File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Taxslayer For Military

Free Tax Preparation ServicesAmend A Return2011 Turbo Tax SoftwareAdd 1098 T Information 1040x FormWww.irs.govform1040xFree Federal And State Tax PreparationHow Can I File My 2011 Taxes1040ez E-fileTax Return Form 1040ezHow To Refile Taxes For 2012Turbotax Premier Federal E File State 20122011 Federal Tax FormIrs GovEz FormTax Act 2012 Returning UserState Taxes Free E File1040ez FormFree 2012 Tax HelpWhere Can I File My State And Federal Taxes For FreeFile Federal Taxes Online FreeH And R Block Free FederalFree Turbo Tax 1040ezHow Can I File My State Taxes Online For FreeFile Taxes Online FreeState Tax OnlineFillable 1040xFed 1040ez2011 Taxes FormsFile 1040x Online2008 Turbotax DownloadFree State Income Tax Filing OnlineTax 2011Federal 1040ez FormHow To Fill Out An Amended Tax Return Form1040ez Instructions 2013Filing ExtensionHow Do I Amend My 2012 Taxes2012 Income Tax FormsHighest State TaxesIrs File Extension

Taxslayer For Military

Taxslayer for military 2. Taxslayer for military   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Taxslayer for military Divorce and remarriage. Taxslayer for military Annulled marriages. Taxslayer for military Head of household or qualifying widow(er) with dependent child. Taxslayer for military Considered married. Taxslayer for military Same-sex marriage. Taxslayer for military Spouse died during the year. Taxslayer for military Married persons living apart. Taxslayer for military Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. Taxslayer for military  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Taxslayer for military See Same-sex marriage under Marital Status, later. Taxslayer for military Introduction This chapter helps you determine which filing status to use. Taxslayer for military There are five filing statuses. Taxslayer for military Single. Taxslayer for military Married Filing Jointly. Taxslayer for military Married Filing Separately. Taxslayer for military Head of Household. Taxslayer for military Qualifying Widow(er) With Dependent Child. Taxslayer for military If more than one filing status applies to you, choose the one that will give you the lowest tax. Taxslayer for military You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). Taxslayer for military You also use your filing status to determine whether you are eligible to claim certain deductions and credits. Taxslayer for military Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. Taxslayer for military S. Taxslayer for military Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. Taxslayer for military Unmarried persons. Taxslayer for military   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Taxslayer for military State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Taxslayer for military Divorced persons. Taxslayer for military   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Taxslayer for military Divorce and remarriage. Taxslayer for military   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Taxslayer for military Annulled marriages. Taxslayer for military    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Taxslayer for military You must file Form 1040X, Amended U. Taxslayer for military S. Taxslayer for military Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. Taxslayer for military Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Taxslayer for military If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). Taxslayer for military However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Taxslayer for military Head of household or qualifying widow(er) with dependent child. Taxslayer for military   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Taxslayer for military See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Taxslayer for military Married persons. Taxslayer for military   If you are considered married, you and your spouse can file a joint return or separate returns. Taxslayer for military Considered married. Taxslayer for military   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Taxslayer for military You are married and living together as a married couple. Taxslayer for military You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Taxslayer for military You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. Taxslayer for military You are separated under an interlocutory (not final) decree of divorce. Taxslayer for military Same-sex marriage. Taxslayer for military   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Taxslayer for military The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Taxslayer for military However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Taxslayer for military For more details, see Publication 501. Taxslayer for military Spouse died during the year. Taxslayer for military   If your spouse died during the year, you are considered married for the whole year for filing status purposes. Taxslayer for military   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Taxslayer for military For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Taxslayer for military   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Taxslayer for military Your deceased spouse's filing status is married filing separately for that year. Taxslayer for military Married persons living apart. Taxslayer for military   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Taxslayer for military If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. Taxslayer for military Also, your tax may be lower, and you may be able to claim the earned income credit. Taxslayer for military See Head of Household , later. Taxslayer for military Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Taxslayer for military To determine your marital status, see Marital Status , earlier. Taxslayer for military Widow(er). Taxslayer for military   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Taxslayer for military You may, however, be able to use another filing status that will give you a lower tax. Taxslayer for military See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Taxslayer for military How to file. Taxslayer for military   You can file Form 1040. Taxslayer for military If you have taxable income of less than $100,000, you may be able to file Form 1040A. Taxslayer for military If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Taxslayer for military If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Taxslayer for military Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. Taxslayer for military Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Taxslayer for military On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Taxslayer for military You can file a joint return even if one of you had no income or deductions. Taxslayer for military If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Taxslayer for military Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Taxslayer for military If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Taxslayer for military You can choose the method that gives the two of you the lower combined tax. Taxslayer for military How to file. Taxslayer for military   If you file as married filing jointly, you can use Form 1040. Taxslayer for military If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Taxslayer for military If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Taxslayer for military If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Taxslayer for military Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Taxslayer for military Spouse died. Taxslayer for military   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Taxslayer for military See Spouse died during the year under Marital Status, earlier, for more information. Taxslayer for military   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Taxslayer for military Divorced persons. Taxslayer for military   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Taxslayer for military Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Taxslayer for military Accounting period. Taxslayer for military   Both of you must use the same accounting period, but you can use different accounting methods. Taxslayer for military See Accounting Periods and Accounting Methods in chapter 1. Taxslayer for military Joint responsibility. Taxslayer for military   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Taxslayer for military This means that if one spouse does not pay the tax due, the other may have to. Taxslayer for military Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Taxslayer for military One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Taxslayer for military You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Taxslayer for military Divorced taxpayer. Taxslayer for military   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Taxslayer for military This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Taxslayer for military Relief from joint responsibility. Taxslayer for military   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Taxslayer for military You can ask for relief no matter how small the liability. Taxslayer for military   There are three types of relief available. Taxslayer for military Innocent spouse relief. Taxslayer for military Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). Taxslayer for military Equitable relief. Taxslayer for military    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Taxslayer for military Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Taxslayer for military Signing a joint return. Taxslayer for military   For a return to be considered a joint return, both spouses generally must sign the return. Taxslayer for military Spouse died before signing. Taxslayer for military   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Taxslayer for military If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Taxslayer for military Spouse away from home. Taxslayer for military   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. Taxslayer for military Injury or disease prevents signing. Taxslayer for military   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Taxslayer for military ” Be sure to also sign in the space provided for your signature. Taxslayer for military Attach a dated statement, signed by you, to the return. Taxslayer for military The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Taxslayer for military Signing as guardian of spouse. Taxslayer for military   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Taxslayer for military Spouse in combat zone. Taxslayer for military   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Taxslayer for military Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Taxslayer for military For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Taxslayer for military Other reasons spouse cannot sign. Taxslayer for military    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Taxslayer for military Attach the power of attorney (or a copy of it) to your tax return. Taxslayer for military You can use Form 2848, Power of Attorney and Declaration of Representative. Taxslayer for military Nonresident alien or dual-status alien. Taxslayer for military   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Taxslayer for military However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Taxslayer for military S. Taxslayer for military citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Taxslayer for military If you do file a joint return, you and your spouse are both treated as U. Taxslayer for military S. Taxslayer for military residents for the entire tax year. Taxslayer for military See chapter 1 of Publication 519. Taxslayer for military Married Filing Separately You can choose married filing separately as your filing status if you are married. Taxslayer for military This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Taxslayer for military If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Taxslayer for military You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Taxslayer for military This can apply to you even if you are not divorced or legally separated. Taxslayer for military If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Taxslayer for military The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Taxslayer for military See Head of Household , later, for more information. Taxslayer for military You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Taxslayer for military However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Taxslayer for military This way you can make sure you are using the filing status that results in the lowest combined tax. Taxslayer for military When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Taxslayer for military How to file. Taxslayer for military   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Taxslayer for military You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Taxslayer for military You can file Form 1040. Taxslayer for military If your taxable income is less than $100,000, you may be able to file Form 1040A. Taxslayer for military Select this filing status by checking the box on line 3 of either form. Taxslayer for military Enter your spouse's full name and SSN or ITIN in the spaces provided. Taxslayer for military If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Taxslayer for military Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Taxslayer for military Special Rules If you choose married filing separately as your filing status, the following special rules apply. Taxslayer for military Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Taxslayer for military   Your tax rate generally is higher than on a joint return. Taxslayer for military Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Taxslayer for military You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). Taxslayer for military If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Taxslayer for military For more information about these expenses, the credit, and the exclusion, see chapter 32. Taxslayer for military You cannot take the earned income credit. Taxslayer for military You cannot take the exclusion or credit for adoption expenses in most cases. Taxslayer for military You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Taxslayer for military You cannot exclude any interest income from qualified U. Taxslayer for military S. Taxslayer for military savings bonds you used for higher education expenses. Taxslayer for military If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Taxslayer for military The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Taxslayer for military Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Taxslayer for military If your spouse itemizes deductions, you cannot claim the standard deduction. Taxslayer for military If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Taxslayer for military Adjusted gross income (AGI) limits. Taxslayer for military   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Taxslayer for military Individual retirement arrangements (IRAs). Taxslayer for military   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Taxslayer for military Your deduction is reduced or eliminated if your income is more than a certain amount. Taxslayer for military This amount is much lower for married individuals who file separately and lived together at any time during the year. Taxslayer for military For more information, see How Much Can You Deduct in chapter 17. Taxslayer for military Rental activity losses. Taxslayer for military   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. Taxslayer for military This is called a special allowance. Taxslayer for military However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Taxslayer for military Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Taxslayer for military See Limits on Rental Losses in chapter 9. Taxslayer for military Community property states. Taxslayer for military   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Taxslayer for military See Publication 555. Taxslayer for military Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Taxslayer for military You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Taxslayer for military This does not include any extensions. Taxslayer for military A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Taxslayer for military Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Taxslayer for military Exception. Taxslayer for military   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Taxslayer for military The personal representative has 1 year from the due date of the return (including extensions) to make the change. Taxslayer for military See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. Taxslayer for military Head of Household You may be able to file as head of household if you meet all the following requirements. Taxslayer for military You are unmarried or “considered unmarried” on the last day of the year. Taxslayer for military See Marital Status , earlier, and Considered Unmarried , later. Taxslayer for military You paid more than half the cost of keeping up a home for the year. Taxslayer for military A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Taxslayer for military However, if the qualifying person is your dependent parent, he or she does not have to live with you. Taxslayer for military See Special rule for parent , later, under Qualifying Person. Taxslayer for military If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Taxslayer for military You will also receive a higher standard deduction than if you file as single or married filing separately. Taxslayer for military Kidnapped child. Taxslayer for military   A child may qualify you to file as head of household even if the child has been kidnapped. Taxslayer for military For more information, see Publication 501. Taxslayer for military How to file. Taxslayer for military   If you file as head of household, you can use Form 1040. Taxslayer for military If your taxable income is less than $100,000, you may be able to file Form 1040A. Taxslayer for military Indicate your choice of this filing status by checking the box on line 4 of either form. Taxslayer for military Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Taxslayer for military Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Taxslayer for military You are considered unmarried on the last day of the tax year if you meet all the following tests. Taxslayer for military You file a separate return (defined earlier under Joint Return After Separate Returns ). Taxslayer for military You paid more than half the cost of keeping up your home for the tax year. Taxslayer for military Your spouse did not live in your home during the last 6 months of the tax year. Taxslayer for military Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Taxslayer for military See Temporary absences , under Qualifying Person, later. Taxslayer for military Your home was the main home of your child, stepchild, or foster child for more than half the year. Taxslayer for military (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. Taxslayer for military ) You must be able to claim an exemption for the child. Taxslayer for military However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. Taxslayer for military The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. Taxslayer for military If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Taxslayer for military See Publication 555 for more information. Taxslayer for military Nonresident alien spouse. Taxslayer for military   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Taxslayer for military However, your spouse is not a qualifying person for head of household purposes. Taxslayer for military You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Taxslayer for military Choice to treat spouse as resident. Taxslayer for military   You are considered married if you choose to treat your spouse as a resident alien. Taxslayer for military See Publication 519. Taxslayer for military Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Taxslayer for military You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. Taxslayer for military Worksheet 2-1. Taxslayer for military Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Taxslayer for military Costs you include. Taxslayer for military   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Taxslayer for military   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Taxslayer for military However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Taxslayer for military Costs you do not include. Taxslayer for military   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Taxslayer for military Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Taxslayer for military Qualifying Person See Table 2-1 to see who is a qualifying person. Taxslayer for military Any person not described in Table 2-1 is not a qualifying person. Taxslayer for military Table 2-1. Taxslayer for military Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Taxslayer for military See the text of this chapter for the other requirements you must meet to claim head of household filing status. Taxslayer for military IF the person is your . Taxslayer for military . Taxslayer for military . Taxslayer for military   AND . Taxslayer for military . Taxslayer for military . Taxslayer for military   THEN that person is . Taxslayer for military . Taxslayer for military . Taxslayer for military qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Taxslayer for military   he or she is married and you can claim an exemption for him or her   a qualifying person. Taxslayer for military   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Taxslayer for military 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Taxslayer for military 6   you cannot claim an exemption for him or her   not a qualifying person. Taxslayer for military qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. Taxslayer for military   he or she did not live with you more than half the year   not a qualifying person. Taxslayer for military   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Taxslayer for military   you cannot claim an exemption for him or her   not a qualifying person. Taxslayer for military 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Taxslayer for military 2The term “qualifying child” is defined in chapter 3. Taxslayer for military Note. Taxslayer for military If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. Taxslayer for military If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Taxslayer for military 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Taxslayer for military 4The term “ qualifying relative ” is defined in chapter 3. Taxslayer for military 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Taxslayer for military See Multiple Support Agreement in chapter 3. Taxslayer for military 6See Special rule for parent . Taxslayer for military Example 1—child. Taxslayer for military Your unmarried son lived with you all year and was 18 years old at the end of the year. Taxslayer for military He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Taxslayer for military As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. Taxslayer for military Example 2—child who is not qualifying person. Taxslayer for military The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Taxslayer for military Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. Taxslayer for military Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. Taxslayer for military As a result, he is not your qualifying person for head of household purposes. Taxslayer for military Example 3—girlfriend. Taxslayer for military Your girlfriend lived with you all year. Taxslayer for military Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. Taxslayer for military See Table 2-1. Taxslayer for military Example 4—girlfriend's child. Taxslayer for military The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Taxslayer for military He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). Taxslayer for military As a result, he is not your qualifying person for head of household purposes. Taxslayer for military Home of qualifying person. Taxslayer for military   Generally, the qualifying person must live with you for more than half of the year. Taxslayer for military Special rule for parent. Taxslayer for military   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Taxslayer for military However, you must be able to claim an exemption for your father or mother. Taxslayer for military Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Taxslayer for military   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Taxslayer for military Death or birth. Taxslayer for military   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. Taxslayer for military If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Taxslayer for military If the individual is anyone else, see Publication 501. Taxslayer for military Temporary absences. Taxslayer for military   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Taxslayer for military It must be reasonable to assume the absent person will return to the home after the temporary absence. Taxslayer for military You must continue to keep up the home during the absence. Taxslayer for military Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Taxslayer for military The year of death is the last year for which you can file jointly with your deceased spouse. Taxslayer for military See Married Filing Jointly , earlier. Taxslayer for military You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Taxslayer for military For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. Taxslayer for military This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Taxslayer for military It does not entitle you to file a joint return. Taxslayer for military How to file. Taxslayer for military   If you file as qualifying widow(er) with dependent child, you can use Form 1040. Taxslayer for military If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Taxslayer for military Check the box on line 5 of either form. Taxslayer for military Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Taxslayer for military Eligibility rules. Taxslayer for military   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. Taxslayer for military You were entitled to file a joint return with your spouse for the year your spouse died. Taxslayer for military It does not matter whether you actually filed a joint return. Taxslayer for military Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Taxslayer for military You have a child or stepchild for whom you can claim an exemption. Taxslayer for military This does not include a foster child. Taxslayer for military This child lived in your home all year, except for temporary absences. Taxslayer for military See Temporary absences , earlier, under Head of Household. Taxslayer for military There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Taxslayer for military You paid more than half the cost of keeping up a home for the year. Taxslayer for military See Keeping Up a Home , earlier, under Head of Household. Taxslayer for military Example. Taxslayer for military John's wife died in 2011. Taxslayer for military John has not remarried. Taxslayer for military During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Taxslayer for military For 2011 he was entitled to file a joint return for himself and his deceased wife. Taxslayer for military For 2012 and 2013, he can file as qualifying widower with a dependent child. Taxslayer for military After 2013 he can file as head of household if he qualifies. Taxslayer for military Death or birth. Taxslayer for military    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Taxslayer for military You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Taxslayer for military Kidnapped child. Taxslayer for military   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. Taxslayer for military See Publication 501. Taxslayer for military    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Taxslayer for military Prev  Up  Next   Home   More Online Publications
Español

America's Most Wanted Criminals

Find out where sex offenders are located, review information on missing persons, and look at the most wanted criminals by organization.

National Sex Offender Search

Missing Children

  • Missing Children
    USA.gov's Missing Children page links to Amber Alerts, information about Code Adam, the National Center for Missing and Exploited Children, and more.

Most Wanted by Organization

The Taxslayer For Military

Taxslayer for military 7. Taxslayer for military   Depreciation, Depletion, and Amortization Table of Contents What's New for 2013 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Overview of DepreciationWhat Property Can Be Depreciated? What Property Cannot Be Depreciated? When Does Depreciation Begin and End? Can You Use MACRS To Depreciate Your Property? What Is the Basis of Your Depreciable Property? How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions? Section 179 Expense DeductionWhat Property Qualifies? What Property Does Not Qualify? How Much Can You Deduct? How Do You Elect the Deduction? When Must You Recapture the Deduction? Claiming the Special Depreciation AllowanceWhat is Qualified Property? How Can You Elect Not To Claim the Allowance? When Must You Recapture an Allowance Figuring Depreciation Under MACRSWhich Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS? What Is the Placed-in-Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies? Which Convention Applies? Which Depreciation Method Applies? How Is the Depreciation Deduction Figured? How Do You Use General Asset Accounts? When Do You Recapture MACRS Depreciation? Additional Rules for Listed PropertyWhat Is Listed Property? What Is the Business-Use Requirement? Do the Passenger Automobile Limits Apply? Depletion Who Can Claim Depletion? Figuring Depletion AmortizationBusiness Start-Up Costs Reforestation Costs Section 197 Intangibles What's New for 2013 Increased section 179 expense deduction dollar limits. Taxslayer for military  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. Taxslayer for military This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Taxslayer for military See Dollar Limits under Section 179 Expense Deduction , later. Taxslayer for military Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. Taxslayer for military . Taxslayer for military  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Taxslayer for military See Claiming the Special Depreciation Allowance , later. Taxslayer for military Expiration of the 3- year recovery period for certain race horses. Taxslayer for military  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. Taxslayer for military Introduction If you buy or make improvements to farm property such as machinery, equipment, livestock, or a structure with a useful life of more than a year, you generally cannot deduct its entire cost in one year. Taxslayer for military Instead, you must spread the cost over the time you use the property and deduct part of it each year. Taxslayer for military For most types of property, this is called depreciation. Taxslayer for military This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. Taxslayer for military For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. Taxslayer for military Topics - This chapter discusses: Overview of depreciation Section 179 expense deduction Special depreciation allowance Modified Accelerated Cost Recovery System (MACRS) Listed property Basic information on cost depletion (including timber depletion) and percentage depletion Amortization of the costs of going into business, reforestation costs, the costs of pollution control facilities, and the costs of section 197 intangibles Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) T (Timber), Forest Activities Schedule 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Taxslayer for military It is important to keep good records for property you depreciate. Taxslayer for military Do not file these records with your return. Taxslayer for military Instead, you should keep them as part of the permanent records of the depreciated property. Taxslayer for military They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. Taxslayer for military For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. Taxslayer for military For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. Taxslayer for military Overview of Depreciation This overview discusses basic information on the following. Taxslayer for military What property can be depreciated. Taxslayer for military What property cannot be depreciated. Taxslayer for military When depreciation begins and ends. Taxslayer for military Whether MACRS can be used to figure depreciation. Taxslayer for military What is the basis of your depreciable property. Taxslayer for military How to treat repairs and improvements. Taxslayer for military When you must file Form 4562. Taxslayer for military How you can correct depreciation claimed incorrectly. Taxslayer for military What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, equipment, vehicles, certain livestock, and furniture. Taxslayer for military You can also depreciate certain intangible property, such as copyrights, patents, and computer software. Taxslayer for military To be depreciable, the property must meet all the following requirements. Taxslayer for military It must be property you own. Taxslayer for military It must be used in your business or income-producing activity. Taxslayer for military It must have a determinable useful life. Taxslayer for military It must have a useful life that extends substantially beyond the year you place it in service. Taxslayer for military Property You Own To claim depreciation, you usually must be the owner of the property. Taxslayer for military You are considered as owning property even if it is subject to a debt. Taxslayer for military Leased property. Taxslayer for military   You can depreciate leased property only if you retain the incidents of ownership in the property. Taxslayer for military This means you bear the burden of exhaustion of the capital investment in the property. Taxslayer for military Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. Taxslayer for military You can, however, depreciate any capital improvements you make to the leased property. Taxslayer for military See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. Taxslayer for military   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. Taxslayer for military However, you cannot depreciate the cost of the property if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased. Taxslayer for military Life tenant. Taxslayer for military   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. Taxslayer for military See Certain term interests in property , later, for an exception. Taxslayer for military Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. Taxslayer for military If you use property to produce income (investment use), the income must be taxable. Taxslayer for military You cannot depreciate property that you use solely for personal activities. Taxslayer for military However, if you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the percentage of business or investment use. Taxslayer for military Example 1. Taxslayer for military   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. Taxslayer for military If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. Taxslayer for military Example 2. Taxslayer for military   If you use part of your home for business, you may be able to deduct depreciation on that part based on its business use. Taxslayer for military For more information, see Business Use of Your Home in chapter 4. Taxslayer for military Inventory. Taxslayer for military   You can never depreciate inventory because it is not held for use in your business. Taxslayer for military Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. Taxslayer for military Livestock. Taxslayer for military   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. Taxslayer for military Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis. Taxslayer for military However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. Taxslayer for military Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. Taxslayer for military This means it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Taxslayer for military Irrigation systems and water wells. Taxslayer for military   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. Taxslayer for military You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. Taxslayer for military In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. Taxslayer for military However, land preparation costs for center pivot irrigation systems are not depreciable. Taxslayer for military Dams, ponds, and terraces. Taxslayer for military   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. Taxslayer for military What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. Taxslayer for military This includes the following. Taxslayer for military Land. Taxslayer for military You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. Taxslayer for military The cost of land generally includes the cost of clearing, grading, planting, and landscaping. Taxslayer for military Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. Taxslayer for military See chapter 1 of Publication 946. Taxslayer for military Property placed in service and disposed of in the same year. Taxslayer for military Determining when property is placed in service is explained later. Taxslayer for military Equipment used to build capital improvements. Taxslayer for military You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Taxslayer for military Intangible property such as section 197 intangibles. Taxslayer for military This property does not have a determinable useful life and generally cannot be depreciated. Taxslayer for military However, see Amortization , later. Taxslayer for military Special rules apply to computer software (discussed below). Taxslayer for military Certain term interests (discussed below). Taxslayer for military Computer software. Taxslayer for military   Computer software is generally not a section 197 intangible even if acquired in connection with the acquisition of a business, if it meets all of the following tests. Taxslayer for military It is readily available for purchase by the general public. Taxslayer for military It is subject to a nonexclusive license. Taxslayer for military It has not been substantially modified. Taxslayer for military   If the software meets the tests above, it can be depreciated and may qualify for the section 179 expense deduction and the special depreciation allowance (if applicable), discussed later. Taxslayer for military Certain term interests in property. Taxslayer for military   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. Taxslayer for military This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. Taxslayer for military For more information, see chapter 1 of Publication 946. Taxslayer for military When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. Taxslayer for military You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. Taxslayer for military Placed in Service Property is placed in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Taxslayer for military Even if you are not using the property, it is in service when it is ready and available for its specific use. Taxslayer for military Example. Taxslayer for military You bought a planter for use in your farm business. Taxslayer for military The planter was delivered in December 2012 after harvest was over. Taxslayer for military You begin to depreciate the planter for 2012 because it was ready and available for its specific use in 2012, even though it will not be used until the spring of 2013. Taxslayer for military If your planter comes unassembled in December 2012 and is put together in February 2013, it is not placed in service until 2013. Taxslayer for military You begin to depreciate it in 2013. Taxslayer for military If your planter was delivered and assembled in February 2013 but not used until April 2013, it is placed in service in February 2013, because this is when the planter was ready for its specified use. Taxslayer for military You begin to depreciate it in 2013. Taxslayer for military Fruit or nut trees and vines. Taxslayer for military   If you acquire an orchard, grove, or vineyard before the trees or vines have reached the income-producing stage, and they have a preproductive period of more than 2 years, you must capitalize the preproductive-period costs under the uniform capitalization rules (unless you elect not to use these rules). Taxslayer for military See chapter 6 for information about the uniform capitalization rules. Taxslayer for military Your depreciation begins when the trees and vines reach the income-producing stage (that is, when they bear fruit, nuts, or grapes in quantities sufficient to commercially warrant harvesting). Taxslayer for military Immature livestock. Taxslayer for military   Depreciation for livestock begins when the livestock reaches the age of maturity. Taxslayer for military If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. Taxslayer for military If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. Taxslayer for military If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. Taxslayer for military Your basis for depreciation is your initial cost for the immature livestock. Taxslayer for military Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle. Taxslayer for military For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. Taxslayer for military Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. Taxslayer for military This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. Taxslayer for military Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Taxslayer for military You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Taxslayer for military You sell or exchange the property. Taxslayer for military You convert the property to personal use. Taxslayer for military You abandon the property. Taxslayer for military You transfer the property to a supplies or scrap account. Taxslayer for military The property is destroyed. Taxslayer for military For information on abandonment of property, see chapter 8. Taxslayer for military For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. Taxslayer for military Can You Use MACRS To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most business and investment property placed in service after 1986. Taxslayer for military MACRS is explained later under Figuring Depreciation Under MACRS . Taxslayer for military You cannot use MACRS to depreciate the following property. Taxslayer for military Property you placed in service before 1987. Taxslayer for military Use the methods discussed in Publication 534. Taxslayer for military Certain property owned or used in 1986. Taxslayer for military See chapter 1 of Publication 946. Taxslayer for military Intangible property. Taxslayer for military Films, video tapes, and recordings. Taxslayer for military Certain corporate or partnership property acquired in a nontaxable transfer. Taxslayer for military Property you elected to exclude from MACRS. Taxslayer for military For more information, see chapter 1 of Publication 946. Taxslayer for military What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. Taxslayer for military To determine basis, you need to know the cost or other basis of your property. Taxslayer for military Cost or other basis. Taxslayer for military   The basis of property you buy is usually its cost plus amounts you paid for items such as sales tax, freight charges, and installation and testing fees. Taxslayer for military The cost includes the amount you pay in cash, debt obligations, other property, or services. Taxslayer for military   There are times when you cannot use cost as basis. Taxslayer for military In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. Taxslayer for military Adjusted basis. Taxslayer for military   To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. Taxslayer for military Basis adjustment for depreciation allowed or allowable. Taxslayer for military   After you place your property in service, you must reduce the basis of the property by the depreciation allowed or allowable, whichever is greater. Taxslayer for military Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). Taxslayer for military Depreciation allowable is depreciation you are entitled to deduct. Taxslayer for military   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. Taxslayer for military   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). Taxslayer for military   For more information, see chapter 6. Taxslayer for military How Do You Treat Repairs and Improvements? You generally deduct the cost of repairing business property in the same way as any other business expense. Taxslayer for military However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. Taxslayer for military Treat improvements as separate depreciable property. Taxslayer for military See chapter 1 of Publication 946 for more information. Taxslayer for military Example. Taxslayer for military You repair a small section on a corner of the roof of a barn that you rent to others. Taxslayer for military You deduct the cost of the repair as a business expense. Taxslayer for military However, if you replace the entire roof, the new roof is considered to be an improvement because it increases the value and lengthens the life for the property. Taxslayer for military You depreciate the cost of the new roof. Taxslayer for military Improvements to rented property. Taxslayer for military   You can depreciate permanent improvements you make to business property you rent from someone else. Taxslayer for military Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. Taxslayer for military You must complete and attach Form 4562 to your tax return if you are claiming any of the following. Taxslayer for military A section 179 expense deduction for the current year or a section 179 carryover from a prior year. Taxslayer for military Depreciation for property placed in service during the current year. Taxslayer for military Depreciation on any vehicle or other listed property, regardless of when it was placed in service. Taxslayer for military Amortization of costs that began in the current year. Taxslayer for military For more information, see the Instructions for Form 4562. Taxslayer for military How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. Taxslayer for military You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Taxslayer for military You claimed the incorrect amount because of a mathematical error made in any year. Taxslayer for military You claimed the incorrect amount because of a posting error made in any year, for example, omitting an asset from the depreciation schedule. Taxslayer for military You have not adopted a method of accounting for the property placed in service by you in tax years ending after December 29, 2003. Taxslayer for military You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Taxslayer for military Note. Taxslayer for military You have adopted a method of accounting if you used the same incorrect method of depreciation for two or more consecutively filed returns. Taxslayer for military If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. Taxslayer for military See the Instructions for Form 3115. Taxslayer for military Section 179 Expense Deduction 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. Taxslayer for military This is the section 179 expense deduction. Taxslayer for military You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. Taxslayer for military This part of the chapter explains the rules for the section 179 expense deduction. Taxslayer for military It explains what property qualifies for the deduction, what property does not qualify for the deduction, the limits that may apply, how to elect the deduction, and when you may have to recapture the deduction. Taxslayer for military For more information, see chapter 2 of Publication 946. Taxslayer for military What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. Taxslayer for military It must be eligible property. Taxslayer for military It must be acquired for business use. Taxslayer for military It must have been acquired by purchase. Taxslayer for military Eligible Property To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property. Taxslayer for military Tangible personal property. Taxslayer for military Qualified real property. Taxslayer for military (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. Taxslayer for military For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. Taxslayer for military ) 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. Taxslayer for military Single purpose agricultural (livestock) or horticultural structures. Taxslayer for military Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. Taxslayer for military Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive lease, and has not been substantially modified. Taxslayer for military Tangible personal property. Taxslayer for military   Tangible personal property is any tangible property that is not real property. Taxslayer for military It includes the following property. Taxslayer for military Machinery and equipment. Taxslayer for military Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment. Taxslayer for military Gasoline storage tanks and pumps at retail service stations. Taxslayer for military Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. Taxslayer for military Facility used for the bulk storage of fungible commodities. Taxslayer for military   A facility used for the bulk storage of fungible commodities is qualifying property for purposes of the section 179 expense deduction if it is used in connection with any of the activities listed earlier in item (3)(a). Taxslayer for military Bulk storage means the storage of a commodity in a large mass before it is used. Taxslayer for military Grain bins. Taxslayer for military   A grain bin is an example of a storage facility that is qualifying section 179 property. Taxslayer for military It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. Taxslayer for military Single purpose agricultural or horticultural structures. Taxslayer for military   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. Taxslayer for military Agricultural structure. Taxslayer for military   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. Taxslayer for military To house, raise, and feed a particular type of livestock and its produce. Taxslayer for military To house the equipment, including any replacements, needed to house, raise, or feed the livestock. Taxslayer for military For this purpose, livestock includes poultry. Taxslayer for military   Single purpose structures are qualifying property if used, for example, to breed chickens or hogs, produce milk from dairy cattle, or produce feeder cattle or pigs, broiler chickens, or eggs. Taxslayer for military The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock. Taxslayer for military Horticultural structure. Taxslayer for military   A single purpose horticultural structure is either of the following. Taxslayer for military A greenhouse specifically designed, constructed, and used for the commercial production of plants. Taxslayer for military A structure specifically designed, constructed, and used for the commercial production of mushrooms. Taxslayer for military Use of structure. Taxslayer for military   A structure must be used only for the purpose that qualified it. Taxslayer for military For example, a hog barn will not be qualifying property if you use it to house poultry. Taxslayer for military Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. Taxslayer for military   If a structure includes work space, the work space can be used only for the following activities. Taxslayer for military Stocking, caring for, or collecting livestock or plants or their produce. Taxslayer for military Maintaining the enclosure or structure. Taxslayer for military Maintaining or replacing the equipment or stock enclosed or housed in the structure. Taxslayer for military Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. Taxslayer for military For example, property acquired by gift or inheritance does not qualify. Taxslayer for military Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. Taxslayer for military Example. Taxslayer for military Ken is a farmer. Taxslayer for military He purchased two tractors, one from his brother and one from his father. Taxslayer for military He placed both tractors in service in the same year he bought them. Taxslayer for military The tractor purchased from his father does not qualify for the section 179 expense deduction because he is a related person (as defined above). Taxslayer for military The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). Taxslayer for military What Property Does Not Qualify? Land and improvements. Taxslayer for military   Land and land improvements, do not qualify as section 179 property. Taxslayer for military Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. Taxslayer for military However, agricultural fences do qualify as section 179 property. Taxslayer for military Similarly, field drainage tile also qualifies as section 179 property. Taxslayer for military Excepted property. Taxslayer for military   Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property. Taxslayer for military Certain property you lease to others (if you are a noncorporate lessor). Taxslayer for military Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. Taxslayer for military Property used by a tax-exempt organization (other than a tax-exempt farmers' cooperative) unless the property is used mainly in a taxable unrelated trade or business. Taxslayer for military Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months). Taxslayer for military How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. Taxslayer for military However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Taxslayer for military These limits apply to each taxpayer, not to each business. Taxslayer for military However, see Married individuals under Dollar Limits , later. Taxslayer for military See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. Taxslayer for military If you deduct only part of the cost of qualifying property as a section 179 expense deduction, you can generally depreciate the cost you do not deduct. Taxslayer for military Use Part I of Form 4562 to figure your section 179 expense deduction. Taxslayer for military Partial business use. Taxslayer for military   When you use property for business and nonbusiness purposes, you can elect the section 179 expense deduction only if you use it more than 50% for business in the year you place it in service. Taxslayer for military If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Taxslayer for military Use the resulting business cost to figure your section 179 expense deduction. Taxslayer for military Trade-in of other property. Taxslayer for military   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 expense deduction includes only the cash you paid. Taxslayer for military For example, if you buy (for cash and a trade-in) a new tractor for use in your business, your cost for the section 179 expense deduction is the cash you paid. Taxslayer for military It does not include the adjusted basis of the old tractor you trade for the new tractor. Taxslayer for military Example. Taxslayer for military J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. Taxslayer for military They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. Taxslayer for military J-Bar also traded a used pickup truck with an adjusted basis of $8,000 for a new pickup truck costing $35,000. Taxslayer for military They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. Taxslayer for military Only the cash paid by J-Bar qualifies for the section 179 expense deduction. Taxslayer for military J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). Taxslayer for military Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 is $500,000. Taxslayer for military If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 expense deduction among the items in any way, as long as the total deduction is not more than $500,000. Taxslayer for military Qualified real property that you elect to treat as section 179 property is limited to $250,000 of the maximum section 179 deduction of $500,000 for 2013. Taxslayer for military You do not have to claim the full $500,000. Taxslayer for military For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. Taxslayer for military Reduced dollar limit for cost exceeding $2 million. Taxslayer for military   If the cost of your qualifying section 179 property placed in service in 2013 is over $2 million, you must reduce the dollar limit (but not below zero) by the amount of cost over $2 million. Taxslayer for military 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 expense deduction and you cannot carry over the cost that is more than $2,500,000. Taxslayer for military Example. Taxslayer for military This year, James Smith placed in service machinery costing $2,050,000. Taxslayer for military Because this cost is $50,000 more than $2 million, he must reduce his dollar limit to $450,000 ($500,000 − $50,000). Taxslayer for military Limits for sport utility vehicles. Taxslayer for military   The total amount you can elect to deduct for certain sport utility vehicles and certain other vehicles placed in service in 2013 is $25,000. Taxslayer for military This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, and highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. Taxslayer for military   For more information, see chapter 2 of Publication 946. Taxslayer for military Limits for passenger automobiles. Taxslayer for military   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. Taxslayer for military See Do the Passenger Automobile Limits Apply , later. Taxslayer for military Married individuals. Taxslayer for military   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. Taxslayer for military 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. Taxslayer for military 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 million. Taxslayer for military You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. Taxslayer for military If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. Taxslayer for military Joint return after separate returns. Taxslayer for military   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. Taxslayer for military The dollar limit (after reduction for any cost of section 179 property over $2 million). Taxslayer for military The total cost of section 179 property you and your spouse elected to expense on your separate returns. Taxslayer for military 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. Taxslayer for military 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. Taxslayer for military Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. Taxslayer for military See Carryover of disallowed deduction , later. Taxslayer for military Taxable income. Taxslayer for military   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. Taxslayer for military In addition to net income or loss from a sole proprietorship, partnership, or S corporation, net income or loss derived from a trade or business also includes the following items. Taxslayer for military Section 1231 gains (or losses) as discussed in chapter 9. Taxslayer for military Interest from working capital of your trade or business. Taxslayer for military Wages, salaries, tips, or other pay earned by you (or your spouse if you file a joint return) as an employee of any employer. Taxslayer for military   In addition, figure taxable income without regard to any of the following. Taxslayer for military The section 179 expense deduction. Taxslayer for military The self-employment tax deduction. Taxslayer for military Any net operating loss carryback or carryforward. Taxslayer for military Any unreimbursed employee business expenses. Taxslayer for military Two different taxable income limits. Taxslayer for military   In addition to the business income limit for your section 179 expense deduction, you may have a taxable income limit for some other deduction (for example, charitable contributions). Taxslayer for military You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. Taxslayer for military If so, complete the following steps. Taxslayer for military Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. Taxslayer for military 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. Taxslayer for military 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. Taxslayer for military 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. Taxslayer for military 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. Taxslayer for military 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. Taxslayer for military 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. Taxslayer for military 8 Figure your actual other deduction using the taxable income figured in Step 7. Taxslayer for military Example. Taxslayer for military On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. Taxslayer for military It elects to expense the entire $500,000 cost under section 179. Taxslayer for military In June, the corporation gave a charitable contribution of $10,000. Taxslayer for military A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. Taxslayer for military The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. Taxslayer for military XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. Taxslayer for military XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. Taxslayer for military Step 1. Taxslayer for military Taxable income figured without either deduction is $520,000. Taxslayer for military Step 2. Taxslayer for military Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. Taxslayer for military Step 3. Taxslayer for military $20,000 ($520,000 − $500,000). Taxslayer for military Step 4. Taxslayer for military Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. Taxslayer for military Step 5. Taxslayer for military $518,000 ($520,000 − $2,000). Taxslayer for military Step 6. Taxslayer for military Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. Taxslayer for military Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. Taxslayer for military Step 7. Taxslayer for military $20,000 ($520,000 − $500,000). Taxslayer for military Step 8. Taxslayer for military Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. Taxslayer for military Carryover of disallowed deduction. Taxslayer for military   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. Taxslayer for military   The amount you carry over is used in determining your section 179 expense deduction in the next year. Taxslayer for military However, it is subject to the limits in that year. Taxslayer for military 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 cost will be carried forward. Taxslayer for military Your selections must be shown in your books and records. Taxslayer for military Example. Taxslayer for military Last year, Joyce Jones placed in service a machine that cost $8,000 and elected to deduct all $8,000 under section 179. Taxslayer for military The taxable income from her business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) was $6,000. Taxslayer for military Her section 179 expense deduction was limited to $6,000. Taxslayer for military The $2,000 cost that was not allowed as a section 179 expense deduction (because of the business income limit) is carried to this year. Taxslayer for military This year, Joyce placed another machine in service that cost $9,000. Taxslayer for military Her taxable income from business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) is $10,000. Taxslayer for military Joyce can deduct the full cost of the machine ($9,000) but only $1,000 of the carryover from last year because of the business income limit. Taxslayer for military She can carry over the balance of $1,000 to next year. Taxslayer for military Partnerships and S Corporations The section 179 expense deduction limits apply both to the partnership or S corporation and to each partner or shareholder. Taxslayer for military The partnership or S corporation determines its section 179 expense deduction subject to the limits. Taxslayer for military It then allocates the deduction among its partners or shareholders. Taxslayer for military If you are a partner in a partnership or shareholder of an S corporation, you add the amount allocated from the partnership or S corporation to any section 179 costs not related to the partnership or S corporation and then apply the dollar limit to this total. Taxslayer for military To determine any reduction in the dollar limit for costs over $560,000, you do not include any of the cost of section 179 property placed in service by the partnership or S corporation. Taxslayer for military After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. Taxslayer for military For more information, see chapter 2 of Publication 946. Taxslayer for military Example. Taxslayer for military In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. Taxslayer for military P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). Taxslayer for military Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. Taxslayer for military Because P's taxable income from the active conduct of all its trades or businesses for the year was $400,000, it can deduct the full $340,000. Taxslayer for military P allocates $100,000 of its section 179 expense deduction and $110,000 of its taxable income to John, one of its partners. Taxslayer for military John also conducts a business as a sole proprietor and in 2013, placed in service in that business, section 179 property costing $28,000. Taxslayer for military John's taxable income from that business was $10,000. Taxslayer for military In addition to the $100,000 allocated from P, he elects to expense the $28,000 of his sole proprietorship's section 179 costs. Taxslayer for military However, John's deduction is limited to his business taxable income of $120,000 ($110,000 from P plus $10,000 from his sole proprietorship). Taxslayer for military He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. Taxslayer for military How Do You Elect the Deduction? You elect to take the section 179 expense deduction by completing Part I of Form 4562. Taxslayer for military If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. Taxslayer for military   File Form 4562 with either of the following: Your original tax return (whether or not you filed it timely), or An amended return filed within the time prescribed by law. Taxslayer for military 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. Taxslayer for military The amended return must also include any resulting adjustments to taxable income. Taxslayer for military Revoking an election. Taxslayer for military   An election (or any specification made in the election) to take a section 179 expense deduction for 2013 can be revoked without IRS approval by filing an amended return. Taxslayer for military The amended return must be filed within the time prescribed by law. Taxslayer for military The amended return must also include any resulting adjustments to taxable income (for example, allowable depreciation in that tax year for the item of section 179 property for which the election pertains. Taxslayer for military ) Once made, the revocation is irrevocable. Taxslayer for military When Must You Recapture the Deduction? You may have to recapture the section 179 expense deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. Taxslayer for military In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. Taxslayer for military You also increase the basis of the property by the recapture amount. Taxslayer for military Recovery periods for property are discussed later. Taxslayer for military If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Taxslayer for military Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. Taxslayer for military   If the property is listed property, do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Taxslayer for military Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. Taxslayer for military Figuring the recapture amount. Taxslayer for military   To figure the amount to recapture, take the following steps. Taxslayer for military Figure the allowable depreciation for the section 179 expense deduction you claimed. Taxslayer for military Begin with the year you placed the property in service and include the year of recapture. Taxslayer for military Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. Taxslayer for military The result is the amount you must recapture. Taxslayer for military Example. Taxslayer for military In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. Taxslayer for military The property is not listed property. Taxslayer for military He elected a $5,000 section 179 expense deduction for the property and also elected not to claim a special depreciation allowance. Taxslayer for military He used the property only for business in 2011 and 2012. Taxslayer for military During 2013, he used the property 40% for business and 60% for personal use. Taxslayer for military He figures his recapture amount as follows. Taxslayer for military Section 179 expense deduction claimed (2011) $5,000 Minus: Allowable depreciation (instead of section 179 expense deduction):   2011 $1,250   2012 1,875   2013 ($1,250 × 40% (business)) 500 3,625 2013 — Recapture amount $1,375     Paul must include $1,375 in income for 2013. Taxslayer for military Where to report recapture. Taxslayer for military   Report any recapture of the section 179 expense deduction as ordinary income in Part IV of Form 4797 and include it in income on Schedule F (Form 1040). Taxslayer for military Recapture for qualified section 179 GO Zone property. Taxslayer for military   If any qualified section 179 GO Zone property ceases to be used in the GO Zone in a later year, you must recapture the benefit of the increased section 179 expense deduction as “other income. Taxslayer for military ” Claiming the Special Depreciation Allowance For qualified property (defined below) placed in service in 2013, you can take an additional 50% special depreciation allowance. Taxslayer for military The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS. Taxslayer for military Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. Taxslayer for military What is Qualified Property? For farmers, qualified property generally is certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Taxslayer for military Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Taxslayer for military   Certain qualified property (defined below) acquired after December 31, 2007, and before January 1, 2014, is eligible for a 50% special depreciation allowance. Taxslayer for military   Qualified property includes the following: Tangible property depreciated under the Modified Accelerated Cost Recovery System (MACRS) with a recovery period of 20 years or less. Taxslayer for military Water utility property. Taxslayer for military Off-the-shelf computer software. Taxslayer for military Qualified leasehold improvement property. Taxslayer for military   Qualified property must also meet all of the following tests: You must have acquired qualified property by purchase after December 31, 2007. Taxslayer for military If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. Taxslayer for military Qualified property must be placed in service after December 31, 2007 and placed in service before January 1, 2014 (before January 1, 2015 for certain property with a long production period and for certain aircraft). Taxslayer for military The original use of the property must begin with you after December 31, 2007. Taxslayer for military For more information, see chapter 3 of Publication 946. Taxslayer for military How Can You Elect Not To Claim the Allowance? You can elect, for any class of property, not to deduct the special depreciation allowance for all property in such class placed in service during the tax year. Taxslayer for military To make the election, attach a statement to your return indicating the class of property for which you are making the election. Taxslayer for military Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Taxslayer for military However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Taxslayer for military Attach the election statement to the amended return. Taxslayer for military On the amended return, write “Filed pursuant to section 301. Taxslayer for military 9100-2. Taxslayer for military ” Once made, the election may not be revoked without IRS consent. Taxslayer for military If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Taxslayer for military When Must You Recapture an Allowance When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Taxslayer for military For more information, see chapter 3 of Publication 946. Taxslayer for military Figuring Depreciation Under MACRS The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Taxslayer for military MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Taxslayer for military Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Taxslayer for military To be sure you can use MACRS to figure depreciation for your property, see Can You Use MACRS To Depreciate Your Property, earlier. Taxslayer for military This part explains how to determine which MACRS depreciation system applies to your property. Taxslayer for military It also discusses the following information that you need to know before you can figure depreciation under MACRS. Taxslayer for military Property's recovery class. Taxslayer for military Placed-in-service date. Taxslayer for military Basis for depreciation. Taxslayer for military Recovery period. Taxslayer for military Convention. Taxslayer for military Depreciation method. Taxslayer for military Finally, this part explains how to use this information to figure your depreciation deduction. Taxslayer for military Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Taxslayer for military You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Taxslayer for military Required use of ADS. Taxslayer for military   You must use ADS for the following property. Taxslayer for military All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Taxslayer for military Listed property used 50% or less in a qualified business use. Taxslayer for military See Additional Rules for Listed Property , later. Taxslayer for military Any tax-exempt use property. Taxslayer for military Any tax-exempt bond-financed property. Taxslayer for military Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Taxslayer for military Any tangible property used predominantly outside the United States during the year. Taxslayer for military If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. Taxslayer for military Electing ADS. Taxslayer for military   Although your property may qualify for GDS, you can elect to use ADS. Taxslayer for military The election generally must cover all property in the same property class you placed in service during the year. Taxslayer for military However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Taxslayer for military Once you make this election, you can never revoke it. Taxslayer for military   You make the election by completing line 20 in Part III of Form 4562. Taxslayer for military Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. Taxslayer for military 3-year property. Taxslayer for military 5-year property. Taxslayer for military 7-year property. Taxslayer for military 10-year property. Taxslayer for military 15-year property. Taxslayer for military 20-year property. Taxslayer for military 25-year property. Taxslayer for military Residential rental property. Taxslayer for military Nonresidential real property. Taxslayer for military See Which Property Class Applies Under GDS in chapter 4 of Publication 946 for examples of the types of property included in each class. Taxslayer for military What Is the Placed-in-Service Date? You begin to claim depreciation when your property is placed in service for use either in a trade or business or for the production of income. Taxslayer for military The placed-in-service date for your property is the date the property is ready and available for a specific use. Taxslayer for military It is therefore not necessarily the date it is first used. Taxslayer for military If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Taxslayer for military See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. Taxslayer for military What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Taxslayer for military Reduce that amount by any credits and deductions allocable to the property. Taxslayer for military The following are examples of some of the credits and deductions that reduce basis. Taxslayer for military Any deduction for section 179 property. Taxslayer for military Any deduction for removal of barriers to the disabled and the elderly. Taxslayer for military Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Taxslayer for military Any special depreciation allowance. Taxslayer for military Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Taxslayer for military For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property , earlier. Taxslayer for military Also, see chapter 6. Taxslayer for military For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Taxslayer for military Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Taxslayer for military It is determined based on the depreciation system (GDS or ADS) used. Taxslayer for military See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. Taxslayer for military For a complete list of recovery periods, see the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. Taxslayer for military House trailers for farm laborers. Taxslayer for military   To depreciate a house trailer you supply as housing for those who work on your farm, use one of the following recovery periods if the house trailer is mobile (it has wheels and a history of movement). Taxslayer for military A 7-year recovery period under GDS. Taxslayer for military A 10-year recovery period under ADS. Taxslayer for military   However, if the house trailer is not mobile (its wheels have been removed and permanent utilities and pipes attached to it), use one of the following recovery periods. Taxslayer for military A 20-year recovery period under GDS. Taxslayer for military A 25-year recovery period under ADS. Taxslayer for military Water wells. Taxslayer for military   Water wells used to provide water for raising poultry and livestock are land improvements. Taxslayer for military If they are depreciable, use one of the following recovery periods. Taxslayer for military A 15-year recovery period under GDS. Taxslayer for military A 20-year recovery period under ADS. Taxslayer for military   The types of water wells that can be depreciated were discussed earlier in Irrigation systems and water wells under Property Having a Determinable Useful Life . Taxslayer for military Table 7-1. Taxslayer for military Farm Property Recovery Periods   Recovery Period in Years Assets GDS ADS Agricultural structures (single purpose) 10 15 Automobiles 5 5 Calculators and copiers 5 6 Cattle (dairy or breeding) 5 7 Communication equipment1 7 10 Computer and peripheral equipment 5 5 Drainage facilities 15 20 Farm buildings2 20 25 Farm machinery and equipment 7 10 Fences (agricultural) 7 10 Goats and sheep (breeding) 5 5 Grain bin 7 10 Hogs (breeding) 3 3 Horses (age when placed in service)     Breeding and working (12 years or less) 7 10 Breeding and working (more than 12 years) 3 10 Racing horses 3 12 Horticultural structures (single purpose) 10 15 Logging machinery and equipment3 5 6 Nonresidential real property 394 40 Office furniture, fixtures, and equipment (not calculators, copiers, or typewriters) 7 10 Paved lots 15 20 Residential rental property 27. Taxslayer for military 5 40 Tractor units (over-the-road) 3 4 Trees or vines bearing fruit or nuts 10 20 Truck (heavy duty, unloaded weight 13,000 lbs. Taxslayer for military or more) 5 6 Truck (actual weight less than 13,000 lbs) 5 5 Water wells 15 20 1 Not including communication equipment listed in other classes. Taxslayer for military 2 Not including single purpose agricultural or horticultural structures. Taxslayer for military 3 Used by logging and sawmill operators for cutting of timber. Taxslayer for military 4 For property placed in service after May 12, 1993; for property placed in service before May 13, 1993,  the recovery period is 31. Taxslayer for military 5 years. Taxslayer for military Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Taxslayer for military The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Taxslayer for military Use one of the following conventions. Taxslayer for military The half-year convention. Taxslayer for military The mid-month convention. Taxslayer for military The mid-quarter convention. Taxslayer for military For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. Taxslayer for military Also, see the Instructions for Form 4562. Taxslayer for military Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Taxslayer for military The 200% declining balance method over a GDS recovery period. Taxslayer for military The 150% declining balance method over a GDS recovery period. Taxslayer for military The straight line method over a GDS recovery period. Taxslayer for military The straight line method over an ADS recovery period. Taxslayer for military Depreciation Table. Taxslayer for military   The following table lists the types of property you can depreciate under each method. Taxslayer for military The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Taxslayer for military Depreciation Table System/Method   Type of Property GDS using  150% DB • All property used in a farming business (except real property)   • All 15- and 20-year property   • Nonfarm 3-, 5-, 7-, and 10-year property1 GDS using SL • Nonresidential real property   • Residential rental property   • Trees or vines bearing fruit or nuts   • All 3-, 5-, 7-, 10-, 15-, and 20-year property1 ADS using SL • Property used predomi- nantly outside the United States   • Farm property used when an election not to apply the uniform capitalization rules is in effect   • Tax-exempt property   • Tax-exempt bond-financed property   • Imported property2   • Any property for which you elect to use this method1 GDS using  200% DB • Nonfarm 3-, 5-, 7-, and 10-year property 1Elective method 2See section 168(g)(6) of the Internal Revenue  Code Property used in farming business. Taxslayer for military   For personal property placed in service after 1988 in a farming business, you must use the 150% declining balance method over a GDS recovery period or you can elect one of the following methods. Taxslayer for military The straight line method over a GDS recovery period. Taxslayer for military The straight line method over an ADS recovery period. Taxslayer for military For property placed in service before 1999, you could have elected to use the 150% declining balance method using the ADS recovery periods for certain property classes. Taxslayer for military If you made this election, continue to use the same method and recovery period for that property. Taxslayer for military Real property. Taxslayer for military   You can depreciate real property using the straight line method under either GDS or ADS. Taxslayer for military Switching to straight line. Taxslayer for military   If you use a declining balance method, you switch to the straight line method in the year it provides an equal or greater deduction. Taxslayer for military If you use the MACRS percentage tables, discussed later under How Is the Depreciation Deduction Figured , you do not need to determine in which year your deduction is greater using the straight line method. Taxslayer for military The tables have the switch to the straight line method built into their rates. Taxslayer for military Fruit or nut trees and vines. Taxslayer for military   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. Taxslayer for military ADS required for some farmers. Taxslayer for military   If you elect not to apply the uniform capitalization rules to any plant shown in Table 6-1 of chapter 6 and produced in your farming business, you must use ADS for all property you place in service in any year the election is in effect. Taxslayer for military See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. Taxslayer for military Electing a different method. Taxslayer for military   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. Taxslayer for military You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Taxslayer for military However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). Taxslayer for military Attach the election to the amended return and write “Filed pursuant to section 301. Taxslayer for military 9100-2” on the election statement. Taxslayer for military File the amended return at the same address you filed the original return. Taxslayer for military Once you make the election, you cannot change it. Taxslayer for military    If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Taxslayer for military However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. Taxslayer for military Straight line election. Taxslayer for military   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. Taxslayer for military Make the election by entering “S/L” under column (f) in Part III of Form 4562. Taxslayer for military ADS election. Taxslayer for military   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Taxslayer for military ADS uses the straight line method of depreciation over the ADS recovery periods, which are generally longer than the GDS recovery periods. Taxslayer for military The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. Taxslayer for military Additional ADS recovery periods for other classes of property may be found in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. Taxslayer for military How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed-in-service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Taxslayer for military Then you are ready to figure your depreciation deduction. Taxslayer for military You can figure it in one of two ways. Taxslayer for military You can use the percentage tables provided by the IRS. Taxslayer for military You can figure your own deduction without using the tables. Taxslayer for military Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. Taxslayer for military Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Taxslayer for military These percentage tables are in Appendix A of Publication 946. Taxslayer for military Rules for using the tables. Taxslayer for military   The following rules cover the use of the percentage tables. Taxslayer for military You must apply the rates in the percentage tables to your property's unadjusted basis. Taxslayer for military Unadjusted basis is the same basis amount you would use to figure gain on a sale but figured without reducing your original basis by any MACRS depreciation taken in earlier years. Taxslayer for military You cannot use the percentage tables for a short tax year. Taxslayer for military See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. Taxslayer for military You generally must continue to use them for the entire recovery period of the property. Taxslayer for military You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to the property, which is depreciated as a separate property. Taxslayer for military Basis adjustment due to casualty loss. Taxslayer for military   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Taxslayer for military For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Taxslayer for military See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Taxslayer for military Figuring depreciation using the 150% DB method and half-year convention. Taxslayer for military    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. Taxslayer for military The percentages are based on the 150% declining balance method with a change to the straight line method. Taxslayer for military This table covers only the half-year convention and the first 8 years for 20-year property. Taxslayer for military See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. Taxslayer for military   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . Taxslayer for military Example 1. Taxslayer for military During the year, you bought an item of 7-year property for $10,000 and placed it in service. Taxslayer for military You do not elect a section 179 expense deduction for this property. Taxslayer for military In addition, the property is not qualified property for purposes of the special depreciation allowance. Taxslayer for military The unadjusted basis of the property is $10,000. Taxslayer for military You use the percentages in Table 7-2 to figure your deduction. Taxslayer for military Since this is 7-year property, you multiply $10,000 by 10. Taxslayer for military 71% to get this year's depreciation of $1,071. Taxslayer for military For next year, your depreciation will be $1,913 ($10,000 × 19. Taxslayer for military 13%). Taxslayer for military Example 2. Taxslayer for military You had a barn constructed on your farm at a cost of $20,000. Taxslayer for military You placed the barn in service this year. Taxslayer for military You elect not to claim the special depreciation allowance. Taxslayer for military The barn is 20-year property and you use the table percentages to figure your deduction. Taxslayer for military You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. Taxslayer for military 75% to get $750. Taxslayer for military For next year, your depreciation will be $1,443. Taxslayer for military 80 ($20,000 × 7. Taxslayer for military 219%). Taxslayer for military Table 7-2. Taxslayer for military 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. Taxslayer for military 0 % 15. Taxslayer for military 00 % 10. Taxslayer for military 71 % 3. Taxslayer for military 750 % 2 37. Taxslayer for military 5   25. Taxslayer for military 50   19. Taxslayer for military 13   7. Taxslayer for military 219   3 25. Taxslayer for military 0   17. Taxslayer for military 85   15. Taxslayer for military 03   6. Taxslayer for military 677   4 12. Taxslayer for military 5   16. Taxslayer for military 66   12. Taxslayer for military 25   6. Taxslayer for military 177   5     16. Taxslayer for military 66   12. Taxslayer for military 25   5. Taxslayer for military 713   6     8. Taxslayer for military 33   12. Taxslayer for military 25   5. Taxslayer for military 285   7         12. Taxslayer for military 25   4. Taxslayer for military 888   8         6. Taxslayer for military 13   4. Taxslayer for military 522   Figuring depreciation using the straight line method and half-year convention. Taxslayer for military   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. Taxslayer for military The table covers only the first 8 years for 20-year property. Taxslayer for military See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. Taxslayer for military Table 7-3. Taxslayer for military Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. Taxslayer for military 67 % 10 % 7. Taxslayer for military 14 % 2. Taxslayer for military 5 % 2 33. Taxslayer for military 33   20   14. Taxslayer for military 29   5. Taxslayer for military 0   3 33. Taxslayer for military 33   20   14. Taxslayer for military 29   5. Taxslayer for military 0   4 16. Taxslayer for military 67   20   14. Taxslayer for military 28   5. Taxslayer for military 0   5     20   14. Taxslayer for military 29   5. Taxslayer for military 0   6     10   14. Taxslayer for military 28   5. Taxslayer for military 0   7         14. Taxslayer for military 29   5. Taxslayer for military 0   8         7. Taxslayer for military 14   5. Taxslayer for military 0