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Irs Form 1040x Instructions

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Irs Form 1040x Instructions

Irs form 1040x instructions Publication 907 - Main Content Table of Contents IncomeDependent Care Benefits Social Security and Railroad Retirement Benefits Disability Pensions Military and Government Disability Pensions Other Payments Itemized DeductionsMedical Expenses Impairment-Related Work Expenses Tax CreditsChild and Dependent Care Credit Credit for the Elderly or the Disabled Earned Income Credit Household Employers Business Tax Incentives How To Get Tax Help Income All income is taxable unless it is specifically excluded by law. Irs form 1040x instructions The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities. Irs form 1040x instructions Dependent Care Benefits Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Irs form 1040x instructions Exclusion or deduction. Irs form 1040x instructions   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Irs form 1040x instructions Your employer can tell you whether your benefit plan qualifies. Irs form 1040x instructions To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Irs form 1040x instructions You cannot use Form 1040EZ. Irs form 1040x instructions   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Irs form 1040x instructions Therefore, you would not get an exclusion from wages. Irs form 1040x instructions Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Irs form 1040x instructions To claim the deduction, you must use Form 2441. Irs form 1040x instructions   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Irs form 1040x instructions Statement for employee. Irs form 1040x instructions   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Irs form 1040x instructions Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Irs form 1040x instructions Qualifying person(s). Irs form 1040x instructions   A qualifying person is: A qualifying child who is under age 13 whom you can claim as a dependent. Irs form 1040x instructions If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13. Irs form 1040x instructions Your disabled spouse who is not physically or mentally able to care for himself or herself. Irs form 1040x instructions Any disabled person who was not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,900 or more or filed a joint return). Irs form 1040x instructions Any disabled person who was not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's 2013 return. Irs form 1040x instructions For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions. Irs form 1040x instructions Social Security and Railroad Retirement Benefits If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable. Irs form 1040x instructions Are any of your benefits taxable?   If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable. Irs form 1040x instructions   If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Irs form 1040x instructions   For more information, see the instructions for Form 1040, lines 20a and 20b, or Form 1040A, lines 14a and 14b. Irs form 1040x instructions Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information. Irs form 1040x instructions Supplemental security income (SSI) payments. Irs form 1040x instructions   Social security benefits do not include SSI payments, which are not taxable. Irs form 1040x instructions Do not include these payments in your income. Irs form 1040x instructions Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Irs form 1040x instructions You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Irs form 1040x instructions Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Irs form 1040x instructions You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Irs form 1040x instructions For information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Irs form 1040x instructions Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Irs form 1040x instructions Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Irs form 1040x instructions For more information on pensions and annuities, see Publication 575, Pension and Annuity Income. Irs form 1040x instructions Retirement and profit-sharing plans. Irs form 1040x instructions   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Irs form 1040x instructions The payments must be reported as a pension or annuity. Irs form 1040x instructions Accrued leave payment. Irs form 1040x instructions   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Irs form 1040x instructions The payment is not a disability payment. Irs form 1040x instructions Include it in your income in the tax year you receive it. Irs form 1040x instructions See Publication 525, Taxable and Nontaxable Income, for more information. Irs form 1040x instructions Military and Government Disability Pensions Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. Irs form 1040x instructions For information about military and government disability pensions, see Publication 525. Irs form 1040x instructions VA disability benefits. Irs form 1040x instructions   Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. Irs form 1040x instructions If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information. Irs form 1040x instructions   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. Irs form 1040x instructions These include: Education, training, and subsistence allowances, Disability compensation and pension payments for disabilities paid either to veterans or their families, Grants for homes designed for wheelchair living, Grants for motor vehicles for veterans who lost their sight or the use of their limbs, Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death, Interest on insurance dividends left on deposit with the VA, Benefits under a dependent-care assistance program, The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, or Payments made under the VA's compensated work therapy program. Irs form 1040x instructions Other Payments You may receive other payments that are related to your disability. Irs form 1040x instructions The following payments are not taxable. Irs form 1040x instructions Benefit payments from a public welfare fund, such as payments due to blindness. Irs form 1040x instructions Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law. Irs form 1040x instructions Compensatory (but not punitive) damages for physical injury or physical sickness. Irs form 1040x instructions Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries. Irs form 1040x instructions Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Irs form 1040x instructions Long-Term Care Insurance Long-term care insurance contracts generally are treated as accident and health insurance contracts. Irs form 1040x instructions Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Irs form 1040x instructions More detailed information can be found in Publication 525. Irs form 1040x instructions Accelerated Death Benefits You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Irs form 1040x instructions Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. Irs form 1040x instructions These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Irs form 1040x instructions This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. Irs form 1040x instructions For more information, see Publication 525. Irs form 1040x instructions Itemized Deductions If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. Irs form 1040x instructions You must use Schedule A (Form 1040) to itemize your deductions. Irs form 1040x instructions See your form instructions for information on the standard deduction and the deductions you can itemize. Irs form 1040x instructions The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities. Irs form 1040x instructions Medical Expenses When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents. Irs form 1040x instructions Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. Irs form 1040x instructions They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance. Irs form 1040x instructions You can deduct only the amount of your medical and dental expenses that is more than 10% (7. Irs form 1040x instructions 5% if either you or your spouse was born before January 2, 1949) of your adjusted gross income shown on Form 1040, line 38. Irs form 1040x instructions The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. Irs form 1040x instructions For more detailed information, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). Irs form 1040x instructions Artificial limbs, contact lenses, eyeglasses, and hearing aids. Irs form 1040x instructions The part of the cost of Braille books and magazines that is more than the price of regular printed editions. Irs form 1040x instructions Cost and repair of special telephone equipment for hearing-impaired persons. Irs form 1040x instructions Cost and maintenance of a wheelchair or a three-wheel motor vehicle commercially known as an “autoette. Irs form 1040x instructions ” Cost and care of a guide dog or other animal aiding a person with a physical disability. Irs form 1040x instructions Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. Irs form 1040x instructions This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect. Irs form 1040x instructions Premiums for qualified long-term care insurance, up to certain amounts. Irs form 1040x instructions Improvements to a home that do not increase its value if the main purpose is medical care. Irs form 1040x instructions An example is constructing entrance or exit ramps. Irs form 1040x instructions Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. Irs form 1040x instructions See Publication 502 for more information. Irs form 1040x instructions Impairment-Related Work Expenses If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. Irs form 1040x instructions If you take a business deduction for these impairment-related work expenses, they are not subject to the 10% (7. Irs form 1040x instructions 5% if you or your spouse is age 65 or older) limit that applies to medical expenses. Irs form 1040x instructions You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (including, but not limited to, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Irs form 1040x instructions Impairment-related expenses defined. Irs form 1040x instructions   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Irs form 1040x instructions Publication 502 contains more detailed information. Irs form 1040x instructions Tax Credits This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities. Irs form 1040x instructions Child and Dependent Care Credit If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. Irs form 1040x instructions To qualify, you must pay these expenses so you can work or look for work. Irs form 1040x instructions The care must be provided for: Your qualifying child who is your dependent and who was under age 13 when the care was provided, Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Irs form 1040x instructions You can claim the credit on Form 1040 or 1040A. Irs form 1040x instructions You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Irs form 1040x instructions You figure the credit on Form 2441. Irs form 1040x instructions For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. Irs form 1040x instructions Publication 503, Child and Dependent Care Expenses, contains more detailed information. Irs form 1040x instructions Credit for the Elderly or the Disabled You may be able to claim this credit if you are a U. Irs form 1040x instructions S. Irs form 1040x instructions citizen or a resident alien and either of the following apply. Irs form 1040x instructions You were 65 or older at the end of 2013, You were under 65 at the end of 2013, and retired on permanent or total disability. Irs form 1040x instructions You can claim the credit on Form 1040 or 1040A. Irs form 1040x instructions You figure the credit on Schedule R. Irs form 1040x instructions For more information, see the instructions for Form 1040, line 53, or Form 1040A, line 30. Irs form 1040x instructions Publication 524, Credit for the Elderly or the Disabled, contains more detailed information. Irs form 1040x instructions Earned Income Credit This credit is based on the amount of your earned income. Irs form 1040x instructions You can get the credit if your adjusted gross income for 2013 is less than: $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, or $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children. Irs form 1040x instructions To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. Irs form 1040x instructions If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. Irs form 1040x instructions You cannot use Form 1040EZ if you have a qualifying child. Irs form 1040x instructions Qualifying child. Irs form 1040x instructions   To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2013, or permanently and totally disabled at any time during 2013, regardless of age. Irs form 1040x instructions Earned income. Irs form 1040x instructions   If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Irs form 1040x instructions However, payments you received from a disability insurance policy that you paid the premiums for are not earned income. Irs form 1040x instructions More information. Irs form 1040x instructions   For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 64a; Form 1040A, line 38a; or Form 1040EZ, line 8a. Irs form 1040x instructions Publication 596, Earned Income Credit (EIC), contains more detailed information. Irs form 1040x instructions Household Employers If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes. Irs form 1040x instructions A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. Irs form 1040x instructions This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. Irs form 1040x instructions In this case you do not have to pay employment taxes on the amount you pay. Irs form 1040x instructions But if you control what work is done and how it is done, the worker is your employee. Irs form 1040x instructions If you possess the right to discharge a worker, that worker is generally considered to be your employee. Irs form 1040x instructions If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency. Irs form 1040x instructions To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide For Wages Paid in 2013. Irs form 1040x instructions Business Tax Incentives If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities. Irs form 1040x instructions Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. Irs form 1040x instructions For more information, see chapter 7 of Publication 535, Business Expenses. Irs form 1040x instructions Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. Irs form 1040x instructions The expenses must be to enable the eligible small business to comply with the Americans With Disabilities Act of 1990. Irs form 1040x instructions See Form 8826, Disabled Access Credit, for more information. Irs form 1040x instructions Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. Irs form 1040x instructions One targeted group consists of vocational rehabilitation referrals. Irs form 1040x instructions These are individuals who have a physical or mental disability that results in a substantial handicap to employment. Irs form 1040x instructions See Form 5884, Work Opportunity Credit. Irs form 1040x instructions How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Irs form 1040x instructions Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Irs form 1040x instructions Free help with your tax return. Irs form 1040x instructions   Free help in preparing your return is available nationwide from IRS-certified volunteers. Irs form 1040x instructions The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Irs form 1040x instructions The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Irs form 1040x instructions Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Irs form 1040x instructions Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Irs form 1040x instructions To find the nearest VITA or TCE site, visit IRS. Irs form 1040x instructions gov or call 1-800-906-9887. Irs form 1040x instructions   As part of the TCE program, AARP offers the Tax-Aide counseling program. Irs form 1040x instructions To find the nearest AARP Tax-Aide site, visit AARP's website at www. Irs form 1040x instructions aarp. Irs form 1040x instructions org/money/taxaide or call 1-888-227-7669. Irs form 1040x instructions   For more information on these programs, go to IRS. Irs form 1040x instructions gov and enter “VITA” in the search box. Irs form 1040x instructions Internet. Irs form 1040x instructions IRS. Irs form 1040x instructions gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Irs form 1040x instructions Apply for an Employer Identification Number (EIN). Irs form 1040x instructions Go to IRS. Irs form 1040x instructions gov and enter Apply for an EIN in the search box. Irs form 1040x instructions Request an Electronic Filing PIN by going to IRS. Irs form 1040x instructions gov and entering Electronic Filing PIN in the search box. Irs form 1040x instructions Check the status of your 2013 refund with Where's My Refund? Go to IRS. Irs form 1040x instructions gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs form 1040x instructions If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs form 1040x instructions Check the status of your amended return. Irs form 1040x instructions Go to IRS. Irs form 1040x instructions gov and enter Where's My Amended Return in the search box. Irs form 1040x instructions Download forms, instructions, and publications, including some accessible versions. Irs form 1040x instructions Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Irs form 1040x instructions gov or IRS2Go. Irs form 1040x instructions Tax return and tax account transcripts are generally available for the current year and past three years. Irs form 1040x instructions Figure your income tax withholding with the IRS Withholding Calculator on IRS. Irs form 1040x instructions gov. Irs form 1040x instructions Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Irs form 1040x instructions Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Irs form 1040x instructions gov. Irs form 1040x instructions Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Irs form 1040x instructions gov or IRS2Go. Irs form 1040x instructions Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Irs form 1040x instructions An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Irs form 1040x instructions Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Irs form 1040x instructions If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Irs form 1040x instructions Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Irs form 1040x instructions Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Irs form 1040x instructions gov. Irs form 1040x instructions Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs form 1040x instructions The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs form 1040x instructions Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Irs form 1040x instructions AARP offers the Tax-Aide counseling program as part of the TCE program. Irs form 1040x instructions Visit AARP's website to find the nearest Tax-Aide location. Irs form 1040x instructions Research your tax questions. Irs form 1040x instructions Search publications and instructions by topic or keyword. Irs form 1040x instructions Read the Internal Revenue Code, regulations, or other official guidance. Irs form 1040x instructions Read Internal Revenue Bulletins. Irs form 1040x instructions Sign up to receive local and national tax news by email. Irs form 1040x instructions Phone. Irs form 1040x instructions You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Irs form 1040x instructions Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Irs form 1040x instructions Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Irs form 1040x instructions Call to locate the nearest volunteer help site, 1-800-906-9887. Irs form 1040x instructions Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs form 1040x instructions The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs form 1040x instructions Most VITA and TCE sites offer free electronic filing. Irs form 1040x instructions Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Irs form 1040x instructions Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Irs form 1040x instructions Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Irs form 1040x instructions The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Irs form 1040x instructions If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs form 1040x instructions Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Irs form 1040x instructions Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs form 1040x instructions Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Irs form 1040x instructions Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Irs form 1040x instructions Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Irs form 1040x instructions You should receive your order within 10 business days. Irs form 1040x instructions Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Irs form 1040x instructions Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Irs form 1040x instructions Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Irs form 1040x instructions Call to ask tax questions, 1-800-829-1040. Irs form 1040x instructions Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Irs form 1040x instructions The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Irs form 1040x instructions These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Irs form 1040x instructions gsa. Irs form 1040x instructions gov/fedrelay. Irs form 1040x instructions Walk-in. Irs form 1040x instructions You can find a selection of forms, publications and services — in-person, face-to-face. Irs form 1040x instructions Products. Irs form 1040x instructions You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Irs form 1040x instructions Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Irs form 1040x instructions Services. Irs form 1040x instructions You can walk in to your local TAC most business days for personal, face-to-face tax help. Irs form 1040x instructions An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Irs form 1040x instructions If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Irs form 1040x instructions No appointment is necessary—just walk in. Irs form 1040x instructions Before visiting, check www. Irs form 1040x instructions irs. Irs form 1040x instructions gov/localcontacts for hours of operation and services provided. Irs form 1040x instructions Mail. Irs form 1040x instructions You can send your order for forms, instructions, and publications to the address below. Irs form 1040x instructions You should receive a response within 10 business days after your request is received. Irs form 1040x instructions  Internal Revenue Service 1201 N. Irs form 1040x instructions Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Irs form 1040x instructions   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Irs form 1040x instructions Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Irs form 1040x instructions What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Irs form 1040x instructions We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Irs form 1040x instructions You face (or your business is facing) an immediate threat of adverse action. Irs form 1040x instructions You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Irs form 1040x instructions   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Irs form 1040x instructions Here's why we can help: TAS is an independent organization within the IRS. Irs form 1040x instructions Our advocates know how to work with the IRS. Irs form 1040x instructions Our services are free and tailored to meet your needs. Irs form 1040x instructions We have offices in every state, the District of Columbia, and Puerto Rico. Irs form 1040x instructions How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Irs form 1040x instructions irs. Irs form 1040x instructions gov/advocate, or call us toll-free at 1-877-777-4778. Irs form 1040x instructions How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Irs form 1040x instructions If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Irs form 1040x instructions irs. Irs form 1040x instructions gov/sams. Irs form 1040x instructions Low Income Taxpayer Clinics. Irs form 1040x instructions   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Irs form 1040x instructions Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Irs form 1040x instructions Visit www. Irs form 1040x instructions TaxpayerAdvocate. Irs form 1040x instructions irs. Irs form 1040x instructions gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Irs form 1040x instructions Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - What's New

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Recent Updates

Exempt Organizations Financial Data—2013 data on tax-exempt organizations were published on Tax Stats. These data include selected financial items from more than 600,000 Forms 990, 990-EZ and 990-PF filed by tax-exempt organizations and processed by the IRS during calendar year 2013. The latest release was expanded to include nearly 500 financial and other data items. The data are in ASCII space-delimited format, and supporting documentation is available.

2013 IRS Data BookThe Internal Revenue Service (IRS) has released the 2013 IRS Data Book, a snapshot of agency activities for Fiscal Year 2013—Oct. 1, 2012, to Sept. 30, 2013. In addition to information on taxes collected and returns processed, the report also includes information about enforcement, taxpayer assistance, and the IRS budget and workforce, among others.

2014 Winter SOI Bulletin—Statistics of Income (SOI) has released the 2014 Winter SOI Bulletin. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers.

This issue of the SOI Bulletin includes articles on the following topics:

  • Individual Income Tax Returns, Preliminary Data, 2012
  • Sales of Capital Assets Panel Data Reported on Individual Tax Returns, 2004–2007
  • Split-Interest Trusts, Filing Year 2012
  • Nonprofit Charitable Organizations, 2010

(March 2014)

Corporation Foreign Tax Credit, 2010Two new tables presenting data from Form 1118, Foreign Tax Credit—Corporations, are now available on SOI’s Tax Stats Webpage. The tables present data from the population of returns filed for Tax Year 2010. Table 1.1 displays data on returns with income in an excess credit position while table 1.2 shows data on returns in an excess limit position. Data presented includes foreign-source income, deductions, and taxes by major and selected minor industry. (February, 2014)

Exempt Organizations Microdata Files, Tax Years 1985–1997—Historical microdata files based on Forms 990 and Forms 990-EZ sampled for the annual studies of nonprofit charitable and other tax-exempt organizations are now available. Annual data are available for organizations exempt from income tax under Internal Revenue Code Section 501(c)(3). Additional data for tax-exempt organizations under IRC Sections 501(c)(4) through 501(c)(9) are available for limited tax years. (February, 2014)

2011 Individual Income Tax ZIP Code and County DataUnited States’ ZIP Code and county data for Tax Year 2011 are now available on Tax Stats. The data present selected income and tax return items by State, ZIP Code, county, and size of adjusted gross income. These data are based on individual income tax returns filed with the IRS. (February, 2014)

Fiduciary Income Tax, 2012—Three tables presenting Filing Year 2012 data for income from estates and trusts (Form 1041) are now available. The statistics cover sources of income and deductions at the National and State levels. Data are classified by trust type and filing status. (February, 2014)

U.S. Gift Tax Returns table Gift Tax, 2012 - One table presenting Filing Year 2012 data for United States Gift (and Generation-Skipping Transfer) Tax Returns (Form 709), including information on total gifts, deductions, credits, and net tax amounts, is now available. Data are presented by tax status and size of total taxable gifts. (January 2014)

2013 Fall SOI Bulletin—Statistics of Income (SOI) has released the 2013 Fall SOI Bulletin. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers.

This issue of the SOI Bulletin includes articles on the following topics:

  • Individual Income Tax Returns, 2011
  • Partnership Returns, 2011
  • Accumulation and Distribution of Individual Retirement Arrangements, 2010

(January 2014)

The Statistics of Income Tax Stats Table Wizard was recently updated! The Table Wizard allows users to query tax data on corporations, individuals, tax-exempt organizations, estates, gifts trusts, and more. The resulting data can then be downloaded. This update includes the following data:

  • Corporate data by industry (Forms 1120 and 1120s)—2004 through 2010
  • 501c(3)  Exempt Organizations (Form 990)—2004 through 2007
  • Domestic Private Foundations and Charitable Trusts (Form 990-PF)—2004 through 2008
  • Unrelated Business Income Tax Returns (Form 990-T)—2006 through 2008
  • Estate Tax Returns (Form 706)—2007 through 2010
  • Gift Tax Returns (Form 709)—2005 through 2010

(December 2013)

2011 Individual Income Tax Estimated Data Line CountsThe 2011 Statistics of Income (SOI) estimated data line counts publication presents estimates of frequencies of taxpayer entries on the lines of the forms and schedules filed with individual tax returns as shown on the 2011 Individual SOI Complete Report file. The statistics are based on a sample of returns that have been weighted to estimate the entire 2011 Tax Year population. The publication includes corresponding dollar amounts of selected lines filed in concurrence with the number of returns filed. (December 2013)

Tax Year 2001–2011 Individual Income Tax Return Statistics by Selected Descending and Ascending Cumulative PercentilesStatistics based on all individual income tax returns by selected descending and ascending cumulative percentiles are now available for Tax Years 2001–2011. Tables present historical statistics on income and tax by cumulative percentiles based on the number of returns. They also show distributions of adjusted gross income (AGI) and total income tax, as defined for each tax year, by descending and ascending cumulative percentiles of returns in both current and constant dollars. These tables can be used to make comparisons across cumulative percentile classes beginning with Tax Year 2001. This release is based on all individual income tax returns except returns of dependents. (December 2013)

2011 Partnership Returns Line Item Estimates (Publication 5035)—This publication presents estimates of frequencies of taxpayer entries recorded on the applicable lines of the forms and schedules filed with partnership tax returns for Tax Year 2011. It also contains corresponding population estimates of dollar amounts recorded on those lines (as applicable). (November 2013)

Partnerships, 2011—Twenty-two tables presenting Tax Year 2011 data for partnership returns (Forms 1065 and 1065-B), including types of partnerships and specific industrial sectors, are now available. The statistics cover balance sheets, trade or business income and deductions, portfolio income, rental income (including rental real estate income), and total net income. Data are classified by industry and size of total assets. In addition, historical tables provide balance sheet and income statement data as well as counts of partnership returns, by size of assets and receipts. 
(November 2013)

Foreign Recipients of US Income Study, 2011 Tax Year—Two tables presenting data for Tax Year 2011 from Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, are now available. The tables include statistics for the number of returns, total income, tax withheld, income subject to withholding, income exempt from withholding, and income by category. Data are available by selected countries and selected recipient types. (October 2013)

Issue Year 2011 Tax-Exempt Bond Tables— Updated tax-exempt bond data for both governmental and private activity bonds issued in calendar year 2011 are now available on Tax Stats. Data include the term of issue, purpose, bond size, and uses of bond proceeds. Tax credit bond data, by bond type, and State-level data, by bond purpose, are also available. (October 2013)

 

 



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The Irs Form 1040x Instructions

Irs form 1040x instructions 3. Irs form 1040x instructions   Rent Expense Table of Contents Introduction Topics - This chapter discusses: RentConditional sales contract. Irs form 1040x instructions Leveraged leases. Irs form 1040x instructions Leveraged leases of limited-use property. Irs form 1040x instructions Taxes on Leased Property Cost of Getting a Lease Improvements by Lessee Capitalizing Rent Expenses Introduction This chapter discusses the tax treatment of rent or lease payments you make for property you use in your business but do not own. Irs form 1040x instructions It also discusses how to treat other kinds of payments you make that are related to your use of this property. Irs form 1040x instructions These include payments you make for taxes on the property. Irs form 1040x instructions Topics - This chapter discusses: The definition of rent Taxes on leased property The cost of getting a lease Improvements by the lessee Capitalizing rent expenses Rent Rent is any amount you pay for the use of property you do not own. Irs form 1040x instructions In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. Irs form 1040x instructions If you have or will receive equity in or title to the property, the rent is not deductible. Irs form 1040x instructions Unreasonable rent. Irs form 1040x instructions   You cannot take a rental deduction for unreasonable rent. Irs form 1040x instructions Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Irs form 1040x instructions Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Irs form 1040x instructions Rent is not unreasonable just because it is figured as a percentage of gross sales. Irs form 1040x instructions For examples of related persons, see Related persons in chapter 2, Publication 544. Irs form 1040x instructions Rent on your home. Irs form 1040x instructions   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Irs form 1040x instructions You must meet the requirements for business use of your home. Irs form 1040x instructions For more information, see Business use of your home in chapter 1. Irs form 1040x instructions Rent paid in advance. Irs form 1040x instructions   Generally, rent paid in your trade or business is deductible in the year paid or accrued. Irs form 1040x instructions If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Irs form 1040x instructions You can deduct the rest of your payment only over the period to which it applies. Irs form 1040x instructions Example 1. Irs form 1040x instructions You are a calendar year taxpayer and you leased a building for 5 years beginning July 1. Irs form 1040x instructions Your rent is $12,000 per year. Irs form 1040x instructions You paid the first year's rent ($12,000) on June 30. Irs form 1040x instructions You can deduct only $6,000 (6/12 × $12,000) for the rent that applies to the first year. Irs form 1040x instructions Example 2. Irs form 1040x instructions You are a calendar year taxpayer. Irs form 1040x instructions Last January you leased property for 3 years for $6,000 a year. Irs form 1040x instructions You paid the full $18,000 (3 × $6,000) during the first year of the lease. Irs form 1040x instructions Each year you can deduct only $6,000, the part of the lease that applies to that year. Irs form 1040x instructions Canceling a lease. Irs form 1040x instructions   You generally can deduct as rent an amount you pay to cancel a business lease. Irs form 1040x instructions Lease or purchase. Irs form 1040x instructions   There may be instances in which you must determine whether your payments are for rent or for the purchase of the property. Irs form 1040x instructions You must first determine whether your agreement is a lease or a conditional sales contract. Irs form 1040x instructions Payments made under a conditional sales contract are not deductible as rent expense. Irs form 1040x instructions Conditional sales contract. Irs form 1040x instructions   Whether an agreement is a conditional sales contract depends on the intent of the parties. Irs form 1040x instructions Determine intent based on the provisions of the agreement and the facts and circumstances that exist when you make the agreement. Irs form 1040x instructions No single test, or special combination of tests, always applies. Irs form 1040x instructions However, in general, an agreement may be considered a conditional sales contract rather than a lease if any of the following is true. Irs form 1040x instructions The agreement applies part of each payment toward an equity interest you will receive. Irs form 1040x instructions You get title to the property after you make a stated amount of required payments. Irs form 1040x instructions The amount you must pay to use the property for a short time is a large part of the amount you would pay to get title to the property. Irs form 1040x instructions You pay much more than the current fair rental value of the property. Irs form 1040x instructions You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Irs form 1040x instructions Determine this value when you make the agreement. Irs form 1040x instructions You have an option to buy the property at a nominal price compared to the total amount you have to pay under the agreement. Irs form 1040x instructions The agreement designates part of the payments as interest, or that part is easy to recognize as interest. Irs form 1040x instructions Leveraged leases. Irs form 1040x instructions   Leveraged lease transactions may not be considered leases. Irs form 1040x instructions Leveraged leases generally involve three parties: a lessor, a lessee, and a lender to the lessor. Irs form 1040x instructions Usually the lease term covers a large part of the useful life of the leased property, and the lessee's payments to the lessor are enough to cover the lessor's payments to the lender. Irs form 1040x instructions   If you plan to take part in what appears to be a leveraged lease, you may want to get an advance ruling. Irs form 1040x instructions Revenue Procedure 2001-28 on page 1156 of Internal Revenue Bulletin 2001-19 contains the guidelines the IRS will use to determine if a leveraged lease is a lease for federal income tax purposes. Irs form 1040x instructions Revenue Procedure 2001-29 on page 1160 of the same Internal Revenue Bulletin provides the information required to be furnished in a request for an advance ruling on a leveraged lease transaction. Irs form 1040x instructions Internal Revenue Bulletin 2001-19 is available at www. Irs form 1040x instructions irs. Irs form 1040x instructions gov/pub/irs-irbs/irb01-19. Irs form 1040x instructions pdf. Irs form 1040x instructions   In general, Revenue Procedure 2001-28 provides that, for advance ruling purposes only, the IRS will consider the lessor in a leveraged lease transaction to be the owner of the property and the transaction to be a valid lease if all the factors in the revenue procedure are met, including the following. Irs form 1040x instructions The lessor must maintain a minimum unconditional “at risk” equity investment in the property (at least 20% of the cost of the property) during the entire lease term. Irs form 1040x instructions The lessee may not have a contractual right to buy the property from the lessor at less than fair market value when the right is exercised. Irs form 1040x instructions The lessee may not invest in the property, except as provided by Revenue Procedure 2001-28. Irs form 1040x instructions The lessee may not lend any money to the lessor to buy the property or guarantee the loan used by the lessor to buy the property. Irs form 1040x instructions The lessor must show that it expects to receive a profit apart from the tax deductions, allowances, credits, and other tax attributes. Irs form 1040x instructions   The IRS may charge you a user fee for issuing a tax ruling. Irs form 1040x instructions For more information, see Revenue Procedure 2014-1 available at  www. Irs form 1040x instructions irs. Irs form 1040x instructions gov/irb/2014-1_IRB/ar05. Irs form 1040x instructions html. Irs form 1040x instructions Leveraged leases of limited-use property. Irs form 1040x instructions   The IRS will not issue advance rulings on leveraged leases of so-called limited-use property. Irs form 1040x instructions Limited-use property is property not expected to be either useful to or usable by a lessor at the end of the lease term except for continued leasing or transfer to a lessee. Irs form 1040x instructions See Revenue Procedure 2001-28 for examples of limited-use property and property that is not limited-use property. Irs form 1040x instructions Leases over $250,000. Irs form 1040x instructions   Special rules are provided for certain leases of tangible property. Irs form 1040x instructions The rules apply if the lease calls for total payments of more than $250,000 and any of the following apply. Irs form 1040x instructions Rents increase during the lease. Irs form 1040x instructions Rents decrease during the lease. Irs form 1040x instructions Rents are deferred (rent is payable after the end of the calendar year following the calendar year in which the use occurs and the rent is allocated). Irs form 1040x instructions Rents are prepaid (rent is payable before the end of the calendar year preceding the calendar year in which the use occurs and the rent is allocated). Irs form 1040x instructions These rules do not apply if your lease specifies equal amounts of rent for each month in the lease term and all rent payments are due in the calendar year to which the rent relates (or in the preceding or following calendar year). Irs form 1040x instructions   Generally, if the special rules apply, you must use an accrual method of accounting (and time value of money principles) for your rental expenses, regardless of your overall method of accounting. Irs form 1040x instructions In addition, in certain cases in which the IRS has determined that a lease was designed to achieve tax avoidance, you must take rent and stated or imputed interest into account under a constant rental accrual method in which the rent is treated as accruing ratably over the entire lease term. Irs form 1040x instructions For details, see section 467 of the Internal Revenue Code. Irs form 1040x instructions Taxes on Leased Property If you lease business property, you can deduct as additional rent any taxes you have to pay to or for the lessor. Irs form 1040x instructions When you can deduct these taxes as additional rent depends on your accounting method. Irs form 1040x instructions Cash method. Irs form 1040x instructions   If you use the cash method of accounting, you can deduct the taxes as additional rent only for the tax year in which you pay them. Irs form 1040x instructions Accrual method. Irs form 1040x instructions   If you use an accrual method of accounting, you can deduct taxes as additional rent for the tax year in which you can determine all the following. Irs form 1040x instructions That you have a liability for taxes on the leased property. Irs form 1040x instructions How much the liability is. Irs form 1040x instructions That economic performance occurred. Irs form 1040x instructions   The liability and amount of taxes are determined by state or local law and the lease agreement. Irs form 1040x instructions Economic performance occurs as you use the property. Irs form 1040x instructions Example 1. Irs form 1040x instructions Oak Corporation is a calendar year taxpayer that uses an accrual method of accounting. Irs form 1040x instructions Oak leases land for use in its business. Irs form 1040x instructions Under state law, owners of real property become liable (incur a lien on the property) for real estate taxes for the year on January 1 of that year. Irs form 1040x instructions However, they do not have to pay these taxes until July 1 of the next year (18 months later) when tax bills are issued. Irs form 1040x instructions Under the terms of the lease, Oak becomes liable for the real estate taxes in the later year when the tax bills are issued. Irs form 1040x instructions If the lease ends before the tax bill for a year is issued, Oak is not liable for the taxes for that year. Irs form 1040x instructions Oak cannot deduct the real estate taxes as rent until the tax bill is issued. Irs form 1040x instructions This is when Oak's liability under the lease becomes fixed. Irs form 1040x instructions Example 2. Irs form 1040x instructions The facts are the same as in Example 1 except that, according to the terms of the lease, Oak becomes liable for the real estate taxes when the owner of the property becomes liable for them. Irs form 1040x instructions As a result, Oak will deduct the real estate taxes as rent on its tax return for the earlier year. Irs form 1040x instructions This is the year in which Oak's liability under the lease becomes fixed. Irs form 1040x instructions Cost of Getting a Lease You may either enter into a new lease with the lessor of the property or get an existing lease from another lessee. Irs form 1040x instructions Very often when you get an existing lease from another lessee, you must pay the previous lessee money to get the lease, besides having to pay the rent on the lease. Irs form 1040x instructions If you get an existing lease on property or equipment for your business, you generally must amortize any amount you pay to get that lease over the remaining term of the lease. Irs form 1040x instructions For example, if you pay $10,000 to get a lease and there are 10 years remaining on the lease with no option to renew, you can deduct $1,000 each year. Irs form 1040x instructions The cost of getting an existing lease of tangible property is not subject to the amortization rules for section 197 intangibles discussed in chapter 8. Irs form 1040x instructions Option to renew. Irs form 1040x instructions   The term of the lease for amortization includes all renewal options plus any other period for which you and the lessor reasonably expect the lease to be renewed. Irs form 1040x instructions However, this applies only if less than 75% of the cost of getting the lease is for the term remaining on the purchase date (not including any period for which you may choose to renew, extend, or continue the lease). Irs form 1040x instructions Allocate the lease cost to the original term and any option term based on the facts and circumstances. Irs form 1040x instructions In some cases, it may be appropriate to make the allocation using a present value computation. Irs form 1040x instructions For more information, see Regulations section 1. Irs form 1040x instructions 178-1(b)(5). Irs form 1040x instructions Example 1. Irs form 1040x instructions You paid $10,000 to get a lease with 20 years remaining on it and two options to renew for 5 years each. Irs form 1040x instructions Of this cost, you paid $7,000 for the original lease and $3,000 for the renewal options. Irs form 1040x instructions Because $7,000 is less than 75% of the total $10,000 cost of the lease (or $7,500), you must amortize the $10,000 over 30 years. Irs form 1040x instructions That is the remaining life of your present lease plus the periods for renewal. Irs form 1040x instructions Example 2. Irs form 1040x instructions The facts are the same as in Example 1, except that you paid $8,000 for the original lease and $2,000 for the renewal options. Irs form 1040x instructions You can amortize the entire $10,000 over the 20-year remaining life of the original lease. Irs form 1040x instructions The $8,000 cost of getting the original lease was not less than 75% of the total cost of the lease (or $7,500). Irs form 1040x instructions Cost of a modification agreement. Irs form 1040x instructions   You may have to pay an additional “rent” amount over part of the lease period to change certain provisions in your lease. Irs form 1040x instructions You must capitalize these payments and amortize them over the remaining period of the lease. Irs form 1040x instructions You cannot deduct the payments as additional rent, even if they are described as rent in the agreement. Irs form 1040x instructions Example. Irs form 1040x instructions You are a calendar year taxpayer and sign a 20-year lease to rent part of a building starting on January 1. Irs form 1040x instructions However, before you occupy it, you decide that you really need less space. Irs form 1040x instructions The lessor agrees to reduce your rent from $7,000 to $6,000 per year and to release the excess space from the original lease. Irs form 1040x instructions In exchange, you agree to pay an additional rent amount of $3,000, payable in 60 monthly installments of $50 each. Irs form 1040x instructions   You must capitalize the $3,000 and amortize it over the 20-year term of the lease. Irs form 1040x instructions Your amortization deduction each year will be $150 ($3,000 ÷ 20). Irs form 1040x instructions You cannot deduct the $600 (12 × $50) that you will pay during each of the first 5 years as rent. Irs form 1040x instructions Commissions, bonuses, and fees. Irs form 1040x instructions   Commissions, bonuses, fees, and other amounts you pay to get a lease on property you use in your business are capital costs. Irs form 1040x instructions You must amortize these costs over the term of the lease. Irs form 1040x instructions Loss on merchandise and fixtures. Irs form 1040x instructions   If you sell at a loss merchandise and fixtures that you bought solely to get a lease, the loss is a cost of getting the lease. Irs form 1040x instructions You must capitalize the loss and amortize it over the remaining term of the lease. Irs form 1040x instructions Improvements by Lessee If you add buildings or make other permanent improvements to leased property, depreciate the cost of the improvements using the modified accelerated cost recovery system (MACRS). Irs form 1040x instructions Depreciate the property over its appropriate recovery period. Irs form 1040x instructions You cannot amortize the cost over the remaining term of the lease. Irs form 1040x instructions If you do not keep the improvements when you end the lease, figure your gain or loss based on your adjusted basis in the improvements at that time. Irs form 1040x instructions For more information, see the discussion of MACRS in Publication 946, How To Depreciate Property. Irs form 1040x instructions Assignment of a lease. Irs form 1040x instructions   If a long-term lessee who makes permanent improvements to land later assigns all lease rights to you for money and you pay the rent required by the lease, the amount you pay for the assignment is a capital investment. Irs form 1040x instructions If the rental value of the leased land increased since the lease began, part of your capital investment is for that increase in the rental value. Irs form 1040x instructions The rest is for your investment in the permanent improvements. Irs form 1040x instructions   The part that is for the increased rental value of the land is a cost of getting a lease, and you amortize it over the remaining term of the lease. Irs form 1040x instructions You can depreciate the part that is for your investment in the improvements over the recovery period of the property as discussed earlier, without regard to the lease term. Irs form 1040x instructions Capitalizing Rent Expenses Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Irs form 1040x instructions Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Irs form 1040x instructions You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Irs form 1040x instructions Indirect costs include amounts incurred for renting or leasing equipment, facilities, or land. Irs form 1040x instructions Uniform capitalization rules. Irs form 1040x instructions   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Irs form 1040x instructions Produce real property or tangible personal property. Irs form 1040x instructions For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Irs form 1040x instructions Acquire property for resale. Irs form 1040x instructions However, these rules do not apply to the following property. Irs form 1040x instructions Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Irs form 1040x instructions Property you produce if you meet either of the following conditions. Irs form 1040x instructions Your indirect costs of producing the property are $200,000 or less. Irs form 1040x instructions You use the cash method of accounting and do not account for inventories. Irs form 1040x instructions Example 1. Irs form 1040x instructions You rent construction equipment to build a storage facility. Irs form 1040x instructions If you are subject to the uniform capitalization rules, you must capitalize as part of the cost of the building the rent you paid for the equipment. Irs form 1040x instructions You recover your cost by claiming a deduction for depreciation on the building. Irs form 1040x instructions Example 2. Irs form 1040x instructions You rent space in a facility to conduct your business of manufacturing tools. Irs form 1040x instructions If you are subject to the uniform capitalization rules, you must include the rent you paid to occupy the facility in the cost of the tools you produce. Irs form 1040x instructions More information. Irs form 1040x instructions   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Irs form 1040x instructions Prev  Up  Next   Home   More Online Publications