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Military H And R Block

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Military H And R Block

Military h and r block Publication 521 - Main Content Table of Contents Who Can Deduct Moving ExpensesMove Related to Start of Work Distance Test Time Test Retirees or Survivors Who Move to the United States Deductible Moving ExpensesMoves to Locations in the United States Moves to Locations Outside the United States Nondeductible Expenses ReimbursementsTypes of Reimbursement Plans Tax Withholding and Estimated Tax How and When To ReportForm 3903 When To Deduct Expenses Illustrated Example Members of the Armed Forces How To Get Tax Help Who Can Deduct Moving Expenses You can deduct your moving expenses if you meet all three of the following requirements. Military h and r block Your move is closely related to the start of work. Military h and r block You meet the distance test. Military h and r block You meet the time test. Military h and r block After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses. Military h and r block Retirees, survivors, and Armed Forces members. Military h and r block   Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. Military h and r block These rules are discussed later in this publication. Military h and r block Move Related to Start of Work Your move must be closely related, both in time and in place, to the start of work at your new job location. Military h and r block Closely related in time. Military h and r block   In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. Military h and r block It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. Military h and r block    Figure A. Military h and r block Illustration of Distance Test Please click here for the text description of the image. Military h and r block Figure A   If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that circumstances existed that prevented the move within that time. Military h and r block Example. Military h and r block Your family moved more than a year after you started work at a new location. Military h and r block You delayed the move for 18 months to allow your child to complete high school. Military h and r block You can deduct your moving expenses. Military h and r block Closely related in place. Military h and r block   You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. Military h and r block If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that: You are required to live at your new home as a condition of your employment, or You will spend less time or money commuting from your new home to your new job location. Military h and r block Home defined. Military h and r block   Your home means your main home (residence). Military h and r block It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. Military h and r block It does not include other homes owned or kept up by you or members of your family. Military h and r block It also does not include a seasonal home, such as a summer beach cottage. Military h and r block Your former home means your home before you left for your new job location. Military h and r block Your new home means your home within the area of your new job location. Military h and r block Retirees or survivors. Military h and r block   You may be able to deduct the expenses of moving to the United States or its possessions even though the move is not related to the start of work at a new job location. Military h and r block You must have worked outside the United States or be a survivor of someone who did. Military h and r block See Retirees or Survivors Who Move to the United States, later. Military h and r block Distance Test Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. Military h and r block For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. Military h and r block You can use Worksheet 1 to see if you meet this test. Military h and r block Worksheet 1. Military h and r block Distance Test   Note. Military h and r block Members of the Armed Forces may not have to meet this test. Military h and r block See Members of the Armed Forces. Military h and r block     1. Military h and r block Enter the number of miles from your old home to your new workplace 1. Military h and r block miles 2. Military h and r block Enter the number of miles from your old home to your old workplace 2. Military h and r block miles 3. Military h and r block Subtract line 2 from line 1. Military h and r block If zero or less, enter -0- 3. Military h and r block miles 4. Military h and r block Is line 3 at least 50 miles? □ Yes. Military h and r block You meet this test. Military h and r block  □ No. Military h and r block You do not meet this test. Military h and r block You cannot deduct your moving expenses. Military h and r block The distance between a job location and your home is the shortest of the more commonly traveled routes between them. Military h and r block The distance test considers only the location of your former home. Military h and r block It does not take into account the location of your new home. Military h and r block See Figure A, earlier. Military h and r block Example. Military h and r block You moved to a new home less than 50 miles from your former home because you changed main job locations. Military h and r block Your old main job location was 3 miles from your former home. Military h and r block Your new main job location is 60 miles from that home. Military h and r block Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test. Military h and r block First job or return to full-time work. Military h and r block   If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. Military h and r block   If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home. Military h and r block Armed Forces. Military h and r block   If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test. Military h and r block See Members of the Armed Forces, later. Military h and r block Main job location. Military h and r block   Your main job location is usually the place where you spend most of your working time. Military h and r block This could be your office, plant, store, shop, or other location. Military h and r block If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Military h and r block Union members. Military h and r block   If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall. Military h and r block More than one job. Military h and r block   If you have more than one job at any time, your main job location depends on the facts in each case. Military h and r block The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Military h and r block    Table 1. Military h and r block Satisfying the Time Test for Employees and Self-Employed Persons IF you are. Military h and r block . Military h and r block . Military h and r block THEN you satisfy the time test by meeting the. Military h and r block . Military h and r block . Military h and r block an employee 39-week test for employees. Military h and r block self-employed 78-week test for self-employed persons. Military h and r block both self-employed and an employee at the same time 78-week test for a self-employed person or the 39-week  test for an employee. Military h and r block Your principal place of work  determines which test applies. Military h and r block both self-employed and an employee, but unable to satisfy the 39-week test for employees 78-week test for self-employed persons. Military h and r block Time Test To deduct your moving expenses, you also must meet one of the following two time tests. Military h and r block The time test for employees. Military h and r block The time test for self-employed persons. Military h and r block Both of these tests are explained below. Military h and r block See Table 1, below, for a summary of these tests. Military h and r block You can deduct your moving expenses before you meet either of the time tests. Military h and r block See Time Test Not Yet Met, later. Military h and r block Time Test for Employees If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). Military h and r block Full-time employment depends on what is usual for your type of work in your area. Military h and r block For purposes of this test, the following four rules apply. Military h and r block You count only your full-time work as an employee, not any work you do as a self-employed person. Military h and r block You do not have to work for the same employer for all 39 weeks. Military h and r block You do not have to work 39 weeks in a row. Military h and r block You must work full time within the same general commuting area for all 39 weeks. Military h and r block Temporary absence from work. Military h and r block   You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. Military h and r block You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement. Military h and r block Seasonal work. Military h and r block   If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. Military h and r block For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months. Military h and r block    Figure B. Military h and r block Can You Deduct Expenses for a Non-Military Move Within the United States? Please click here for the text description of the image. Military h and r block Figure B Time Test for Self-Employed Persons If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test). Military h and r block For purposes of the time test for self-employed persons, the following three rules apply. Military h and r block You count any full-time work you do either as an employee or as a self-employed person. Military h and r block You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks. Military h and r block You must work within the same general commuting area for all 78 weeks. Military h and r block Example. Military h and r block You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2013. Military h and r block You pay moving expenses in 2013 and 2014 in connection with this move. Military h and r block On April 15, 2014, when you file your income tax return for the year 2013, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Military h and r block Although you have not satisfied the 78-week employment condition at this time, you can deduct your 2013 moving expenses on your 2013 income tax return as there is still sufficient time remaining before December 1, 2015, to satisfy such condition. Military h and r block You can deduct any moving expenses you pay in 2014 on your 2014 income tax return even if you have not met the 78-week test. Military h and r block You have until December 1, 2015, to satisfy this requirement. Military h and r block Self-employment. Military h and r block   You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. Military h and r block You are not considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week. Military h and r block Full-time work. Military h and r block   You can count only those weeks during which you work full time as a week of work. Military h and r block Whether you work full time during any week depends on what is usual for your type of work in your area. Military h and r block For example, you are a self-employed dentist and maintain office hours 4 days a week. Military h and r block You are considered to perform services full time if maintaining office hours 4 days a week is not unusual for other self-employed dentists in your area. Military h and r block Temporary absence from work. Military h and r block   You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes. Military h and r block Seasonal trade or business. Military h and r block   If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. Military h and r block The off-season must be less than 6 months and you must work full time before and after the off-season. Military h and r block Example. Military h and r block You own and operate a motel at a beach resort. Military h and r block The motel is closed for 5 months during the off-season. Military h and r block You work full time as the operator of the motel before and after the off-season. Military h and r block You are considered self-employed on a full-time basis during the weeks of the off-season. Military h and r block   If you were both an employee and self-employed, see Table 1 earlier, for the requirements. Military h and r block Example. Military h and r block Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for C and L Cabinet Shop. Military h and r block He generally worked at the shop about 40 hours each week. Military h and r block Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. Military h and r block Because Justin's principal place of business is the cabinet shop, he can satisfy the time test by meeting the 39-week test. Military h and r block    If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test. Military h and r block Joint Return If you are married, file a joint return, and both you and your spouse work full-time, either of you can satisfy the full-time work test. Military h and r block However, you cannot add the weeks your spouse worked to the weeks you worked to satisfy that test. Military h and r block Time Test Not Yet Met You can deduct your moving expenses on your 2013 tax return even though you have not met the time test by the date your 2013 return is due. Military h and r block You can do this if you expect to meet the 39-week test in 2014 or the 78-week test in 2014 or 2015. Military h and r block If you do not deduct your moving expenses on your 2013 return, and you later meet the time test, you can file an amended return for 2013 to take the deduction. Military h and r block See When To Deduct Expenses later, for more details. Military h and r block Failure to meet the time test. Military h and r block    If you deduct moving expenses but do not meet the time test in 2014 or 2015, you must either: Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Military h and r block Example. Military h and r block You arrive in the general area of your new job location, as an employee, on September 15, 2013. Military h and r block You deduct your moving expenses on your 2013 return, the year of the move, even though you have not yet met the time test by the date your return is due. Military h and r block If you do not meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either: Report your moving expense deduction as other income on your Form 1040 for 2014, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Military h and r block Exceptions to the Time Test You do not have to meet the time test if one of the following applies. Military h and r block You are in the Armed Forces and you moved because of a permanent change of station. Military h and r block See Members of the Armed Forces , later. Military h and r block Your main job location was outside the United States and you moved to the United States because you retired. Military h and r block See Retirees or Survivors Who Move to the United States, later. Military h and r block You are the survivor of a person whose main job location at the time of death was outside the United States. Military h and r block See Retirees or Survivors Who Move to the United States, later. Military h and r block Your job at the new location ends because of death or disability. Military h and r block You are transferred for your employer's benefit or laid off for a reason other than willful misconduct. Military h and r block For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job. Military h and r block Retirees or Survivors Who Move to the United States If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you do not have to meet the time test, discussed earlier. Military h and r block However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad. Military h and r block If you are living in the United States, retire, and then move and remain retired, you cannot claim a moving expense deduction for that move. Military h and r block United States defined. Military h and r block   For this section of this publication, the term “United States” includes the possessions of the United States. Military h and r block Retirees who were working abroad. Military h and r block   You can deduct moving expenses for a move to a new home in the United States when you permanently retire. Military h and r block However, both your former main job location and your former home must have been outside the United States. Military h and r block Permanently retired. Military h and r block   You are considered permanently retired when you cease gainful full-time employment or self-employment. Military h and r block If, at the time you retire, you intend your retirement to be permanent, you will be considered retired even though you later return to work. Military h and r block Your intention to retire permanently may be determined by: Your age and health, The customary retirement age for people who do similar work, Whether you receive retirement payments from a pension or retirement fund, and The length of time before you return to full-time work. Military h and r block Decedents. Military h and r block   Qualified deductible moving expenses are allowed on a final return (Form 1040 or 1040NR) when a taxpayer has moved and dies within the same calendar year. Military h and r block The personal representative filing on behalf of that taxpayer should complete and attach Form 3903 to the final return. Military h and r block   A personal representative can be an executor, administrator, or anyone who is in charge of the deceased person's property. Military h and r block For more information, see Publication 559, Survivors, Executors, and Administrators. Military h and r block Survivors of decedents who were working abroad. Military h and r block   If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met. Military h and r block The move is to a home in the United States. Military h and r block The move begins within 6 months after the decedent's death. Military h and r block (When a move begins is described below. Military h and r block ) The move is from the decedent's former home. Military h and r block The decedent's former home was outside the United States. Military h and r block The decedent's former home was also your home. Military h and r block When a move begins. Military h and r block   A move begins when one of the following events occurs. Military h and r block You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time. Military h and r block Your household goods and personal effects are packed and on the way to your home in the United States. Military h and r block You leave your former home to travel to your new home in the United States. Military h and r block Deductible Moving Expenses If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses, you can deduct the reasonable expenses of: Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and Traveling (including lodging but not meals) to your new home. Military h and r block You cannot deduct any expenses for meals. Military h and r block Reasonable expenses. Military h and r block   You can deduct only those expenses that are reasonable for the circumstances of your move. Military h and r block For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. Military h and r block If during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips are not deductible as moving expenses. Military h and r block Example. Military h and r block Beth's employer transferred her from Boston, Massachusetts, to Buffalo, New York. Military h and r block On her way to Buffalo, Beth drove into Canada to visit the Toronto Zoo. Military h and r block Since Beth's excursion into Canada was away from the usual Boston-Buffalo route, the expenses paid or incurred for the excursion are not deductible. Military h and r block Beth can only deduct what it would have cost to drive directly from Boston to Buffalo. Military h and r block Likewise, Beth cannot deduct any expenses, such as the cost of a hotel room, caused by the delay for sightseeing. Military h and r block Travel by car. Military h and r block   If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either: Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or The standard mileage rate of 24 cents per mile. Military h and r block Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. Military h and r block You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car. Military h and r block Member of your household. Military h and r block   You can deduct moving expenses you pay for yourself and members of your household. Military h and r block A member of your household is anyone who has both your former and new home as his or her home. Military h and r block It does not include a tenant or employee, unless that person is your dependent. Military h and r block Moves to Locations in the United States If you meet the requirements under Who Can Deduct Moving Expenses, earlier, you can deduct expenses for a move to the area of a new main job location within the United States or its possessions. Military h and r block Your move may be from one U. Military h and r block S. Military h and r block location to another or from a foreign country to the United States. Military h and r block Household goods and personal effects. Military h and r block   You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. Military h and r block For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses. Military h and r block   If you use your own car to move your things, see Travel by car, earlier. Military h and r block   You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects. Military h and r block   You can deduct the cost of shipping your car and your household pets to your new home. Military h and r block   You can deduct the cost of moving your household goods and personal effects from a place other than your former home. Military h and r block Your deduction is limited to the amount it would have cost to move them from your former home. Military h and r block Example. Military h and r block Paul Brown has been living and working in North Carolina for the last 4 years. Military h and r block Because he has been renting a small apartment, he stored some furniture at his parents' home in Georgia. Military h and r block Paul got a job in Washington, DC. Military h and r block It cost him $900 to move the furniture from his North Carolina apartment to Washington and $3,000 to move the stored furniture from Georgia to Washington. Military h and r block It would have cost $1,800 to ship the stored furniture from North Carolina to Washington. Military h and r block He can deduct only $1,800 of the $3,000 he paid. Military h and r block The amount he can deduct for moving his furniture is $2,700 ($900 + $1,800). Military h and r block You cannot deduct the cost of moving furniture you buy on the way to your new home. Military h and r block   Storage expenses. Military h and r block   You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. Military h and r block Travel expenses. Military h and r block   You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. Military h and r block This includes expenses for the day you arrive. Military h and r block    The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis. Military h and r block   You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved. Military h and r block   The members of your household do not have to travel together or at the same time. Military h and r block However, you can only deduct expenses for one trip per person. Military h and r block If you use your own car, see Travel by car, earlier. Military h and r block Example. Military h and r block   In February 2013, Josh and Robyn Black moved from Minneapolis to Washington, DC, where Josh was starting a new job. Military h and r block Josh drove the family car to Washington, DC, a trip of 1,100 miles. Military h and r block His expenses were $264. Military h and r block 00 for mileage (1,100 miles x 24 cents per mile) plus $40 for tolls and $150 for lodging, for a total of $454. Military h and r block 00. Military h and r block One week later, Robyn flew from Minneapolis to Washington, DC. Military h and r block Her only expense was her $400 plane ticket. Military h and r block The Blacks' deduction is $854. Military h and r block 00 (Josh's $454. Military h and r block 00 + Robyn's $400). Military h and r block Moves to Locations Outside the United States To deduct expenses for a move outside the United States, you must move to the area of a new place of work outside the United States and its possessions. Military h and r block You must meet the requirements under Who Can Deduct Moving Expenses , earlier. Military h and r block Deductible expenses. Military h and r block   If your move is to a location outside the United States and its possessions, you can deduct the following expenses. Military h and r block The cost of moving household goods and personal effects from your former home to your new home. Military h and r block The cost of traveling (including lodging) from your former home to your new home. Military h and r block The cost of moving household goods and personal effects to and from storage. Military h and r block The cost of storing household goods and personal effects while you are at the new job location. Military h and r block The first two items were explained earlier under Moves to Locations in the United States . Military h and r block The last two items are discussed, later. Military h and r block Moving goods and effects to and from storage. Military h and r block   You can deduct the reasonable expenses of moving your personal effects to and from storage. Military h and r block Storage expenses. Military h and r block   You can deduct the reasonable expenses of storing your household goods and personal effects for all or part of the time the new job location remains your main job location. Military h and r block Moving expenses allocable to excluded foreign income. Military h and r block   If you live and work outside the United States, you may be able to exclude from income part or all of the income you earn in the foreign country. Military h and r block You may also be able to claim a foreign housing exclusion or deduction. Military h and r block If you claim the foreign earned income or foreign housing exclusion, you cannot deduct the part of your moving expenses that relates to the excluded income. Military h and r block    Publication 54, Tax Guide for U. Military h and r block S. Military h and r block Citizens and Resident Aliens Abroad, explains how to figure the part of your moving expenses that relates to excluded income. Military h and r block You can get the publication from most U. Military h and r block S. Military h and r block embassies and consulates, or see How To Get Tax Help at the end of this publication. Military h and r block Nondeductible Expenses You cannot deduct the following items as moving expenses. Military h and r block Any part of the purchase price of your new home. Military h and r block Car tags. Military h and r block Driver's license. Military h and r block Expenses of buying or selling a home (including closing costs, mortgage fees, and points). Military h and r block Expenses of entering into or breaking a lease. Military h and r block Home improvements to help sell your home. Military h and r block Loss on the sale of your home. Military h and r block Losses from disposing of memberships in clubs. Military h and r block Mortgage penalties. Military h and r block Pre-move househunting expenses. Military h and r block Real estate taxes. Military h and r block Refitting of carpet and draperies. Military h and r block Return trips to your former residence. Military h and r block Security deposits (including any given up due to the move). Military h and r block Storage charges except those incurred in transit and for foreign moves. Military h and r block No double deduction. Military h and r block   You cannot take a moving expense deduction and a business expense deduction for the same expenses. Military h and r block You must decide if your expenses are deductible as moving expenses or as business expenses. Military h and r block For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. Military h and r block In most cases, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for one year or less. Military h and r block   See Publication 463, Travel, Entertainment, Gift, and Car Expenses, for information on deducting your business expenses. Military h and r block Reimbursements This section explains how to report a reimbursement (including advances and allowances) on your tax return. Military h and r block It covers reimbursements for any of your moving expenses discussed in this publication. Military h and r block It also explains the types of reimbursements on which your employer must withhold income, social security, and Medicare taxes. Military h and r block Types of Reimbursement Plans If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. Military h and r block For a quick overview of how to report your reimbursement and moving expenses, see Table 2 in the section on How and When To Report, later. Military h and r block Your employer should tell you what method of reimbursement is used and what records are required. Military h and r block Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Military h and r block Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Military h and r block Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. Military h and r block You must adequately account to your employer for these expenses within a reasonable period of time. Military h and r block You must return any excess reimbursement or allowance within a reasonable period of time. Military h and r block Adequate accounting. Military h and r block   You adequately account for your moving expenses by giving your employer documentation of those expenses, such as a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it. Military h and r block Documentation includes receipts, canceled checks, and bills. Military h and r block Reasonable period of time. Military h and r block   What constitutes a “reasonable period of time” depends on the facts and circumstances of your situation. Military h and r block However, regardless of the facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Military h and r block You receive an advance within 30 days of the time you have an expense. Military h and r block You adequately account for your expenses within 60 days after they were paid or incurred. Military h and r block You return any excess reimbursement within 120 days after the expense was paid or incurred. Military h and r block You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Military h and r block Excess reimbursement. Military h and r block   This includes any amount you are paid (including advances and allowances) that is more than the moving expenses that you adequately accounted for to your employer within a reasonable period of time. Military h and r block Returning excess reimbursements. Military h and r block   You must be required to return any excess reimbursement for your moving expenses to the person paying the reimbursement. Military h and r block Excess reimbursement includes any amount for which you did not adequately account within a reasonable period of time. Military h and r block For example, if you received an advance and you did not spend all the money on deductible moving expenses, or you do not have proof of all your expenses, you have an excess reimbursement. Military h and r block You meet accountable plan rules. Military h and r block   If for all reimbursements you meet the three rules for an accountable plan (listed earlier), your employer should not include any reimbursements of expenses in your income in box 1 of your Form W-2, Wage and Tax Statement. Military h and r block Instead, your employer should include the reimbursements in box 12 of your Form W-2. Military h and r block Example. Military h and r block You lived in Boston and accepted a job in Atlanta. Military h and r block Under an accountable plan, your employer reimbursed you for your actual traveling expenses from Boston to Atlanta and the cost of moving your furniture to Atlanta. Military h and r block Your employer will include the reimbursement on your Form W-2, box 12, with Code P. Military h and r block If your moving expenses are more than your reimbursement, you may be able to deduct your additional expenses (see How and When To Report, later). Military h and r block You do not meet accountable plan rules. Military h and r block   You may be reimbursed by your employer, but you may not meet all three rules for part of your expenses. Military h and r block   If your deductible expenses are reimbursed under an otherwise accountable plan but you do not return, within a reasonable period, any reimbursement of expenses for which you did not adequately account, then only the amount for which you did adequately account is considered as paid under an accountable plan. Military h and r block The remaining expenses are treated as having been reimbursed under a nonaccountable plan (discussed below). Military h and r block Reimbursement of nondeductible expenses. Military h and r block   You may be reimbursed by your employer for moving expenses, some of which are deductible expenses and some of which are not deductible. Military h and r block The reimbursements you receive for the nondeductible expenses and any allowances for miscellaneous or unspecified expenses are treated as paid under a nonaccountable plan (see below) and are included in your income. Military h and r block If you are reimbursed by your employer for the taxes you must pay (including social security and Medicare taxes) because you have received taxable moving expense reimbursements, you must pay tax on this reimbursement as well, and it is treated as paid under a nonaccountable plan. Military h and r block Nonaccountable Plans A nonaccountable plan is a reimbursement arrangement that does not meet the three rules listed earlier under Accountable Plans. Military h and r block In addition, the following payments will be treated as paid under a nonaccountable plan. Military h and r block Excess reimbursements you fail to return to your employer. Military h and r block Reimbursements of nondeductible expenses. Military h and r block See Reimbursement of nondeductible expenses, earlier. Military h and r block If an arrangement pays for your moving expenses by reducing your wages, salary, or other pay, the amount of the reduction will be treated as a payment made under a nonaccountable plan. Military h and r block This is because you are entitled to receive the full amount of your pay regardless of whether you had any moving expenses. Military h and r block If you are not sure if the moving expense reimbursement arrangement is an accountable or nonaccountable plan, ask your employer. Military h and r block Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. Military h and r block Your employer will report the total in box 1 of your Form W-2. Military h and r block Example. Military h and r block To get you to work in another city, your new employer reimburses you under an accountable plan for the $7,500 loss on the sale of your home. Military h and r block Because this is a reimbursement of a nondeductible expense, it is treated as paid under a nonaccountable plan and must be included as income in box 1 of your Form W-2. Military h and r block Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Do not include in income any moving expense payment you received under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Military h and r block These payments are made to persons displaced from their homes, businesses, or farms by federal projects. Military h and r block Tax Withholding and Estimated Tax Your employer must withhold income, social security, and Medicare taxes from reimbursements and allowances paid to you that are included in your income. Military h and r block See Reimbursements included in income, later. Military h and r block Reimbursements excluded from income. Military h and r block   Your employer should not include in your wages reimbursements paid under an accountable plan (explained earlier) for moving expenses that you: Could deduct if you had paid or incurred them, and Did not deduct in an earlier year. Military h and r block These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. Military h and r block Your employer should report these reimbursements on your Form W-2, box 12, with Code P. Military h and r block    You cannot claim a moving expense deduction for expenses covered by reimbursements excluded from income (see Accountable Plans under Types of Reimbursement Plans, earlier). Military h and r block Expenses deducted in earlier year. Military h and r block   If you receive a reimbursement this year for moving expenses deducted in an earlier year, and the reimbursement is not included as wages in box 1 of your Form W-2, you must include the reimbursement in income on Form 1040, line 21. Military h and r block Your employer should show the amount of your reimbursement in box 12 of your Form W-2. Military h and r block Reimbursements included in income. Military h and r block   Your employer must include in your income any reimbursements made (or treated as made) under a nonaccountable plan, even though they are for deductible moving expenses. Military h and r block See Nonaccountable Plans under Types of Reimbursement Plans, earlier. Military h and r block Your employer also must include in your gross income as wages any reimbursements of, or payments for, nondeductible moving expenses. Military h and r block This includes amounts your employer reimbursed you under an accountable plan (explained earlier) for meals, househunting trips, and real estate expenses. Military h and r block It also includes reimbursements that exceed your deductible expenses and that you do not return to your employer. Military h and r block Reimbursement for deductible and nondeductible expenses. Military h and r block    If your employer reimburses you for both deductible and nondeductible moving expenses, your employer must determine the amount of the reimbursement that is not taxable and not subject to withholding. Military h and r block Your employer must treat any remaining amount as taxable wages and withhold income, social security, and Medicare taxes. Military h and r block Amount of income tax withheld. Military h and r block   If the reimbursements or allowances you receive are taxable, the amount of income tax your employer will withhold depends on several factors. Military h and r block It depends in part on whether income tax is withheld from your regular wages, on whether the reimbursements and allowances are added to your regular wages, and on any information you have given to your employer on Form W-4, Employee's Withholding Allowance Certificate. Military h and r block   Your employer can treat your reimbursements as supplemental wages and not include the reimbursements and allowances in your regular wages. Military h and r block The employer can withhold income tax on supplemental wages at a flat rate which may be different from your regular tax rate. Military h and r block Estimated tax. Military h and r block    If you must make estimated tax payments, you need to take into account any taxable reimbursements and deductible moving expenses in figuring your estimated tax. Military h and r block For details about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Military h and r block How and When To Report This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move. Military h and r block For a quick overview, see Table 2, later. Military h and r block Form 3903 Use Form 3903 to figure your moving expense deduction. Military h and r block Use a separate Form 3903 for each move for which you are deducting expenses. Military h and r block Do not file Form 3903 if all of the following apply. Military h and r block You moved to a location outside the United States in an earlier year. Military h and r block You are claiming only storage fees while you were away from the United States. Military h and r block Any amount your employer paid for the storage fees is included as wages in box 1 of your Form W-2. Military h and r block Instead, enter the storage fees (after the reduction for the part that is allocable to excluded income) on Form 1040, line 26, and enter “Storage” on the dotted line next to the amount. Military h and r block If you meet the special rules for members of the Armed Forces, see How to complete Form 3903 for members of the Armed Forces under Members of the Armed Forces, later. Military h and r block Completing Form 3903. Military h and r block   Complete Worksheet 1, earlier, or the Distance Test Worksheet in the instructions for Form 3903 to see whether you meet the distance test. Military h and r block If so, complete lines 1 through 3 of the form using your actual expenses (except, if you use your own car, you can figure expenses based on the standard mileage rate, instead of actual amounts for gas and oil). Military h and r block Enter on line 4 the total amount of your moving expense reimbursement that was excluded from your wages. Military h and r block This excluded amount should be identified on Form W-2, box 12, with code P. Military h and r block Expenses greater than reimbursement. Military h and r block   If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Military h and r block This is your moving expense deduction. Military h and r block Expenses equal to or less than reimbursement. Military h and r block    If line 3 is equal to or less than line 4, you have no moving expense deduction. Military h and r block Subtract line 3 from line 4 and, if the result is more than zero, include it as income on Form 1040, line 7. Military h and r block Table 2. Military h and r block Reporting Your Moving Expenses and Reimbursements IF your Form W-2 shows. Military h and r block . Military h and r block . Military h and r block AND you have. Military h and r block . Military h and r block . Military h and r block THEN. Military h and r block . Military h and r block . Military h and r block your reimbursement reported only  in box 12 with code P moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses* and reimbursements. Military h and r block your reimbursement reported only  in box 12 with code P moving expenses equal to the amount  in box 12 do not file Form 3903. Military h and r block your reimbursement divided  between box 12 and box 1 moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses,* but only the  reimbursements reported in box 12 of  Form W-2. Military h and r block your entire reimbursement reported  as wages in box 1 moving expenses file Form 3903 showing all allowable  expenses,* but do not show any  reimbursements. Military h and r block no reimbursement moving expenses file Form 3903 showing all allowable  expenses. Military h and r block * * See Deductible Moving Expenses, earlier, for allowable expenses. Military h and r block    Where to deduct. Military h and r block   Deduct your moving expenses on Form 1040, line 26. Military h and r block The amount of moving expenses you can deduct is shown on Form 3903, line 5. Military h and r block    You cannot deduct moving expenses on Form 1040EZ or Form 1040A. Military h and r block   When To Deduct Expenses You may have a choice of when to deduct your moving expenses. Military h and r block Expenses not reimbursed. Military h and r block   If you were not reimbursed, deduct your moving expenses in the year you paid or incurred the expenses. Military h and r block Example. Military h and r block In December 2012, your employer transferred you to another city in the United States, where you still work. Military h and r block You are single and were not reimbursed for your moving expenses. Military h and r block In 2012, you paid for moving your furniture and deducted these expenses on your 2012 tax return. Military h and r block In January 2013, you paid for travel to the new city. Military h and r block You can deduct these additional expenses on your 2013 tax return. Military h and r block Expenses reimbursed. Military h and r block   If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. Military h and r block If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. Military h and r block See Choosing when to deduct, next. Military h and r block   If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21. Military h and r block Choosing when to deduct. Military h and r block   If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if: You paid the expenses in a year before the year of reimbursement, or You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year. Military h and r block How to make the choice. Military h and r block   You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year. Military h and r block    You cannot deduct any moving expenses for which you received a reimbursement that was not included in your income. Military h and r block Illustrated Example Tom and Peggy Smith are married and have two children. Military h and r block They owned a home in Detroit where Tom worked. Military h and r block On February 8, 2013, Tom's employer told him that he would be transferred to San Diego as of April 10 that year. Military h and r block Peggy flew to San Diego on March 1 to look for a new home. Military h and r block She put a down payment of $25,000 on a house being built and returned to Detroit on March 4. Military h and r block The Smiths sold their Detroit home for $1,500 less than they paid for it. Military h and r block They contracted to have their personal effects moved to San Diego on April 3. Military h and r block The family drove to San Diego where they found that their new home was not finished. Military h and r block They stayed in a nearby motel until the house was ready on May 1. Military h and r block On April 10, Tom went to work in the San Diego plant where he still works. Military h and r block Their records for the move show: 1) Peggy's pre-move househunting  trip:       Travel and lodging   $ 449       Meals   75   $ 524 2) Down payment on San Diego  home 25,000 3) Real estate commission paid on  sale of Detroit home 3,500 4) Loss on sale of Detroit home (not  including real estate commission) 1,500 5) Amount paid for moving personal  effects (furniture, other household  goods, etc. Military h and r block ) 8,000 6) Expenses of driving to San Diego:       Mileage (Start 14,278;  End 16,478) 2,200 miles at 24 cents a mile   $ 528       Lodging   180       Meals   320   1,028 7) Cost of temporary living  expenses in San Diego:       Motel rooms   $1,450       Meals   2,280   3,730 Total $43,282   Tom was reimbursed $10,907 under an accountable plan. Military h and r block His employer gave him the following breakdown of the reimbursement that was allowed under the employer's plan. Military h and r block Moving personal effects   $6,800 Travel (and lodging) to San Diego   708 Travel (and lodging) for househunting trip   449 Lodging for temporary quarters   1,450 Loss on sale of home   1,500 Total reimbursement   $10,907 The employer included this reimbursement on Tom's Form W-2 for the year. Military h and r block The reimbursement of allowable expenses, $7,508 for moving household goods and travel to San Diego, was included in box 12 of Form W-2. Military h and r block His employer identified this amount with code P. Military h and r block The employer included the balance, $3,399 reimbursement of nonallowable expenses, in box 1 of Form W-2 with Tom's other wages. Military h and r block Tom must include this amount on Form 1040, line 7. Military h and r block The employer withholds taxes from the $3,399, as discussed under Reimbursement for deductible and nondeductible expenses under Tax Withholding and Estimated Tax, earlier. Military h and r block Also, Tom's employer could have given him a separate Form W-2 for his moving expense reimbursement. Military h and r block To figure his tax deduction for moving expenses, Tom enters the following amounts on Form 3903. Military h and r block Item 5 — moving personal effects (line 1)   $8,000 Item 6 — driving to San Diego ($528 + $180)  (line 2)   708 Total tax deductible moving expenses (line 3)   $8,708 Minus: Reimbursement included in box 12  of Form W-2 (line 4)   7,508 Tax deduction for moving expenses (line 5)   $1,200   Tom's Form 3903 is shown, later. Military h and r block He also enters his deduction, $1,200, on Form 1040, line 26. Military h and r block Nondeductible expenses. Military h and r block   Of the $43,282 expenses that Tom and Peggy incurred, the following items totaling $34,574 ($43,282 – $8,708) cannot be deducted. Military h and r block Item 1 — pre-move househunting expenses of $524. Military h and r block Item 2 — the $25,000 down payment on the San Diego home. Military h and r block If any part of it were for payment of deductible taxes or interest on the mortgage on the house, that part would be deductible as an itemized deduction. Military h and r block Item 3 — the $3,500 real estate commission paid on the sale of the Detroit home. Military h and r block The commission is used to figure the gain or loss on the sale. Military h and r block Item 4 — the $1,500 loss on the sale of the Detroit home. Military h and r block Item 6 — the $320 expense for meals while driving to San Diego. Military h and r block (However, the lodging and car expenses are deductible. Military h and r block ) Item 7 — temporary living expenses of $3,730. Military h and r block    This image is too large to be displayed in the current screen. Military h and r block Please click the link to view the image. Military h and r block 2012 Form 3903 Moving Expenses Members of the Armed Forces If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet the distance and time tests, discussed earlier. Military h and r block You can deduct your unreimbursed moving expenses. Military h and r block A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. Military h and r block The move must occur within one year of ending your active duty or within the period allowed under the Joint Travel Regulations. Military h and r block Spouse and dependents. Military h and r block   If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to: The place of enlistment, The member's, spouse's, or dependent's home of record, or A nearer point in the United States. Military h and r block   If the military moves you, your spouse, and dependents, to or from separate locations, the moves are treated as a single move to your new main job location. Military h and r block Services or reimbursements provided by government. Military h and r block   Do not include in income the value of moving and storage services provided by the government because of a permanent change of station. Military h and r block In general, if the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government must include the excess in your wages on Form W-2. Military h and r block However, the excess portion of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance is not included in income and should not be included in box 1 of Form W-2. Military h and r block   If your reimbursements or allowances are less than your actual moving expenses, do not include the reimbursements or allowances in income. Military h and r block You can deduct the expenses that are more than your reimbursements. Military h and r block See Deductible Moving Expenses, earlier. Military h and r block How to complete Form 3903 for members of the Armed Forces. Military h and r block    Take the following steps. Military h and r block Complete lines 1 through 3 of the form, using your actual expenses. Military h and r block Do not include any expenses for moving services provided by the government. Military h and r block Also, do not include any expenses that were reimbursed by an allowance you do not have to include in your income. Military h and r block Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. Military h and r block Do not include the value of moving or storage services provided by the government. Military h and r block Also, do not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance. Military h and r block Complete line 5. Military h and r block If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Military h and r block This is your moving expense deduction. Military h and r block If line 3 is equal to or less than line 4, you do not have a moving expense deduction. Military h and r block Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7. Military h and r block If the military moves you, your spouse and dependents, to or from different locations, treat these moves as a single move. Military h and r block    Do not deduct any expenses for moving or storage services provided by the government. Military h and r block How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Military h and r block 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. Military h and r block Free help with your tax return. Military h and r block   Free help in preparing your return is available nationwide from IRS-certified volunteers. Military h and r block The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Military h and r block The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Military h and r block 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. Military h and r block Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Military h and r block To find the nearest VITA or TCE site, visit IRS. Military h and r block gov or call 1-800-906-9887. Military h and r block   As part of the TCE program, AARP offers the Tax-Aide counseling program. Military h and r block To find the nearest AARP Tax-Aide site, visit AARP's website at www. Military h and r block aarp. Military h and r block org/money/taxaide or call 1-888-227-7669. Military h and r block   For more information on these programs, go to IRS. Military h and r block gov and enter “VITA” in the search box. Military h and r block Internet. Military h and r block IRS. Military h and r block gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Military h and r block Apply for an Employer Identification Number (EIN). Military h and r block Go to IRS. Military h and r block gov and enter Apply for an EIN in the search box. Military h and r block Request an Electronic Filing PIN by going to IRS. Military h and r block gov and entering Electronic Filing PIN in the search box. Military h and r block Check the status of your 2013 refund with Where's My Refund? Go to IRS. Military h and r block 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. Military h and r block 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. Military h and r block Check the status of your amended return. Military h and r block Go to IRS. Military h and r block gov and enter Where's My Amended Return in the search box. Military h and r block Download forms, instructions, and publications, including some accessible versions. Military h and r block Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Military h and r block gov or IRS2Go. Military h and r block Tax return and tax account transcripts are generally available for the current year and past three years. Military h and r block Figure your income tax withholding with the IRS Withholding Calculator on IRS. Military h and r block gov. Military h and r block 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. Military h and r block Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Military h and r block gov. Military h and r block Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Military h and r block gov or IRS2Go. Military h and r block Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Military h and r block An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Military h and r block Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Military h and r block If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Military h and r block Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Military h and r block Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Military h and r block gov. Military h and r block 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. Military h and r block The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Military h and r block Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Military h and r block AARP offers the Tax-Aide counseling program as part of the TCE program. Military h and r block Visit AARP's website to find the nearest Tax-Aide location. Military h and r block Research your tax questions. Military h and r block Search publications and instructions by topic or keyword. Military h and r block Read the Internal Revenue Code, regulations, or other official guidance. Military h and r block Read Internal Revenue Bulletins. Military h and r block Sign up to receive local and national tax news by email. Military h and r block Phone. Military h and r block You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Military h and r block Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Military h and r block 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. Military h and r block Call to locate the nearest volunteer help site, 1-800-906-9887. Military h and r block 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. Military h and r block The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Military h and r block Most VITA and TCE sites offer free electronic filing. Military h and r block Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Military h and r block Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Military h and r block Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Military h and r block The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Military h and r block 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. Military h and r block 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. Military h and r block Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Military h and r block Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Military h and r block Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Military h and r block 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). Military h and r block You should receive your order within 10 business days. Military h and r block Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Military h and r block Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Military h and r block Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Military h and r block Call to ask tax questions, 1-800-829-1040. Military h and r block Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Military h and r block The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Military h and r block These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Military h and r block gsa. Military h and r block gov/fedrelay. Military h and r block Walk-in. Military h and r block You can find a selection of forms, publications and services — in-person, face-to-face. Military h and r block Products. Military h and r block You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Military h and r block Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Military h and r block Services. Military h and r block You can walk in to your local TAC most business days for personal, face-to-face tax help. Military h and r block An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Military h and r block 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. Military h and r block No appointment is necessary—just walk in. Military h and r block Before visiting, check www. Military h and r block irs. Military h and r block gov/localcontacts for hours of operation and services provided. Military h and r block Mail. Military h and r block You can send your order for forms, instructions, and publications to the address below. Military h and r block You should receive a response within 10 business days after your request is received. Military h and r block  Internal Revenue Service 1201 N. Military h and r block Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Military h and r block   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Military h and r block Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Military h and r block What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Military h and r block 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. Military h and r block You face (or your business is facing) an immediate threat of adverse action. Military h and r block You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Military h and r block   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. Military h and r block Here's why we can help: TAS is an independent organization within the IRS. Military h and r block Our advocates know how to work with the IRS. Military h and r block Our services are free and tailored to meet your needs. Military h and r block We have offices in every state, the District of Columbia, and Puerto Rico. Military h and r block 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. Military h and r block irs. Military h and r block gov/advocate, or call us toll-free at 1-877-777-4778. Military h and r block How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Military h and r block If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Military h and r block irs. Military h and r block gov/sams. Military h and r block Low Income Taxpayer Clinics. Military h and r block   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. Military h and r block Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Military h and r block Visit www. Military h and r block TaxpayerAdvocate. Military h and r block irs. Military h and r block gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Military h and r block Prev  Up  Next   Home   More Online Publications
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Administration on Aging (AoA)

The Administration on Aging is the Federal focal point and advocate agency for older persons and their concerns. In this role, the Administration on Aging works to heighten awareness among other Federal agencies, organizations, groups, and the public about the valuable contributions that older Americans make to the nation. The Administration also alerts others to the needs of vulnerable older people. Through information, referral and outreach efforts at the community level, the Administration seeks to educate older people and their caregivers about the benefits and services available to help them.

Contact the Agency or Department

Website: Administration on Aging (AoA)

Contact In-Person: Find Administration on Aging (AoA) Offices Near You

E-mail:

Address: One Massachusetts Ave., NW
Washington, DC 20001

Phone Number: (202) 619-0724

Toll-free: (800) 677-1116 (to find local resources)

The Military H And R Block

Military h and r block 2. Military h and r block   Electing the Section 179 Deduction Table of Contents Introduction Useful Items - You may want to see: What Property Qualifies?Eligible Property Property Acquired for Business Use Property Acquired by Purchase What Property Does Not Qualify?Land and Improvements Excepted Property How Much Can You Deduct?Dollar Limits Business Income Limit Partnerships and Partners S Corporations Other Corporations How Do You Elect the Deduction? When Must You Recapture the Deduction? Introduction You can elect 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. Military h and r block This is the section 179 deduction. Military h and r block You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions. Military h and r block Estates and trusts cannot elect the section 179 deduction. Military h and r block This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. Military h and r block It also explains when and how to recapture the deduction. Military h and r block Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 954 Tax Incentives for Distressed Communities Form (and Instructions) 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Military h and r block What Property Qualifies? To qualify for the section 179 deduction, your property must meet all the following requirements. Military h and r block It must be eligible property. Military h and r block It must be acquired for business use. Military h and r block It must have been acquired by purchase. Military h and r block It must not be property described later under What Property Does Not Qualify . Military h and r block The following discussions provide information about these requirements and exceptions. Military h and r block Eligible Property To qualify for the section 179 deduction, your property must be one of the following types of depreciable property. Military h and r block Tangible personal property. Military h and r block Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, A research facility used in connection with any of the activities in (a) above, or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. Military h and r block Single purpose agricultural (livestock) or horticultural structures. Military h and r block See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. Military h and r block Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. Military h and r block Off-the-shelf computer software. Military h and r block Qualified real property (described below). Military h and r block Tangible personal property. Military h and r block   Tangible personal property is any tangible property that is not real property. Military h and r block It includes the following property. Military h and r block Machinery and equipment. Military h and r block Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs. Military h and r block Gasoline storage tanks and pumps at retail service stations. Military h and r block Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals. Military h and r block   The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. Military h and r block For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law. Military h and r block Off-the-shelf computer software. Military h and r block   Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction. Military h and r block This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Military h and r block It includes any program designed to cause a computer to perform a desired function. Military h and r block However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software. Military h and r block Qualified real property. Military h and r block   You can elect to treat certain qualified real property you placed in service as section 179 property for tax years beginning in 2013. Military h and r block If this election is made, the term “section 179 property” will include any qualified real property that is: Qualified leasehold improvement property, Qualified restaurant property, or Qualified retail improvement property. Military h and r block The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 in 2013. Military h and r block For more information, see Special rules for qualified section 179 real property, later. Military h and r block Also, see Election for certain qualified section 179 real property, later, for information on how to make this election. Military h and r block Qualified leasehold improvement property. Military h and r block   Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Military h and r block   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Military h and r block A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Military h and r block Examples include the following. Military h and r block A complete liquidation of a subsidiary. Military h and r block A transfer to a corporation controlled by the transferor. Military h and r block An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Military h and r block Qualified restaurant property. Military h and r block   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2014. Military h and r block Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals. Military h and r block Qualified retail improvement property. Military h and r block   Generally, this is any improvement (placed in service after December 31, 2008, and before January 1, 2014) to an interior portion of nonresidential real property if it meets the following requirements. Military h and r block The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public. Military h and r block The improvement is placed in service more than 3 years after the date the building was first placed in service. Military h and r block The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building. Military h and r block In addition, an improvement made by the lessor does not qualify as qualified retail improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Military h and r block A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Military h and r block Examples include the following. Military h and r block A complete liquidation of a subsidiary. Military h and r block A transfer to a corporation controlled by the transferor. Military h and r block An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Military h and r block Property Acquired for Business Use To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Military h and r block Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify. Military h and r block Partial business use. Military h and r block   When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. Military h and r block If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. Military h and r block Use the resulting business cost to figure your section 179 deduction. Military h and r block Example. Military h and r block May Oak bought and placed in service an item of section 179 property costing $11,000. Military h and r block She used the property 80% for her business and 20% for personal purposes. Military h and r block The business part of the cost of the property is $8,800 (80% × $11,000). Military h and r block Property Acquired by Purchase To qualify for the section 179 deduction, your property must have been acquired by purchase. Military h and r block For example, property acquired by gift or inheritance does not qualify. Military h and r block Property is not considered acquired by purchase in the following situations. Military h and r block It is acquired by one component member of a controlled group from another component member of the same group. Military h and r block Its basis is determined either— In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or Under the stepped-up basis rules for property acquired from a decedent. Military h and r block It is acquired from a related person. Military h and r block Related persons. Military h and r block   Related persons are described under Related persons earlier. Military h and r block However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears. Military h and r block Example. Military h and r block Ken Larch is a tailor. Military h and r block He bought two industrial sewing machines from his father. Military h and r block He placed both machines in service in the same year he bought them. Military h and r block They do not qualify as section 179 property because Ken and his father are related persons. Military h and r block He cannot claim a section 179 deduction for the cost of these machines. Military h and r block What Property Does Not Qualify? Certain property does not qualify for the section 179 deduction. Military h and r block This includes the following. Military h and r block Land and Improvements Land and land improvements do not qualify as section 179 property. Military h and r block Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences. Military h and r block Excepted Property Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property. Military h and r block Certain property you lease to others (if you are a noncorporate lessor). Military h and r block Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. Military h and r block Air conditioning or heating units. Military h and r block Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code. Military h and r block Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income. Military h and r block Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months. Military h and r block Leased property. Military h and r block   Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. Military h and r block This rule does not apply to corporations. Military h and r block However, you can claim a section 179 deduction for the cost of the following property. Military h and r block Property you manufacture or produce and lease to others. Military h and r block Property you purchase and lease to others if both the following tests are met. Military h and r block The term of the lease (including options to renew) is less than 50% of the property's class life. Military h and r block For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property. Military h and r block Property used for lodging. Military h and r block   Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging. Military h and r block However, this does not apply to the following types of property. Military h and r block Nonlodging commercial facilities that are available to those not using the lodging facilities on the same basis as they are available to those using the lodging facilities. Military h and r block Property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. Military h and r block Any certified historic structure to the extent its basis is due to qualified rehabilitation expenditures. Military h and r block Any energy property. Military h and r block Energy property. Military h and r block   Energy property is property that meets the following requirements. Military h and r block It is one of the following types of property. Military h and r block Equipment that uses solar energy to generate electricity, to heat or cool a structure, to provide hot water for use in a structure, or to provide solar process heat, except for equipment used to generate energy to heat a swimming pool. Military h and r block Equipment placed in service after December 31, 2005, and before January 1, 2017, that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. Military h and r block Equipment used to produce, distribute, or use energy derived from a geothermal deposit. Military h and r block For electricity generated by geothermal power, this includes equipment up to (but not including) the electrical transmission stage. Military h and r block Qualified fuel cell property or qualified microturbine property placed in service after December 31, 2005, and before January 1, 2017. Military h and r block The construction, reconstruction, or erection of the property must be completed by you. Military h and r block For property you acquire, the original use of the property must begin with you. Military h and r block The property must meet the performance and quality standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property. Military h and r block   For periods before February 14, 2008, energy property does not include any property that is public utility property as defined by section 46(f)(5) of the Internal Revenue Code (as in effect on November 4, 1990). Military h and r block How Much Can You Deduct? Your section 179 deduction is generally the cost of the qualifying property. Military h and r block However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Military h and r block These limits apply to each taxpayer, not to each business. Military h and r block However, see Married Individuals under Dollar Limits , later. Military h and r block For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. Military h and r block See Do the Passenger Automobile Limits Apply in chapter 5 . Military h and r block If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct. Military h and r block Trade-in of other property. Military h and r block   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. Military h and r block Example. Military h and r block Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. Military h and r block They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. Military h and r block The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. Military h and r block They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van. Military h and r block Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. Military h and r block Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200). Military h and r block Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 generally cannot be more than $500,000. Military h and r block If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $500,000. Military h and r block You do not have to claim the full $500,000. Military h and r block Qualified real property (described earlier) that you elected to treat as section 179 real property is limited to $250,000 of the maximum deduction of $500,000 for 2013. Military h and r block The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. Military h and r block After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. Military h and r block Example. Military h and r block In 2013, you bought and placed in service $500,000 in machinery and a $25,000 circular saw for your business. Military h and r block You elect to deduct $475,000 for the machinery and the entire $25,000 for the saw, a total of $500,000. Military h and r block This is the maximum amount you can deduct. Military h and r block Your $25,000 deduction for the saw completely recovered its cost. Military h and r block Your basis for depreciation is zero. Military h and r block The basis for depreciation of your machinery is $25,000. Military h and r block You figure this by subtracting your $475,000 section 179 deduction for the machinery from the $500,000 cost of the machinery. Military h and r block Situations affecting dollar limit. Military h and r block   Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. Military h and r block The general dollar limit is affected by any of the following situations. Military h and r block The cost of your section 179 property placed in service exceeds $2,000,000. Military h and r block Your business is an enterprise zone business. Military h and r block You placed in service a sport utility or certain other vehicles. Military h and r block You are married filing a joint or separate return. Military h and r block Costs exceeding $2,000,000 If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. Military h and r block If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Military h and r block Example. Military h and r block In 2013, Jane Ash placed in service machinery costing $2,100,000. Military h and r block This cost is $100,000 more than $2,000,000, so she must reduce her dollar limit to $400,000 ($500,000 − $100,000). Military h and r block Enterprise Zone Businesses An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. Military h and r block For more information including the definitions of “enterprise zone business” and “qualified zone property,” see sections 1397A, 1397C, and 1397D of the Internal Revenue Code. Military h and r block The dollar limit on the section 179 deduction is increased by the smaller of: $35,000, or The cost of section 179 property that is also qualified zone property placed in service before January 1, 2014 (including such property placed in service by your spouse, even if you are filing a separate return). Military h and r block Note. Military h and r block   You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,000,000 (explained earlier). Military h and r block Sport Utility and Certain Other Vehicles You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. Military h and r block This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. Military h and r block However, the $25,000 limit does not apply to any vehicle: Designed to seat more than nine passengers behind the driver's seat, Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Military h and r block Married Individuals If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. Military h and r block If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Military h and r block If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,000,000. Military h and r block You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. Military h and r block If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. Military h and r block Example. Military h and r block Jack Elm is married. Military h and r block He and his wife file separate returns. Military h and r block Jack bought and placed in service $2,000,000 of qualified farm machinery in 2013. Military h and r block His wife has her own business, and she bought and placed in service $30,000 of qualified business equipment. Military h and r block Their combined dollar limit is $470,000. Military h and r block This is because they must figure the limit as if they were one taxpayer. Military h and r block They reduce the $500,000 dollar limit by the $30,000 excess of their costs over $2,000,000. Military h and r block They elect to allocate the $470,000 dollar limit as follows. Military h and r block $446,500 ($470,000 x 95%) to Mr. Military h and r block Elm's machinery. Military h and r block $23,500 ($470,000 x 5%) to Mrs. Military h and r block Elm's equipment. Military h and r block If they did not make an election to allocate their costs in this way, they would have to allocate $235,000 ($470,000 × 50%) to each of them. Military h and r block Joint return after filing separate returns. Military h and r block   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. Military h and r block The dollar limit (after reduction for any cost of section 179 property over $2,000,000). Military h and r block The total cost of section 179 property you and your spouse elected to expense on your separate returns. Military h and r block Example. Military h and r block The facts are the same as in the previous example except that Jack elected to deduct $30,000 of the cost of section 179 property on his separate return and his wife elected to deduct $2,000. Military h and r block After the due date of their returns, they file a joint return. Military h and r block Their dollar limit for the section 179 deduction is $32,000. Military h and r block This is the lesser of the following amounts. Military h and r block $470,000—The dollar limit less the cost of section 179 property over $2,000,000. Military h and r block $32,000—The total they elected to expense on their separate returns. Military h and r block Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Military h and r block Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. Military h and r block Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. Military h and r block Special rules apply to a 2013 deduction of qualified section 179 real property that is disallowed because of the business income limit. Military h and r block See Special rules for qualified section 179 property under Carryover of disallowed deduction, later. Military h and r block Taxable income. Military h and r block   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. Military h and r block Net income or loss from a trade or business includes the following items. Military h and r block Section 1231 gains (or losses). Military h and r block Interest from working capital of your trade or business. Military h and r block Wages, salaries, tips, or other pay earned as an employee. Military h and r block For information about section 1231 gains and losses, see chapter 3 in Publication 544. Military h and r block   In addition, figure taxable income without regard to any of the following. Military h and r block The section 179 deduction. Military h and r block The self-employment tax deduction. Military h and r block Any net operating loss carryback or carryforward. Military h and r block Any unreimbursed employee business expenses. Military h and r block Two different taxable income limits. Military h and r block   In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. Military h and r block You may have to figure the limit for this other deduction taking into account the section 179 deduction. Military h and r block If so, complete the following steps. Military h and r block Step Action 1 Figure taxable income without the section 179 deduction or the other deduction. Military h and r block 2 Figure a hypothetical section 179 deduction using the taxable income figured in Step 1. Military h and r block 3 Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1. Military h and r block 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. Military h and r block 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1. Military h and r block 6 Figure your actual section 179 deduction using the taxable income figured in Step 5. Military h and r block 7 Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1. Military h and r block 8 Figure your actual other deduction using the taxable income figured in Step 7. Military h and r block Example. Military h and r block On February 1, 2013, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $500,000. Military h and r block It elects to expense the entire $500,000 cost under section 179. Military h and r block In June, the corporation gave a charitable contribution of $10,000. Military h and r block A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. Military h and r block The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. Military h and r block XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $520,000. Military h and r block XYZ figures its section 179 deduction and its deduction for charitable contributions as follows. Military h and r block Step 1– Taxable income figured without either deduction is $520,000. Military h and r block Step 2– Using $520,000 as taxable income, XYZ's hypothetical section 179 deduction is $500,000. Military h and r block Step 3– $20,000 ($520,000 − $500,000). Military h and r block Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. Military h and r block Step 5– $518,000 ($520,000 − $2,000). Military h and r block Step 6– Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. Military h and r block Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 deduction. Military h and r block Step 7– $20,000 ($520,000 − $500,000). Military h and r block Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. Military h and r block Carryover of disallowed deduction. Military h and r block   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. Military h and r block This disallowed deduction amount is shown on line 13 of Form 4562. Military h and r block You use the amount you carry over to determine your section 179 deduction in the next year. Military h and r block Enter that amount on line 10 of your Form 4562 for the next year. Military h and r block   If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. Military h and r block Your selections must be shown in your books and records. Military h and r block For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. Military h and r block If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year. Military h and r block   If costs from more than one year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first. Military h and r block Special rules for qualified section 179 real property. Military h and r block   You can carry over to 2013 a 2012 deduction attributable to qualified section 179 real property that you elected to expense but were unable to take because of the business income limitation. Military h and r block Any such 2012 carryover amounts that are not deducted in 2013, plus any 2013 disallowed section 179 expense deductions attributable to qualified real property, are not carried over to 2014. Military h and r block Instead these amounts are treated as property placed in service on the first day of 2013 for purposes of computing depreciation (including the special depreciation allowance, if applicable). Military h and r block See section 179(f) of the Internal Revenue Code and Notice 2013-59 for more information. Military h and r block If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. Military h and r block Instead, you must add it back to the property's basis. Military h and r block Partnerships and Partners The section 179 deduction limits apply both to the partnership and to each partner. Military h and r block The partnership determines its section 179 deduction subject to the limits. Military h and r block It then allocates the deduction among its partners. Military h and r block Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Military h and r block ) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. Military h and r block To determine any reduction in the dollar limit for costs over $2,000,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. Military h and r block After the dollar limit (reduced for any nonpartnership section 179 costs over $2,000,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit. Military h and r block Partnership's taxable income. Military h and r block   For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. Military h and r block See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). Military h and r block However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code. Military h and r block Partner's share of partnership's taxable income. Military h and r block   For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business. Military h and r block Example. Military h and r block In 2013, Beech Partnership placed in service section 179 property with a total cost of $2,025,000. Military h and r block The partnership must reduce its dollar limit by $25,000 ($2,025,000 − $2,000,000). Military h and r block Its maximum section 179 deduction is $475,000 ($500,000 − $25,000), and it elects to expense that amount. Military h and r block The partnership's taxable income from the active conduct of all its trades or businesses for the year was $600,000, so it can deduct the full $475,000. Military h and r block It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners. Military h and r block In addition to being a partner in Beech Partnership, Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. Military h and r block He also conducts a business as a sole proprietor and, in 2013, placed in service in that business qualifying section 179 property costing $55,000. Military h and r block He had a net loss of $5,000 from that business for the year. Military h and r block Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,000,000 and his dollar limit is not reduced. Military h and r block His maximum section 179 deduction is $500,000. Military h and r block He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. Military h and r block However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership minus $5,000 loss from his sole proprietorship). Military h and r block He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2014. Military h and r block He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records. Military h and r block Different tax years. Military h and r block   For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year. Military h and r block Example. Military h and r block John and James Oak are equal partners in Oak Partnership. Military h and r block Oak Partnership uses a tax year ending January 31. Military h and r block John and James both use a tax year ending December 31. Military h and r block For its tax year ending January 31, 2013, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2012. Military h and r block John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2013 tax year. Military h and r block Adjustment of partner's basis in partnership. Military h and r block   A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. Military h and r block If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership. Military h and r block Adjustment of partnership's basis in section 179 property. Military h and r block   The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. Military h and r block This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits. Military h and r block S Corporations Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. Military h and r block The deduction limits apply to an S corporation and to each shareholder. Military h and r block The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits. Military h and r block Figuring taxable income for an S corporation. Military h and r block   To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year. Military h and r block   To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. Military h and r block However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. Military h and r block For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. Military h and r block In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income. Military h and r block Other Corporations A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes. Military h and r block It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return). Military h and r block It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived from a trade or business actively conducted by the corporation during the tax year. Military h and r block How Do You Elect the Deduction? You elect to take the section 179 deduction by completing Part I of Form 4562. Military h and r block If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. Military h and r block For property placed in service in 2013, file Form 4562 with either of the following. Military h and r block Your original 2013 tax return, whether or not you file it timely. Military h and r block An amended return for 2013 filed within the time prescribed by law. Military h and r block An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Military h and r block The amended return must also include any resulting adjustments to taxable income. Military h and r block You must keep records that show the specific identification of each piece of qualifying section 179 property. Military h and r block These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Military h and r block Election for certain qualified section 179 real property. Military h and r block   You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2013. Military h and r block If you elect to treat this property as section 179 property, you must elect the application of the special rules for qualified real property described in section 179(f) of the Internal Revenue Code. Military h and r block   To make the election, attach a statement indicating you are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following. Military h and r block Your original 2013 tax return, whether or not you file it timely. Military h and r block An amended return for 2013 filed within the time prescribed by law. Military h and r block The amended return must also include any adjustments to taxable income. Military h and r block   The statement should indicate your election to expense certain qualified real property under section 179(f) on your return. Military h and r block It must specify one or more of the three types of qualified property (described under Qualified real property ) to which the election applies, the cost of each such type, and the portion of the cost of each such property to be taken into account. Military h and r block Also, report this on line 6 of Form 4562. Military h and r block    The maximum section 179 expense deduction that can be taken for qualified section 179 real property is limited to $250,000. Military h and r block Revoking an election. Military h and r block   An election (or any specification made in the election) to take a section 179 deduction for 2013 can be revoked without IRS approval by filing an amended return. Military h and r block The amended return must be filed within the time prescribed by law. Military h and r block The amended return must also include any resulting adjustments to taxable income. Military h and r block Once made, the revocation is irrevocable. Military h and r block When Must You Recapture the Deduction? You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. Military h and r block In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. Military h and r block You also increase the basis of the property by the recapture amount. Military h and r block Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4 . Military h and r block If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Military h and r block Instead, use the rules for recapturing depreciation explained in chapter 3 of Publication 544 under Section 1245 Property. Military h and r block For qualified real property (described earlier), see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. Military h and r block If the property is listed property (described in chapter 5 ), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Military h and r block Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. Military h and r block Figuring the recapture amount. Military h and r block   To figure the amount to recapture, take the following steps. Military h and r block Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Military h and r block Begin with the year you placed the property in service and include the year of recapture. Military h and r block Subtract the depreciation figured in (1) from the section 179 deduction you claimed. Military h and r block The result is the amount you must recapture. Military h and r block Example. Military h and r block In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. Military h and r block The property is not listed property. Military h and r block The property is 3-year property. Military h and r block He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. Military h and r block He used the property only for business in 2011 and 2012. Military h and r block In 2013, he used the property 40% for business and 60% for personal use. Military h and r block He figures his recapture amount as follows. Military h and r block Section 179 deduction claimed (2011) $5,000. Military h and r block 00 Minus: Allowable depreciation using Table A-1 (instead of section 179 deduction):   2011 $1,666. Military h and r block 50   2012 2,222. Military h and r block 50   2013 ($740. Military h and r block 50 × 40% (business)) 296. Military h and r block 20 4,185. Military h and r block 20 2013 — Recapture amount $ 814. Military h and r block 80 Paul must include $814. Military h and r block 80 in income for 2013. Military h and r block If any qualified zone property placed in service during the year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. Military h and r block Prev  Up  Next   Home   More Online Publications