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Military Hr Block

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Military Hr Block

Military hr block 34. Military hr block   Child Tax Credit Table of Contents Introduction Useful Items - You may want to see: Qualifying Child Amount of CreditLimits on the Credit Claiming the Credit Additional Child Tax Credit Completing Schedule 8812 (Form 1040A or 1040)Part I Parts II–IV Introduction The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. Military hr block The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. Military hr block This chapter explains the following. Military hr block Who is a qualifying child. Military hr block The amount of the credit. Military hr block How to claim the credit. Military hr block The child tax credit and the additional child tax credit should not be confused with the child and dependent care credit discussed in chapter 32. Military hr block If you have no tax. Military hr block   Credits, such as the child tax credit or the credit for child and dependent care expenses, are used to reduce tax. Military hr block If your tax on Form 1040, line 46, or Form 1040A, line 28, is zero, do not figure the child tax credit because there is no tax to reduce. Military hr block However, you may qualify for the additional child tax credit on line 65 (Form 1040) or line 39 (Form 1040A). Military hr block Useful Items - You may want to see: Publication 972 Child Tax Credit Form (and Instructions) Schedule 8812 (Form 1040A or 1040) Child Tax Credit W-4 Employee's Withholding Allowance Certificate Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you , later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. Military hr block S. Military hr block citizen, a U. Military hr block S. Military hr block national, or a resident of the United States. Military hr block If the child was adopted, see Adopted child , later. Military hr block For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c. Military hr block Example 1. Military hr block Your son turned 17 on December 30, 2013. Military hr block He is a citizen of the United States and you claimed him as a dependent on your return. Military hr block He is not a qualifying child for the child tax credit because he was not under age 17 at the end of 2013. Military hr block Example 2. Military hr block Your daughter turned 8 years old in 2013. Military hr block She is not a citizen of the United States, has an ITIN, and lived in Mexico all of 2013. Military hr block She is not a qualifying child for the child tax credit because she was not a resident of the United States for 2013. Military hr block Filers who have certain child dependents with an Individual Taxpayer Identification Number (ITIN). Military hr block   If you are claiming a child tax credit or additional child tax credit for a child you identified on your tax return with an ITIN instead of an SSN, you must complete Part I of Schedule 8812 (Form 1040A or 1040). Military hr block   Although a child may be your dependent, you may only claim a child tax credit or additional child tax credit for a dependent who is a citizen, national, or resident of the United States. Military hr block To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. Military hr block For more information about the substantial presence test, see Publication 519, U. Military hr block S. Military hr block Tax Guide for Aliens. Military hr block Adopted child. Military hr block   An adopted child is always treated as your own child. Military hr block An adopted child includes a child lawfully placed with you for legal adoption. Military hr block   If you are a U. Military hr block S. Military hr block citizen or U. Military hr block S. Military hr block national and your adopted child lived with you all year as a member of your household in 2013, that child meets condition (7) above to be a qualifying child for the child tax credit. Military hr block Exceptions to time lived with you. Military hr block   A child is considered to have lived with you for more than half of 2013 if the child was born or died in 2013 and your home was this child's home for more than half the time he or she was alive. Military hr block Temporary absences by you or the child for special circumstances, such as for school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. Military hr block   There are also exceptions for kidnapped children and children of divorced or separated parents. Military hr block For details, see Residency Test in chapter 3. Military hr block Qualifying child of more than one person. Military hr block   A special rule applies if your qualifying child is the qualifying child of more than one person. Military hr block For details, see Special Rule for Qualifying Child of More Than One Person in chapter 3. Military hr block Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. Military hr block Limits on the Credit You must reduce your child tax credit if either (1) or (2) applies. Military hr block The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. Military hr block If this amount is zero, you cannot take this credit because there is no tax to reduce. Military hr block But you may be able to take the additional child tax credit. Military hr block See Additional Child Tax Credit , later. Military hr block Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. Military hr block Married filing jointly - $110,000. Military hr block Single, head of household, or qualifying widow(er) - $75,000. Military hr block Married filing separately - $55,000. Military hr block Modified AGI. Military hr block   For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you. Military hr block Any amount excluded from income because of the exclusion of income from  Puerto Rico. Military hr block On the dotted line next to Form 1040, line 38, enter the amount excluded and identify it as “EPRI. Military hr block ” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. Military hr block Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. Military hr block Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. Military hr block Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. Military hr block   If you do not have any of the above, your modified AGI is the same as your AGI. Military hr block AGI. Military hr block   Your AGI is the amount on Form 1040, line 38, or Form 1040A, line 22. Military hr block Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. Military hr block You cannot claim the child tax credit on Form 1040EZ. Military hr block You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child. Military hr block If you claim the child tax credit with a child identified by an ITIN, you must also file Schedule 8812. Military hr block To figure your credit, first review the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions. Military hr block If you are instructed to use Publication 972, you may not use the worksheet in your tax return instructions; instead, you must use Publication 972 to figure the credit. Military hr block If you are not instructed to use Publication 972, you may use the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions or Publication 972 to figure the credit. Military hr block Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. Military hr block The additional child tax credit may give you a refund even if you do not owe any tax. Military hr block How to claim the additional child tax credit. Military hr block   To claim the additional child tax credit, follow the steps below. Military hr block Make sure you figured the amount, if any, of your child tax credit. Military hr block See Claiming the Credit , earlier. Military hr block If you answered “Yes” on line 9 or line 10 of the Child Tax Credit Worksheet in the Form 1040 or Form 1040A instructions, or line 13 of the Child Tax Credit Worksheet in Publication 972, use Parts II through IV of Schedule 8812 to see if you can take the additional child tax credit. Military hr block If you have an additional child tax credit on line 13 of Schedule 8812, carry it to Form 1040, line 65, or Form 1040A, line 39. Military hr block Completing Schedule 8812 (Form 1040A or 1040) Schedule 8812 contains four parts, but can really be thought of as two sections. Military hr block Part I is distinct and separate from Parts II–IV. Military hr block If all your children are identified by social security numbers or IRS adoption taxpayer identification numbers and you are not claiming the additional child tax credit, you do not need to complete or attach Schedule 8812 to your tax return. Military hr block Part I You only need to complete Part I if you are claiming the child tax credit for a child identified by an IRS individual taxpayer identification number (ITIN). Military hr block When completing Part I, only answer the questions with regard to children identified by an ITIN; you do not need to complete Part I of Schedule 8812 for any child that is identified by a social security number (SSN) or an IRS adoption taxpayer identification number (ATIN). Military hr block If all the children for whom you checked the box in column 4 of line 6c on your Form 1040 or Form 1040A are identified by an SSN or an ATIN, you do not need to complete Part I of Schedule 8812. Military hr block Parts II–IV Parts II–IV help you figure your additional child tax credit. Military hr block Generally, you should only complete Parts II–IV if you are instructed to do so after completing the Child Tax Credit Worksheet in your tax return instructions or Publication 972. Military hr block See How to claim the additional child tax credit , earlier. Military hr block Prev  Up  Next   Home   More Online Publications
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The Military Hr Block

Military hr block Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. Military hr block For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. Military hr block If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. Military hr block Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. Military hr block A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. Military hr block Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. Military hr block Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). Military hr block It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. Military hr block A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. Military hr block Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Military hr block It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. Military hr block Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. Military hr block Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. Military hr block Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Military hr block Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Military hr block Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. Military hr block Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. Military hr block Listed property placed in service before 1987. Military hr block   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. Military hr block Listed property placed in service after 1986. Military hr block   For information on listed property placed in service after 1986, see Publication 946. Military hr block Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. Military hr block You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. Military hr block The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. Military hr block However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. Military hr block Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. Military hr block Example. Military hr block Sarah Bradley uses a home computer 50% of the time to manage her investments. Military hr block She also uses the computer 40% of the time in her part-time consumer research business. Military hr block Sarah's home computer is listed property because it is not used at a regular business establishment. Military hr block Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. Military hr block Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. Military hr block Her combined rate of business/investment use for determining her depreciation deduction is 90%. Military hr block Qualified Business Use A qualified business use is any use in your trade or business. Military hr block However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. Military hr block See Employees, later. Military hr block 5% owner. Military hr block   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. Military hr block   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Military hr block Related person. Military hr block   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. Military hr block Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. Military hr block See Publication 463. Military hr block Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. Military hr block Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. Military hr block Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. Military hr block Any payment to you for the use of the automobile is treated as a rent payment for 3). Military hr block Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. Military hr block Use for the employer's convenience. Military hr block   Whether the use of listed property is for the employer's convenience must be determined from all the facts. Military hr block The use is for the employer's convenience if it is for a substantial business reason of the employer. Military hr block The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. Military hr block Use required as a condition of employment. Military hr block   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. Military hr block The use of property must be required for the employee to perform duties properly. Military hr block The employer need not explicitly require the employee to use the property. Military hr block A mere statement by the employer that the use of the property is a condition of employment is not sufficient. Military hr block Example 1. Military hr block Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. Military hr block She owns and uses a motorcycle to deliver packages to downtown offices. Military hr block We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. Military hr block The company reimburses delivery persons for their costs. Military hr block Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Military hr block Example 2. Military hr block Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Military hr block He must travel to these sites on a regular basis. Military hr block Uplift does not furnish an automobile or explicitly require him to use his own automobile. Military hr block However, it reimburses him for any costs he incurs in traveling to the various sites. Military hr block The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Military hr block Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Military hr block You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. Military hr block For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. Military hr block For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. Military hr block Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. Military hr block First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. Military hr block Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. Military hr block It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Military hr block Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. Military hr block Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. Military hr block See Recapture of excess depreciation, next. Military hr block Recapture of excess depreciation. Military hr block   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. Military hr block Any excess depreciation must also be added to the adjusted basis of your property. Military hr block Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. Military hr block This means you figure your depreciation using the percentages fromTable 16 or 17. Military hr block For information on investment credit recapture, see the instructions for Form 4255. Military hr block Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. Military hr block In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. Military hr block To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. Military hr block See Car Used 50% or Less for Business in Publication 917. Military hr block Leased Property The limitations on cost recovery deductions apply to the rental of listed property. Military hr block The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). Military hr block SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. Military hr block Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Military hr block A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. Military hr block This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. Military hr block Occasional or incidental leasing activity is insufficient. Military hr block For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. Military hr block An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Military hr block Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. Military hr block Inclusion amount for property leased before 1987. Military hr block   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. Military hr block You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. Military hr block   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. Military hr block For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. Military hr block You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. Military hr block Special rules. Military hr block   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. Military hr block The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. Military hr block   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. Military hr block Maximum inclusion amount. Military hr block   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. Military hr block What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. Military hr block How long to keep records. Military hr block   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). Military hr block Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Military hr block It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. Military hr block However, your records should back up your receipts in an orderly manner. Military hr block Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. Military hr block Written documents of your expenditure or use are generally better evidence than oral statements alone. Military hr block A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. Military hr block A daily log is not required. Military hr block However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. Military hr block Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. Military hr block An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. Military hr block For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. Military hr block Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. Military hr block However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. Military hr block A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Military hr block For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Military hr block Business Use Supported An adequate record contains enough information on each element of every business or investment use. Military hr block The amount of detail required to support the use depends on the facts and circumstances. Military hr block For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Military hr block Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. Military hr block Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. Military hr block However, repeated uses can be combined as a single item. Military hr block Each expenditure is recorded as a separate item and not combined with other expenditures. Military hr block If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. Military hr block If these expenses are combined, you do not need to support the business purpose of each expense. Military hr block Instead, you can divide the expenses based on the total business use of the listed property. Military hr block Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. Military hr block For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. Military hr block Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. Military hr block Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Military hr block Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. Military hr block It must be kept elsewhere and made available as support to the district director on request. Military hr block Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. Military hr block If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. Military hr block If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Military hr block If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Military hr block Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. Military hr block Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Military hr block Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. Military hr block If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. Military hr block Employees. Military hr block   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. Military hr block Employees claiming the standard mileage rate may be able to use Form 2106–EZ. Military hr block Employer who provides vehicles to employees. Military hr block   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. Military hr block   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. Military hr block Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. Military hr block   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. Military hr block See the instructions for Form 4562. Military hr block Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. Military hr block In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. Military hr block In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. Military hr block For more information about deductions after the recovery period for automobiles, see Publication 917. Military hr block Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. Military hr block Table 1. Military hr block 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. Military hr block Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications