrblock To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Hrblock When to make election. Hrblock   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Hrblock   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Hrblock Attach the election statement to the amended return. Hrblock At the top of the election statement, write “Filed pursuant to section 301. Hrblock 9100–2. Hrblock ” Revoking an election. Hrblock   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Hrblock A request to revoke the election is subject to a user fee. Hrblock Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Hrblock The rules apply to returns for the following years. Hrblock 2000 fiscal years that end after September 10, 2001. Hrblock 2001 calendar and fiscal years. Hrblock Claiming the allowance. Hrblock   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Hrblock File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Hrblock Write “Filed Pursuant to Rev. Hrblock Proc. Hrblock 2002–33” at the top of the amended return. Hrblock File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Hrblock Your return must be filed by the due date (including extensions). Hrblock Write “Automatic Change Filed Under Rev. Hrblock Proc. Hrblock 2002–33” on the appropriate line of Form 3115. Hrblock You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Hrblock For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Hrblock Example 1. Hrblock You are an individual and you use the calendar year. Hrblock You placed qualified property in service for your business in December 2001. Hrblock You filed your 2001 income tax return before April 15, 2002. Hrblock You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Hrblock You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Hrblock Proc. Hrblock 2002–33” at the top of the amended return. Hrblock You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Hrblock Example 2. Hrblock The facts concerning your 2001 return are the same as in Example 1. Hrblock In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Hrblock You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Hrblock Proc. Hrblock 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Hrblock You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Hrblock Electing not to claim the allowance. Hrblock   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Hrblock The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Hrblock The statement can be either attached to or written on the return. Hrblock You can, for example, write “not deducting 30%” on Form 4562. Hrblock Deemed election. Hrblock   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Hrblock You will be treated as making the election if you meet both of the following conditions. Hrblock You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Hrblock You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Hrblock See Claiming the allowance, earlier. Hrblock Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Hrblock Generally, the limit is increased from $3,060 to $7,660. Hrblock However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Hrblock Table 1 shows the maximum deduction amounts for 2001. Hrblock Table 1. Hrblock Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Hrblock 11 Placed in Service After Sept. Hrblock 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Hrblock Election not to claim the allowance. Hrblock   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Hrblock New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Hrblock They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Hrblock Area defined. Hrblock   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Hrblock Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Hrblock The allowance is an additional deduction of 30% of the property's depreciable basis. Hrblock To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Hrblock See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Hrblock The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Hrblock There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Hrblock In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Hrblock You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Hrblock Qualified property is eligible for only one special depreciation allowance. Hrblock Example 1. Hrblock On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Hrblock You did not elect to claim a section 179 deduction. Hrblock You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Hrblock You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Hrblock Example 2. Hrblock The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Hrblock (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Hrblock You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Hrblock You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Hrblock Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Hrblock It is one of the following types of property. Hrblock Used property depreciated under MACRS with a recovery period of 20 years or less. Hrblock See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Hrblock Used water utility property. Hrblock See 25-year property on page 22 in Publication 946. Hrblock Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Hrblock (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Hrblock ) Certain nonresidential real property and residential rental property (defined later). Hrblock It meets the following tests (explained later under Tests to be met). Hrblock Acquisition date test. Hrblock Placed in service date test. Hrblock Substantial use test. Hrblock Original use test. Hrblock It is not excepted property (explained later under Excepted property). Hrblock Nonresidential real property and residential rental property. Hrblock   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Hrblock Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Hrblock   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Hrblock Otherwise, the property is considered damaged real property. Hrblock For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Hrblock Tests to be met. Hrblock   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Hrblock Acquisition date test. Hrblock   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Hrblock   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Hrblock   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Hrblock Placed in service date test. Hrblock   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Hrblock   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Hrblock Substantial use test. Hrblock   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Hrblock Original use test. Hrblock   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Hrblock   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Hrblock Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Hrblock Excepted property. Hrblock   The following property does not qualify for the special Liberty Zone depreciation allowance. Hrblock Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Hrblock Property required to be depreciated using ADS. Hrblock This includes listed property used 50% or less in a qualified business use. Hrblock Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Hrblock Example. Hrblock In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Hrblock New office furniture with a MACRS recovery period of 7 years. Hrblock A used computer with a MACRS recovery period of 5 years. Hrblock The computer had not previously been used within the Liberty Zone. Hrblock Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Hrblock Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Hrblock Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Hrblock If you make this election for any property, it applies to all property in the same property class placed in service during the year. Hrblock To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Hrblock When to make the election. Hrblock   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Hrblock   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Hrblock Attach the election statement to the amended return. Hrblock At the top of the election statement, write “Filed pursuant to section 301. Hrblock 9100–2. Hrblock ” Revoking an election. Hrblock   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Hrblock A request to revoke the election is subject to a user fee. Hrblock Returns filed before June 1, 2002. Hrblock   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Hrblock Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Hrblock For tax years beginning in 2000, that limit was $20,000. Hrblock For tax years beginning in 2001 and 2002, that limit is generally $24,000. Hrblock If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Hrblock Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Hrblock The increase is the smaller of the following amounts. Hrblock $35,000. Hrblock The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Hrblock If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Hrblock Qualified property. Hrblock   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Hrblock Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Hrblock Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Hrblock For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Hrblock Example 1. Hrblock In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Hrblock Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Hrblock Example 2. Hrblock In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Hrblock Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Hrblock Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Hrblock However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Hrblock Example. Hrblock In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Hrblock Your increased dollar limit is $59,000 ($35,000 + $24,000). Hrblock Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Hrblock Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Hrblock Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Hrblock This rule applies to returns for the following years. Hrblock 2000 fiscal years that end after September 10, 2001. Hrblock 2001 calendar and fiscal years. Hrblock On the amended return, write “Filed Pursuant to Rev. Hrblock Proc. Hrblock 2002–33. Hrblock ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Hrblock This means that it is depreciated over a recovery period of 5 years. Hrblock For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Hrblock The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Hrblock Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Hrblock Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Hrblock Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Hrblock Your 2001 calendar or fiscal year return. Hrblock On the amended return, write “Filed Pursuant to Rev. Hrblock Proc. Hrblock 2002–33. Hrblock ” Table 2. Hrblock Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Hrblock See the text for definitions and examples. Hrblock Do not rely on this chart alone. Hrblock IF you want to. Hrblock . Hrblock . Hrblock THEN you. Hrblock . Hrblock . Hrblock BY. Hrblock . Hrblock . Hrblock claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Hrblock elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Hrblock deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Hrblock use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Hrblock 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. Hrblock Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 28-Mar-2014

The Hrblock

Hrblock Publication 501 - Main Content Table of Contents Who Must FileSelf-employed persons. Hrblock Filing Requirements for Most Taxpayers Dependents Other Situations Who Should File Filing StatusMarital Status Single Married Filing Jointly Married Filing Separately Head of Household Qualifying Widow(er) With Dependent Child ExemptionsForm 1040EZ filers. Hrblock Form 1040A filers. Hrblock Form 1040 filers. Hrblock More information. Hrblock Personal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. Hrblock Taxpayer identification numbers for aliens. Hrblock Taxpayer identification numbers for adoptees. Hrblock Standard DeductionStandard Deduction Amount Standard Deduction for Dependents Who Should Itemize How To Get Tax HelpLow Income Taxpayer Clinics Who Must File If you are a U. Hrblock S. Hrblock citizen or resident alien, whether you must file a federal income tax return depends on your gross income, your filing status, your age, and whether you are a dependent. Hrblock For details, see Table 1 and Table 2. Hrblock You also must file if one of the situations described in Table 3 applies. Hrblock The filing requirements apply even if you owe no tax. Hrblock Table 1. Hrblock 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Hrblock . Hrblock . Hrblock AND at the end of 2013 you were. Hrblock . Hrblock . Hrblock * THEN file a return if your gross income was at least. Hrblock . Hrblock . Hrblock ** single under 65  $10,000 65 or older $11,500 head of household under 65 $12,850 65 or older $14,350 married, filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married, filing separately any age  $3,900 qualifying widow(er) with dependent child under 65 $16,100 65 or older $17,300 * If you were born before January 2, 1949, you are considered to be 65 or older at the end of 2013. Hrblock ** Gross income means all income you receive in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Hrblock Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Hrblock If (a) or (b) applies, see the Form 1040 instructions to figure the taxable part of social security benefits you must include in gross income. Hrblock Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Hrblock Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. Hrblock But in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. Hrblock *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Hrblock You may have to pay a penalty if you are required to file a return but fail to do so. Hrblock If you willfully fail to file a return, you may be subject to criminal prosecution. Hrblock For information on what form to use — Form 1040EZ, Form 1040A, or Form 1040 — see the instructions for your tax return. Hrblock Gross income. Hrblock    Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Hrblock If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. Hrblock For a list of community property states, see Community property states under Married Filing Separately, later. Hrblock Self-employed persons. Hrblock    If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. Hrblock If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. Hrblock In either case, you must add any income from investments and from incidental or outside operations or sources. Hrblock    You must file Form 1040 if you owe any self-employment tax. Hrblock Filing status. Hrblock    Your filing status generally depends on whether you are single or married. Hrblock Whether you are single or married is determined at the end of your tax year, which is December 31 for most taxpayers. Hrblock Filing status is discussed in detail later in this publication. Hrblock Age. Hrblock    Age is a factor in determining if you must file a return only if you are 65 or older at the end of your tax year. Hrblock For 2013, you are 65 or older if you were born before January 2, 1949. Hrblock Filing Requirements for Most Taxpayers You must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1. Hrblock Dependents should see Table 2 instead. Hrblock Deceased Persons You must file an income tax return for a decedent (a person who died) if both of the following are true. Hrblock You are the surviving spouse, executor, administrator, or legal representative. Hrblock The decedent met the filing requirements described in this publication at the time of his or her death. Hrblock For more information, see Final Income Tax Return for Decedent — Form 1040 in Publication 559. Hrblock Table 2. Hrblock 2013 Filing Requirements for Dependents See Exemptions for Dependents to find out if you are a dependent. Hrblock If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Hrblock  In this table, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Hrblock It also includes unemployment compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Hrblock Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. Hrblock Gross income is the total of your unearned and earned income. Hrblock If your gross income was $3,900 or more, you usually cannot be claimed as a dependent unless you are a qualifying child. Hrblock For details, see Exemptions for Dependents. Hrblock Single dependents—Were you either age 65 or older or blind? □ No. Hrblock You must file a return if any of the following apply. Hrblock Your unearned income was more than $1,000. Hrblock Your earned income was more than $6,100. Hrblock Your gross income was more than the larger of— $1,000, or Your earned income (up to $5,750) plus $350. Hrblock     □ Yes. Hrblock You must file a return if any of the following apply. Hrblock Your unearned income was more than $2,500 ($4,000 if 65 or older and blind). Hrblock Your earned income was more than $7,600 ($9,100 if 65 or older and blind). Hrblock Your gross income was more than the larger of—  $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Hrblock     Married dependents—Were you either age 65 or older or blind? □ No. Hrblock You must file a return if any of the following apply. Hrblock Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Hrblock Your unearned income was more than $1,000. Hrblock Your earned income was more than $6,100. Hrblock Your gross income was more than the larger of— $1,000, or Your earned income (up to $5,750 plus $350. Hrblock     □ Yes. Hrblock You must file a return if any of the following apply. Hrblock Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Hrblock Your unearned income was more than $2,200 ($3,400 if 65 or older and blind). Hrblock Your earned income was more than $7,300 ($8,500 if 65 or older and blind). Hrblock Your gross income was more than the larger of— $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Hrblock     U. Hrblock S. Hrblock Citizens or Resident Aliens Living Abroad To determine whether you must file a return, include in your gross income any income you earned or received abroad, including any income you can exclude under the foreign earned income exclusion. Hrblock For more information on special tax rules that may apply to you, see Publication 54, Tax Guide for U. Hrblock S. Hrblock Citizens and Resident Aliens Abroad. Hrblock Residents of Puerto Rico If you are a U. Hrblock S. Hrblock citizen and also a bona fide resident of Puerto Rico, you generally must file a U. Hrblock S. Hrblock income tax return for any year in which you meet the income requirements. Hrblock This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico. Hrblock If you are a bona fide resident of Puerto Rico for the whole year, your U. Hrblock S. Hrblock gross income does not include income from sources within Puerto Rico. Hrblock It does, however, include any income you received for your services as an employee of the United States or any U. Hrblock S. Hrblock agency. Hrblock If you receive income from Puerto Rican sources that is not subject to U. Hrblock S. Hrblock tax, you must reduce your standard deduction, which reduces the amount of income you can have before you must file a U. Hrblock S. Hrblock income tax return. Hrblock For more information, see Publication 570, Tax Guide for Individuals With Income From U. Hrblock S. Hrblock Possessions. Hrblock Individuals With Income From U. Hrblock S. Hrblock Possessions If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. Hrblock S. Hrblock Virgin Islands, special rules may apply when determining whether you must file a U. Hrblock S. Hrblock federal income tax return. Hrblock In addition, you may have to file a return with the individual possession government. Hrblock See Publication 570 for more information. Hrblock Dependents A person who is a dependent may still have to file a return. Hrblock It depends on his or her earned income, unearned income, and gross income. Hrblock For details, see Table 2. Hrblock A dependent must also file if one of the situations described in Table 3 applies. Hrblock Responsibility of parent. Hrblock    If a dependent child must file an income tax return but cannot file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child. Hrblock If the child cannot sign the return, the parent or guardian must sign the child's name followed by the words “By (your signature), parent for minor child. Hrblock ” Earned income. Hrblock    Earned income includes salaries, wages, professional fees, and other amounts received as pay for work you actually perform. Hrblock Earned income (only for purposes of filing requirements and the standard deduction) also includes any part of a scholarship that you must include in your gross income. Hrblock See chapter 1 of Publication 970, Tax Benefits for Education, for more information on taxable and nontaxable scholarships. Hrblock Child's earnings. Hrblock    Amounts a child earns by performing services are included in his or her gross income and not the gross income of the parent. Hrblock This is true even if under local law the child's parent has the right to the earnings and may actually have received them. Hrblock But if the child does not pay the tax due on this income, the parent is liable for the tax. Hrblock Unearned income. Hrblock    Unearned income includes income such as interest, dividends, and capital gains. Hrblock Trust distributions of interest, dividends, capital gains, and survivor annuities are also considered unearned income. Hrblock Election to report child's unearned income on parent's return. Hrblock    You may be able to include your child's interest and dividend income on your tax return. Hrblock If you do this, your child will not have to file a return. Hrblock To make this election, all of the following conditions must be met. Hrblock Your child was under age 19 (or under age 24 if a student) at the end of 2013. Hrblock (A child born on January 1, 1995, is considered to be age 19 at the end of 2013; you cannot make the election for this child unless the child was a student. Hrblock Similarly, a child born on January 1, 1990, is considered to be age 24 at the end of 2013; you cannot make the election for this child. Hrblock ) Your child had gross income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Hrblock The interest and dividend income was less than $10,000. Hrblock Your child is required to file a return for 2013 unless you make this election. Hrblock Your child does not file a joint return for 2013. Hrblock No estimated tax payment was made for 2013 and no 2012 overpayment was applied to 2013 under your child's name and social security number. Hrblock No federal income tax was withheld from your child's income under the backup withholding rules. Hrblock You are the parent whose return must be used when making the election to report your child's unearned income. Hrblock   For more information, see Form 8814 and Parent's Election To Report Child's Interest and Dividends in Publication 929. Hrblock Other Situations You may have to file a tax return even if your gross income is less than the amount shown in Table 1 or Table 2 for your filing status. Hrblock See Table 3 for those other situations when you must file. Hrblock Table 3. Hrblock Other Situations When You Must File a 2013 Return If any of the four conditions listed below applied to you for 2013, you must file a return. Hrblock 1. Hrblock You owe any special taxes, including any of the following. Hrblock   a. Hrblock Alternative minimum tax. Hrblock (See Form 6251. Hrblock )   b. Hrblock Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Hrblock (See Publication 590, Individual Retirement Arrangements (IRAs), and Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Hrblock ) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. Hrblock   c. Hrblock Social security or Medicare tax on tips you did not report to your employer (see Publication 531, Reporting Tip Income) or on wages you received from an employer who did not withhold these taxes (see Form 8919). Hrblock   d. Hrblock Write-in taxes, including uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on group-term life insurance and additional tax on health savings accounts. Hrblock (See Publication 531, Publication 969, and the Form 1040 instructions for line 60. Hrblock )   e. Hrblock Household employment taxes. Hrblock But if you are filing a return only because you owe these taxes, you can file Schedule H (Form 1040) by itself. Hrblock   f. Hrblock Recapture taxes. Hrblock (See the Form 1040 instructions for lines 44, 59b, and 60. Hrblock ) 2. Hrblock You (or your spouse if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions. Hrblock 3. Hrblock You had net earnings from self-employment of at least $400. Hrblock (See Schedule SE (Form 1040) and its instructions. Hrblock ) 4. Hrblock You had wages of $108. Hrblock 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Hrblock (See Schedule SE (Form 1040) and its instructions. Hrblock ) Who Should File Even if you do not have to file, you should file a tax return if you can get money back. Hrblock For example, you should file if one of the following applies. Hrblock You had income tax withheld from your pay. Hrblock You made estimated tax payments for the year or had any of your overpayment for last year applied to this year's estimated tax. Hrblock You qualify for the earned income credit. Hrblock See Publication 596, Earned Income Credit (EIC), for more information. Hrblock You qualify for the additional child tax credit. Hrblock See the instructions for the tax form you file (Form 1040 or 1040A) for more information. Hrblock You qualify for the refundable American opportunity education credit. Hrblock See Form 8863, Education Credits. Hrblock You qualify for the health coverage tax credit. Hrblock For information about this credit, see Form 8885, Health Coverage Tax Credit. Hrblock You qualify for the credit for federal tax on fuels. Hrblock See Form 4136, Credit for Federal Tax Paid on Fuels. Hrblock Form 1099-B received. Hrblock    Even if you are not required to file a return, you should consider filing if all of the following apply. Hrblock You received a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions (or substitute statement). Hrblock The amount in box 2a of Form 1099-B (or substitute statement), when added to your other gross income, means you have to file a tax return because of the filing requirement in Table 1 or Table 2 that applies to you. Hrblock Box 3 of Form 1099-B (or substitute statement) is blank. Hrblock In this case, filing a return may keep you from getting a notice from the IRS. Hrblock Filing Status You must determine your filing status before you can determine whether you must file a tax return, your standard deduction (discussed later), and your tax. Hrblock You also use your filing status to determine whether you are eligible to claim certain other deductions and credits. Hrblock There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. Hrblock If more than one filing status applies to you, choose the one that will give you the lowest tax. Hrblock Marital Status In general, your filing status depends on whether you are considered unmarried or married. Hrblock Unmarried persons. Hrblock    You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Hrblock   State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Hrblock Divorced persons. Hrblock    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Hrblock Divorce and remarriage. Hrblock    If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Hrblock Annulled marriages. Hrblock    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Hrblock You must file amended returns (Form 1040X) claiming single or head of household status for all tax years that are affected by the annulment and not closed by the statute of limitations for filing a tax return. Hrblock Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Hrblock If you filed your original tax return early (for example, March 1), your return is considered filed on the due date (generally April 15). Hrblock However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Hrblock Head of household or qualifying widow(er) with dependent child. Hrblock    If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Hrblock See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Hrblock Married persons. Hrblock    If you are considered married, you and your spouse can file a joint return or separate returns. Hrblock Considered married. Hrblock    You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Hrblock You are married and living together. Hrblock You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Hrblock You are married and living apart but not legally separated under a decree of divorce or separate maintenance. Hrblock You are separated under an interlocutory (not final) decree of divorce. Hrblock Same-sex marriage. Hrblock    For federal tax purposes, individuals of the same sex are married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Hrblock The term "spouse" includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Hrblock However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not called a marriage under state (or foreign) law are not married for federal tax purposes. Hrblock   The word “state” as used here includes the District of Columbia, Puerto Rico, and U. Hrblock S. Hrblock territories and possessions. Hrblock It means any domestic jurisdiction that has the legal authority to sanction marriages. Hrblock The term “foreign country” means any foreign jurisdiction that has the legal authority to sanction marriages. Hrblock   If individuals of the same sex are married, they generally must use the married filing jointly or married filing separately filing status. Hrblock However, if they did not live together during the last 6 months of the year, one or both of them may be able to use the head of household filing status, as explained later. Hrblock   For more details, see Answers to Frequently Asked Questions For Individuals of the Same Sex Who Are Married Under State Law on IRS. Hrblock gov. Hrblock Spouse died during the year. Hrblock    If your spouse died during the year, you are considered married for the whole year for filing status purposes. Hrblock   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Hrblock For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Hrblock   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Hrblock Your deceased spouse's filing status is married filing separately for that year. Hrblock Married persons living apart. Hrblock    If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Hrblock If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Hrblock Also, your tax may be lower, and you may be able to claim the earned income credit. Hrblock See Head of Household , later. Hrblock Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Hrblock To determine your marital status, see Marital Status , earlier. Hrblock Widow(er). Hrblock    Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Hrblock You may, however, be able to use another filing status that will give you a lower tax. Hrblock See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Hrblock How to file. Hrblock    You can file Form 1040. Hrblock If you have taxable income of less than $100,000, you may be able to file Form 1040A. Hrblock If, in addition, you have no dependents, are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Hrblock If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Hrblock Use the Single column of the Tax Table, or Section A of the Tax Computation Worksheet, to figure your tax. Hrblock Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Hrblock On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Hrblock You can file a joint return even if one of you had no income or deductions. Hrblock If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Hrblock Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Hrblock If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Hrblock You can choose the method that gives the two of you the lower combined tax. Hrblock How to file. Hrblock    If you file as married filing jointly, you can use Form 1040. Hrblock If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Hrblock If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Hrblock If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Hrblock Use the Married filing jointly column of the Tax Table, or Section B of the Tax Computation Worksheet, to figure your tax. Hrblock Spouse died. Hrblock    If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Hrblock See Spouse died during the year , under Married persons, earlier. Hrblock   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Hrblock Divorced persons. Hrblock    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Hrblock Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Hrblock Accounting period. Hrblock    Both of you must use the same accounting period, but you can use different accounting methods. Hrblock Joint responsibility. Hrblock    Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Hrblock This means that if one spouse does not pay the tax due, the other may have to. Hrblock Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Hrblock One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Hrblock   You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Hrblock Divorced taxpayer. Hrblock    You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Hrblock This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Hrblock Relief from joint responsibility. Hrblock    In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Hrblock You can ask for relief no matter how small the liability. Hrblock   There are three types of relief available. Hrblock Innocent spouse relief. Hrblock Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date the election for this relief is filed). Hrblock Equitable relief. Hrblock    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Hrblock Publication 971, Innocent Spouse Relief, explains the kinds of relief and who may qualify for them. Hrblock Signing a joint return. Hrblock    For a return to be considered a joint return, both spouses generally must sign the return. Hrblock Spouse died before signing. Hrblock    If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Hrblock If neither you nor anyone else has been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Hrblock Spouse away from home. Hrblock    If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so it can be filed on time. Hrblock Injury or disease prevents signing. Hrblock    If your spouse cannot sign because of injury or disease and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Hrblock ” Be sure to also sign in the space provided for your signature. Hrblock Attach a dated statement, signed by you, to the return. Hrblock The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Hrblock Signing as guardian of spouse. Hrblock    If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Hrblock Spouse in combat zone. Hrblock    You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Hrblock Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Hrblock For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Hrblock Other reasons spouse cannot sign. Hrblock    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Hrblock Attach the power of attorney (or a copy of it) to your tax return. Hrblock You can use Form 2848. Hrblock Nonresident alien or dual-status alien. Hrblock    Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Hrblock However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Hrblock S. Hrblock citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Hrblock If you do file a joint return, you and your spouse are both treated as U. Hrblock S. Hrblock residents for the entire tax year. Hrblock See chapter 1 of Publication 519. Hrblock Married Filing Separately You can choose married filing separately as your filing status if you are married. Hrblock This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Hrblock If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Hrblock You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Hrblock This can apply to you even if you are not divorced or legally separated. Hrblock If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Hrblock The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Hrblock See Head of Household , later, for more information. Hrblock You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Hrblock However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Hrblock This way you can make sure you are using the filing status that results in the lowest combined tax. Hrblock When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Hrblock How to file. Hrblock    If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Hrblock You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Hrblock   You can file Form 1040. Hrblock If your taxable income is less than $100,000, you may be able to file Form 1040A. Hrblock Select this filing status by checking the box on line 3 of either form. Hrblock Enter your spouse's full name and SSN or ITIN in the spaces provided. Hrblock If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Hrblock Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Hrblock Special Rules If you choose married filing separately as your filing status, the following special rules apply. Hrblock Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Hrblock Your tax rate generally is higher than on a joint return. Hrblock Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Hrblock You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). Hrblock If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Hrblock See Joint Return Test in Publication 503, Child and Dependent Care Expenses, for more information. Hrblock You cannot take the earned income credit. Hrblock You cannot take the exclusion or credit for adoption expenses in most cases. Hrblock You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Hrblock You cannot exclude any interest income from qualified U. Hrblock S. Hrblock savings bonds you used for higher education expenses. Hrblock If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Hrblock The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Hrblock Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Hrblock If your spouse itemizes deductions, you cannot claim the standard deduction. Hrblock If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Hrblock Adjusted gross income (AGI) limits. Hrblock    If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Hrblock Individual retirement arrangements (IRAs). Hrblock    You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Hrblock Your deduction is reduced or eliminated if your income is more than a certain amount. Hrblock This amount is much lower for married individuals who file separately and lived together at any time during the year. Hrblock For more information, see How Much Can You Deduct? in chapter 1 of Publication 590. Hrblock Rental activity losses. Hrblock    If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to $25,000. Hrblock This is called a special allowance. Hrblock However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Hrblock Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Hrblock See Rental Activities in Publication 925, Passive Activity and At-Risk Rules. Hrblock Community property states. Hrblock    If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Hrblock See Publication 555, Community Property. Hrblock Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Hrblock You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Hrblock This does not include any extensions. Hrblock A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Hrblock Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Hrblock Exception. Hrblock    A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Hrblock The personal representative has 1 year from the due date (including extensions) of the return to make the change. Hrblock See Publication 559 for more information on filing income tax returns for a decedent. Hrblock Head of Household You may be able to file as head of household if you meet all the following requirements. Hrblock You are unmarried or considered unmarried on the last day of the year. Hrblock See Marital Status , earlier, and Considered Unmarried , later. Hrblock You paid more than half the cost of keeping up a home for the year. Hrblock A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Hrblock However, if the qualifying person is your dependent parent, he or she does not have to live with you. Hrblock See Special rule for parent , later, under Qualifying Person. Hrblock If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Hrblock You will also receive a higher standard deduction than if you file as single or married filing separately. Hrblock How to file. Hrblock    If you file as head of household, you can use Form 1040. Hrblock If you have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Hrblock Indicate your choice of this filing status by checking the box on line 4 of either form. Hrblock Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Hrblock Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Hrblock You are considered unmarried on the last day of the tax year if you meet all the following tests. Hrblock You file a separate return (defined earlier under Joint Return After Separate Returns ). Hrblock You paid more than half the cost of keeping up your home for the tax year. Hrblock Your spouse did not live in your home during the last 6 months of the tax year. Hrblock Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Hrblock See Temporary absences , later. Hrblock Your home was the main home of your child, stepchild, or foster child for more than half the year. Hrblock (See Home of qualifying person , later, for rules applying to a child's birth, death, or temporary absence during the year. Hrblock ) You must be able to claim an exemption for the child. Hrblock However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described later in Children of divorced or separated parents (or parents who live apart) under Qualifying Child or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative. Hrblock The general rules for claiming an exemption for a dependent are explained later under Exemptions for Dependents . Hrblock If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Hrblock See Publication 555 for more information. Hrblock Nonresident alien spouse. Hrblock    You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Hrblock However, your spouse is not a qualifying person for head of household purposes. Hrblock You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Hrblock Choice to treat spouse as resident. Hrblock    You are considered married if you choose to treat your spouse as a resident alien. Hrblock See chapter 1 of Publication 519. Hrblock Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Hrblock You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 1. Hrblock Worksheet 1. Hrblock Cost of Keeping Up a Home         Amount You  Paid Total  Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $       Minus total amount you paid   ()       Amount others paid   $       If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Hrblock Costs you include. Hrblock    Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Hrblock   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Hrblock However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Hrblock Costs you do not include. Hrblock    Do not include the cost of clothing, education, medical treatment, vacations, life insurance, or transportation. Hrblock Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Hrblock Qualifying Person See Table 4 to see who is a qualifying person. Hrblock Any person not described in Table 4 is not a qualifying person. Hrblock Example 1—child. Hrblock Your unmarried son lived with you all year and was 18 years old at the end of the year. Hrblock He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Hrblock As a result, he is your qualifying child (see Qualifying Child , later) and, because he is single, your qualifying person for head of household purposes. Hrblock Example 2—child who is not qualifying person. Hrblock The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Hrblock Because he does not meet the age test (explained later under Qualifying Child), your son is not your qualifying child. Hrblock Because he does not meet the gross income test (explained later under Qualifying Relative), he is not your qualifying relative. Hrblock As a result, he is not your qualifying person for head of household purposes. Hrblock Example 3—girlfriend. Hrblock Your girlfriend lived with you all year. Hrblock Even though she may be your qualifying relative if the gross income and support tests (explained later) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you . Hrblock See Table 4. Hrblock Example 4—girlfriend's child. Hrblock The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Hrblock He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test , later). Hrblock As a result, he is not your qualifying person for head of household purposes. Hrblock Home of qualifying person. Hrblock    Generally, the qualifying person must live with you for more than half of the year. Hrblock Special rule for parent. Hrblock    If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Hrblock However, you must be able to claim an exemption for your father or mother. Hrblock Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Hrblock   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Hrblock Death or birth. Hrblock    You may be eligible to file as head of household even if the qualifying person who qualifies you for this filing status is born or dies during the year. Hrblock To qualify you for head of household filing status, the qualifying person (as defined in Table 4) must be one of the following. Hrblock Your qualifying child or qualifying relative who lived with you for more than half the part of the year he or she was alive. Hrblock Your parent for whom you paid, for the entire part of the year he or she was alive, more than half the cost of keeping up the home he or she lived in. Hrblock Example. Hrblock You are unmarried. Hrblock Your mother, for whom you can claim an exemption, lived in an apartment by herself. Hrblock She died on September 2. Hrblock The cost of the upkeep of her apartment for the year until her death was $6,000. Hrblock You paid $4,000 and your brother paid $2,000. Hrblock Your brother made no other payments towards your mother's support. Hrblock Your mother had no income. Hrblock Because you paid more than half of the cost of keeping up your mother's apartment from January 1 until her death, and you can claim an exemption for her, you can file as a head of household. Hrblock Temporary absences. Hrblock    You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Hrblock It must be reasonable to assume the absent person will return to the home after the temporary absence. Hrblock You must continue to keep up the home during the absence. Hrblock Kidnapped child. Hrblock    You may be eligible to file as head of household even if the child who is your qualifying person has been kidnapped. Hrblock You can claim head of household filing status if all the following statements are true. Hrblock The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Hrblock In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping. Hrblock You would have qualified for head of household filing status if the child had not been kidnapped. Hrblock   This treatment applies for all years until the earliest of: The year the child is returned, The year there is a determination that the child is dead, or The year the child would have reached age 18. Hrblock Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Hrblock The year of death is the last year for which you can file jointly with your deceased spouse. Hrblock See Married Filing Jointly , earlier. Hrblock You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Hrblock For example, if your spouse died in 2012 and you have not remarried, you may be able to use this filing status for 2013 and 2014. Hrblock The rules for using this filing status are explained in detail here. Hrblock This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Hrblock It does not entitle you to file a joint return. Hrblock How to file. Hrblock    If you file as a qualifying widow(er) with dependent child, you can use Form 1040. Hrblock If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Hrblock Check the box on line 5 of either form. Hrblock Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Hrblock Table 4. Hrblock Who Is a Qualifying Person Qualifying You To File as Head of Household?1 See the text of this publication for the other requirements you must meet to claim head of household filing status. Hrblock IF the person is your . Hrblock . Hrblock . Hrblock   AND . Hrblock . Hrblock . Hrblock   THEN that person is . Hrblock . Hrblock . Hrblock qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Hrblock   he or she is married and you can claim an exemption for him or her   a qualifying person. Hrblock   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Hrblock 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Hrblock 6   you cannot claim an exemption for him or her   not a qualifying person. Hrblock qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests). Hrblock   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you , later, and you can claim an exemption for him or her5   a qualifying person. Hrblock   he or she did not live with you more than half the year   not a qualifying person. Hrblock   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you , later, and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Hrblock   you cannot claim an exemption for him or her   not a qualifying person. Hrblock 1 A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Hrblock 2 The term “qualifying child” is defined under Exemptions for Dependents, later. Hrblock Note: If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child, later. Hrblock If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Hrblock 3 This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Hrblock 4 The term “qualifying relative” is defined under Exemptions for Dependents, later. Hrblock 5 If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Hrblock See Multiple Support Agreement . Hrblock 6 See Special rule for parent . Hrblock Eligibility rules. Hrblock    You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all the following tests. Hrblock You were entitled to file a joint return with your spouse for the year your spouse died. Hrblock It does not matter whether you actually filed a joint return. Hrblock Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Hrblock You have a child or stepchild for whom you can claim an exemption. Hrblock This does not include a foster child. Hrblock This child lived in your home all year, except for temporary absences. Hrblock See Temporary absences , earlier, under Head of Household. Hrblock There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Hrblock You paid more than half the cost of keeping up a home for the year. Hrblock See Keeping Up a Home , earlier, under Head of Household. Hrblock Example. Hrblock John's wife died in 2011. Hrblock John has not remarried. Hrblock He has continued during 2012 and 2013 to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Hrblock For 2011 he was entitled to file a joint return for himself and his deceased wife. Hrblock For 2012 and 2013, he can file as a qualifying widower with a dependent child. Hrblock After 2013, he can file as head of household if he qualifies. Hrblock Death or birth. Hrblock    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Hrblock You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Hrblock Kidnapped child. Hrblock    You may be eligible to file as a qualifying widow(er) with dependent child even if the child who qualifies you for this filing status has been kidnapped. Hrblock You can claim qualifying widow(er) with dependent child filing status if all the following statements are true. Hrblock The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Hrblock In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping. Hrblock You would have qualified for qualifying widow(er) with dependent child filing status if the child had not been kidnapped. Hrblock As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Hrblock Exemptions Exemptions reduce your taxable income. Hrblock You can deduct $3,900 for each exemption you claim in 2013. Hrblock If you are entitled to two exemptions for 2013, you can deduct $7,800 ($3,900 × 2). Hrblock But you may lose the benefit of part or all of your exemptions if your adjusted gross income is above a certain amount. Hrblock See Phaseout of Exemptions , later. Hrblock Types of exemptions. Hrblock    There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). Hrblock While each is worth the same amount ($3,900 for 2013), different rules, discussed later, apply to each type. Hrblock Dependent cannot claim a personal exemption. Hrblock    If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim a personal exemption on his or her own tax return. Hrblock How to claim exemptions. Hrblock    How you claim an exemption on your tax return depends on which form you file. Hrblock Form 1040EZ filers. Hrblock    If you file Form 1040EZ, the exemption amount is combined with the standard deduction and entered on line 5. Hrblock Form 1040A filers. Hrblock    If you file Form 1040A, complete lines 6a through 6d. Hrblock The total number of exemptions you can claim is the total in the box on line 6d. Hrblock Also complete line 26. Hrblock Form 1040 filers. Hrblock    If you file Form 1040, complete lines 6a through 6d. Hrblock The total number of exemptions you can claim is the total in the box on line 6d. Hrblock Also complete line 42. Hrblock If your adjusted gross income is more than $150,000, see Phaseout of Exemptions , later. Hrblock U. Hrblock S. Hrblock citizen or resident alien. Hrblock    If you are a U. Hrblock S. Hrblock citizen, U. Hrblock S. Hrblock resident alien, U. Hrblock S. Hrblock national (defined later) or a resident of Canada or Mexico, you may qualify for any of the exemptions discussed here. Hrblock Nonresident aliens. Hrblock    Generally, if you are a nonresident alien (other than a resident of Canada or Mexico, or certain residents of India or Korea), you can qualify for only one personal exemption for yourself. Hrblock You cannot claim exemptions for a spouse or dependents. Hrblock   These restrictions do not apply if you are a nonresident alien married to a U. Hrblock S. Hrblock citizen or resident alien and have chosen to be treated as a resident of the United States. Hrblock More information. Hrblock    For more information on exemptions if you are a nonresident alien, see chapter 5 in Publication 519. Hrblock Dual-status taxpayers. Hrblock    If you have been both a nonresident alien and a resident alien in the same tax year, you should see Publication 519 for information on determining your exemptions. Hrblock Personal Exemptions You are generally allowed one exemption for yourself. Hrblock If you are married, you may be allowed one exemption for your spouse. Hrblock These are called personal exemptions. Hrblock Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. Hrblock If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. Hrblock Your Spouse's Exemption Your spouse is never considered your dependent. Hrblock Joint return. Hrblock    On a joint return, you can claim one exemption for yourself and one for your spouse. Hrblock Separate return. Hrblock    If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. Hrblock This is true even if the other taxpayer does not actually claim your spouse as a dependent. Hrblock You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. Hrblock S. Hrblock tax purposes and satisfy the other conditions listed above. Hrblock Head of household. Hrblock    If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied. Hrblock   To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Hrblock Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A. Hrblock Death of spouse. Hrblock    If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . Hrblock If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . Hrblock   If you remarried during the year, you cannot take an exemption for your deceased spouse. Hrblock   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. Hrblock If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. Hrblock Divorced or separated spouse. Hrblock    If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. Hrblock This rule applies even if you provided all of your former spouse's support. Hrblock Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. Hrblock You can claim an exemption for a dependent even if your dependent files a return. Hrblock The term “dependent” means: A qualifying child, or A qualifying relative. Hrblock The terms “ qualifying child ” and “ qualifying relative ” are defined later. Hrblock You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. Hrblock Dependent taxpayer test. Hrblock Joint return test. Hrblock Citizen or resident test. Hrblock These three tests are explained in detail later. Hrblock All the requirements for claiming an exemption for a dependent are summarized in Table 5. Hrblock Table 5. Hrblock Overview of the Rules for Claiming an Exemption for a Dependent This table is only an overview of the rules. Hrblock For details, see the rest of this publication. Hrblock You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer. Hrblock   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. Hrblock   You cannot claim a person as a dependent unless that person is a U. Hrblock S. Hrblock citizen, U. Hrblock S. Hrblock resident alien, U. Hrblock S. Hrblock national, or a resident of Canada or Mexico. Hrblock 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. Hrblock   Tests To Be a Qualifying Child Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Hrblock   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled. Hrblock   The child must have lived with you for more than half of the year. Hrblock 2  The child must not have provided more than half of his or her own support for the year. Hrblock   The child is not filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid). Hrblock  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. Hrblock See the Special Rule for Qualifying Child of More Than One Person described later to find out which person is the person entitled to claim the child as a qualifying child. Hrblock The person cannot be your qualifying child or the qualifying child of any other taxpayer. Hrblock   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). Hrblock   The person's gross income for the year must be less than $3,900. Hrblock 3  You must provide more than half of the person's total support for the year. Hrblock 4  1 There is an exception for certain adopted children. Hrblock 2 There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. Hrblock 3 There is an exception if the person is disabled and has income from a sheltered workshop. Hrblock 4 There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. Hrblock Dependent not allowed a personal exemption. Hrblock If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. Hrblock This is true even if you do not claim the dependent's exemption on your return. Hrblock It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. Hrblock Housekeepers, maids, or servants. Hrblock    If these people work for you, you cannot claim exemptions for them. Hrblock Child tax credit. Hrblock    You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. Hrblock For more information, see the instructions for the tax form you file (Form 1040 or 1040A). Hrblock Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. Hrblock Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. Hrblock If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. Hrblock Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. Hrblock Exception. Hrblock    You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. Hrblock Example 1—child files joint return. Hrblock You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Hrblock He earned $25,000 for the year. Hrblock The couple files a joint return. Hrblock You cannot take an exemption for your daughter. Hrblock Example 2—child files joint return only as claim for refund of withheld tax. Hrblock Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Hrblock Neither is required to file a tax return. Hrblock They do not have a child. Hrblock Taxes were taken out of their pay so they file a joint return only to get a refund of the withheld taxes. Hrblock The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. Hrblock You can claim exemptions for each of them if all the other tests to do so are met. Hrblock Example 3—child files joint return to claim American opportunity credit. Hrblock The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Hrblock He and his wife are not required to file a tax return. Hrblock However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Hrblock Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income