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Turbotax

Turbotax 33. Turbotax   Crédito para Ancianos o Personas Incapacitadas Table of Contents Introduction Useful Items - You may want to see: ¿Reúne los Requisitos del Crédito?Persona que Reúne los Requisitos Límites sobre los Ingresos Cómo Reclamar el CréditoEl Crédito Calculado por el IRS El Crédito Calculado por Usted Mismo Introduction Si reúne los requisitos, tal vez pueda reducir los impuestos que adeuda tomando el crédito para ancianos o personas incapacitadas, el cual se calcula en el Anexo R (Formulario 1040A o Formulario 1040). Turbotax Este capítulo trata lo siguiente: Quién reúne los requisitos para reclamar el crédito para ancianos o personas incapacitadas. Turbotax Cómo reclamar el crédito. Turbotax Tal vez pueda tomar el crédito para ancianos o personas incapacitadas si: Tiene 65 años de edad o más al final del año 2013 o Se jubiló por incapacidad total y permanente y recibe ingresos por incapacidad sujetos a impuestos. Turbotax Useful Items - You may want to see: Publicación 524 Credit for the Elderly or the Disabled (Crédito para ancianos o personas incapacitadas), en inglés 554 Tax Guide for Seniors (Guía tributaria para personas de la tercera edad), en inglés Formulario (e Instrucciones) Anexo R (Formulario 1040A o 1040) Credit for the Elderly or the Disabled (Crédito para ancianos o personas incapacitadas), en inglés ¿Reúne los Requisitos del Crédito? Puede reclamar el crédito para ancianos o personas incapacitadas si le corresponden ambas situaciones: Usted es una persona que reúne los requisitos. Turbotax Sus ingresos no sobrepasan determinados límites. Turbotax Puede utilizar la Figura 33-A y la Tabla 33-1 como guía para ver si tiene derecho al crédito. Turbotax Primero, utilice la Figura 33-A para saber si reúne los requisitos. Turbotax En tal caso, pase a la Tabla 33-1 para asegurarse que sus ingresos no superen los límites correspondientes al crédito. Turbotax Puede reclamar el crédito sólo si presenta el Formulario 1040 o el Formulario 1040A. Turbotax No puede reclamar el crédito si presenta el Formulario 1040EZ. Turbotax Persona que Reúne los Requisitos Usted reúne los requisitos de este crédito si es ciudadano estadounidense o extranjero residente y cualquiera de las siguientes situaciones le corresponden: Tenía 65 años de edad o más al final del año 2013. Turbotax Tenía menos de 65 años de edad al final del año 2013 y se cumplen las tres condiciones siguientes: Se jubiló por incapacidad total y permanente (se explica más adelante). Turbotax Recibió ingresos sujetos a impuestos por incapacidad durante 2013. Turbotax En el día 1 de enero de 2013, no había alcanzado la edad de jubilación obligatoria (se define más adelante bajo Ingresos por incapacidad ). Turbotax 65 años de edad. Turbotax   Se considera que tiene 65 años el día antes de cumplir los 65 años. Turbotax Por lo tanto, si nació el 1 de enero de 1949, se considera que tiene 65 años de edad al final de 2013. Turbotax Ciudadano o Extranjero Residente de los Estados Unidos Para reclamar el crédito, tiene que ser ciudadano o extranjero residente de los Estados Unidos (o ser tratado como extranjero residente). Turbotax Normalmente, no puede reclamar el crédito si fue extranjero no residente en algún momento durante el año tributario. Turbotax Excepciones. Turbotax   Tal vez pueda tomar el crédito si es extranjero no residente casado con un ciudadano o extranjero residente de los EE. Turbotax UU. Turbotax al final del año tributario, y usted y su cónyuge optan por tratarlo a usted como extranjero residente de los Estados Unidos. Turbotax En tal caso, se gravan impuestos sobre los ingresos que usted y su cónyuge reciban de cualquier parte del mundo. Turbotax Si era extranjero no residente al comenzar el año y residente extranjero al final del año, y estaba casado con un ciudadano o extranjero residente de los EE. Turbotax UU. Turbotax al final del año, tal vez pueda optar por ser considerado extranjero residente de los EE. Turbotax UU. Turbotax durante todo el año. Turbotax En ese caso, quizás se le permita reclamar el crédito. Turbotax Para más información sobre estas opciones, vea el capítulo 1 de la Publicación 519, U. Turbotax S. Turbotax Tax Guide for Aliens (Guía tributaria sobre los impuestos estadounidenses para extranjeros), en inglés. Turbotax Personas Casadas Normalmente, si está casado al final del año tributario, usted y su cónyuge tienen que presentar una declaración conjunta para reclamar el crédito. Turbotax No obstante, si usted y su cónyuge no vivieron en la misma vivienda en ningún momento durante el año tributario, pueden presentar una declaración conjunta o declaraciones separadas y aún reclamar el crédito. Turbotax Cabeza de familia. Turbotax   Puede presentar la declaración como cabeza de familia y satisfacer las condiciones del crédito, aun si su cónyuge vivió con usted durante los primeros 6 meses del año, si cumple ciertos requisitos. Turbotax Vea Cabeza de Familia en el capítulo 2, para averiguar qué requisitos tiene que cumplir. Turbotax Personas Menores de 65 Años de Edad Si tiene menos de 65 años de edad al final del año 2013, puede reunir los requisitos del crédito sólo si está jubilado por incapacidad total y permanente (se explica a continuación) y ha recibido ingresos por incapacidad sujetos a impuestos (se explica más adelante, bajo el tema Ingresos por incapacidad ). Turbotax Se le considera jubilado por incapacidad total y permanente si: Estaba total y permanentemente incapacitado cuando se jubiló y Se jubiló por incapacidad antes del cierre del año tributario. Turbotax Aunque no se jubile oficialmente, puede que se le considere jubilado por incapacidad cuando haya dejado de trabajar debido a su incapacidad. Turbotax Si se jubiló por incapacidad antes de 1977 y no estaba total y permanentemente incapacitado en ese momento, puede cumplir los requisitos del crédito si estaba total y permanentemente incapacitado el 1 de enero de 1976 o el 1 de enero de 1977. Turbotax Total y permanentemente incapacitado. Turbotax    Está total y permanentemente incapacitado si no puede dedicarse a ninguna actividad sustancial remunerada a causa de una condición física o mental. Turbotax Un médico calificado tiene que confirmar por escrito que dicha condición ha durado o puede durar 12 meses o más, o que dicha condición puede culminar en la muerte. Turbotax Vea Declaración del médico , más adelante. Turbotax Actividad sustancial remunerada. Turbotax   Se define “actividad sustancial remunerada” como el desempeño de deberes importantes a lo largo de un período de tiempo razonable, mientras uno trabaje para recibir remuneración u obtener ganancias; o un trabajo generalmente realizado a cambio de remuneración o ganancias. Turbotax El mantener un empleo a tiempo completo (o un empleo a tiempo parcial a conveniencia de su empleador) en un ambiente laboral competitivo donde se paga por lo menos el salario mínimo se considera una prueba contundente de que puede dedicarse a una actividad sustancial remunerada. Turbotax   Los trabajos realizados para cuidarse a sí mismo o cuidar su vivienda no se consideran actividades sustanciales remuneradas. Turbotax Tampoco se considera actividad sustancial remunerada: el trabajo no remunerado desempeñado en relación con los pasatiempos, la capacitación o terapia institucional, asistencia a una escuela, los clubes, programas sociales y otras actividades semejantes. Turbotax No obstante, realizar este tipo de trabajo puede demostrar que usted es capaz de dedicarse a una actividad sustancial remunerada. Turbotax    El hecho de que no haya trabajado por algún tiempo no se considera una prueba concluyente de que no pueda dedicarse a una actividad sustancial remunerada. Turbotax Empleo en establecimientos protegidos. Turbotax   Ciertos trabajos ofrecidos a personas con incapacidad física o mental en establecimientos que reúnen ciertos requisitos se consideran empleo protegido. Turbotax Dichos sitios se ubican en establecimientos protegidos, tales como talleres, hospitales e instituciones parecidas, programas laborales o educativos en el hogar y asilos patrocinados por el Departamento de Asuntos de Veteranos (VA, por sus siglas en inglés). Turbotax   En comparación con el empleo comercial, la remuneración del empleo en establecimientos protegidos es más baja. Turbotax Por lo tanto, una persona no suele buscar empleo en establecimientos protegidos si puede encontrar otro empleo. Turbotax El hecho de que una persona haya aceptado un empleo en establecimientos protegidos no comprueba que la persona pueda dedicarse a una actividad sustancial remunerada. Turbotax Declaración del médico. Turbotax   Si tiene menos de 65 años de edad, su médico tiene que certificar por escrito que usted estaba total y permanentemente incapacitado en la fecha en que se jubiló. Turbotax Puede utilizar la declaración en las Instrucciones del Anexo R (Fomulario 1040A o 1040). Turbotax    Please click here for the text description of the image. Turbotax Figura 33−A. Turbotax ¿Es Usted una Persona que Reúne los Requisitos? Tabla 33-1. Turbotax Límites sobre los Ingresos SI su estado civil para efectos de la declaración es . Turbotax . Turbotax . Turbotax . Turbotax ENTONCES aun si reúne los requisitos (vea la Figura 33-A ), NO PUEDE reclamar el crédito si . Turbotax . Turbotax . Turbotax . Turbotax Tiene ingresos brutos ajustados (AGI, por sus siglas en inglés)* iguales o superiores a . Turbotax . Turbotax . Turbotax . Turbotax O el total de su Seguro Social no sujeto a impuestos además de otras pensiones, anualidades o ingreso por incapacidad no sujetos a impuestos es igual o superior a . Turbotax . Turbotax . Turbotax . Turbotax soltero, cabeza de familia o viudo que reúne los requisitos con hijo dependiente $17,500 $5,000 casado que presenta una declaración conjunta y sólo uno de los cónyuges reúne los requisitos de la Figura 33-A $20,000 $5,000 casado que presenta una declaración conjunta y ambos cónyuges reúnen los requisitos de la Figura 33-A $25,000 $7,500 casado que presenta una declaración por separado y usted y su cónyuge no vivieron en la misma vivienda en ningún momento del año 2013 $12,500 $3,750 *El AGI es la cantidad indicada en la línea 22 del Formulario 1040A o la línea 38 del Formulario 1040. Turbotax   No tiene que presentar esta declaración escrita junto con el Formulario 1040 o Formulario 1040A, pero tiene que guardarla con su documentación. Turbotax Veteranos. Turbotax   Si el Departamento de Asuntos de Veteranos (VA, por sus siglas en inglés) certifica que está total y permanentemente incapacitado, puede utilizar el Formulario 21-0172 del VA, Certification of Permanent and Total Disability (Certificación de incapacidad total y permanente), en inglés, en lugar de la declaración escrita de un médico que usted está obligado a conservar. Turbotax El Formulario 21-0172 del VA tiene que ser firmado por una persona autorizada por el VA. Turbotax Puede obtener este formulario de la oficina regional del VA de su área. Turbotax Declaración escrita de un médico obtenida en un año anterior. Turbotax   Si obtuvo una declaración escrita de su médico en un año anterior y, por su condición continua de incapacidad, no pudo dedicarse a ninguna actividad sustancial remunerada durante 2013, quizás no necesite obtener otra declaración escrita de su médico para 2013. Turbotax Para leer una explicación detallada de las condiciones que tiene que cumplir, consulte la Parte II de las Instrucciones del Anexo R (Formulario 1040A o 1040). Turbotax Si satisface las condiciones obligatorias, marque el recuadro 2 de la Parte II del Anexo R (Formulario 1040A o 1040). Turbotax   Si marcó el recuadro 4, 5 ó 6 de la Parte I del Anexo R (Formulario 1040A o 1040), anote en el espacio por encima del recuadro de la línea 2 de la Parte II el (los) primer(os) nombre(s) del (de los) cónyuge(s) para el (los) cual(es) está marcado dicho recuadro. Turbotax Ingresos por incapacidad. Turbotax   Si tiene menos de 65 años de edad, tiene que tener también ingresos tributables de compensación por incapacidad para reunir los requisitos del crédito. Turbotax Los ingresos de compensación por incapacidad tienen que cumplir los siguientes requisitos: Se tienen que pagar conforme al seguro de accidente o médico, o el plan de pensiones de su empleador. Turbotax Se tienen que incluir en los ingresos como salario (o pagos en lugar de salario) durante el tiempo por el cual se ausentó del trabajo a raíz de una incapacidad total y permanente. Turbotax Pagos que no se consideran ingresos por incapacidad. Turbotax   Todo pago que reciba de un plan que no ofrece una opción para la jubilación por incapacidad no se considera ingreso por incapacidad. Turbotax Todo pago global que reciba por vacaciones acumuladas al jubilarse por incapacidad se considera pago de salario en vez de ingreso por incapacidad. Turbotax   Para propósitos del crédito para ancianos o personas incapacitadas, los ingresos por incapacidad no incluyen cantidades que usted reciba después de cumplir la edad obligatoria de jubilación. Turbotax La edad obligatoria de jubilación es la edad establecida por su empleador en la que usted habría estado obligado a jubilarse si no se hubiera quedado incapacitado. Turbotax Límites sobre los Ingresos Para determinar si puede reclamar el crédito, tiene que tener en cuenta dos límites sobre los ingresos. Turbotax El primer límite es la cantidad de ingresos brutos ajustados (AGI, por sus siglas en inglés). Turbotax El segundo límite es la cantidad de Seguro Social no sujeta a impuestos y otras pensiones, anualidades o compensación por incapacidad no sujetas a impuestos que haya recibido. Turbotax Se indican los límites en la Tabla 33-1. Turbotax Si tiene ingresos brutos ajustados y pensiones, anualidades o compensación por incapacidad no sujetos a impuestos inferiores a los límites de ingresos, quizás pueda reclamar el crédito. Turbotax Vea Cómo Reclamar el Crédito , más adelante. Turbotax Si tiene ingresos brutos ajustados o pensiones, anualidades o compensación por incapacidad no sujetos a impuestos iguales o superiores a los límites de ingresos, no puede reclamar el crédito. Turbotax Cómo Reclamar el Crédito Puede calcular el crédito usted mismo o el Servicio de Impuestos Internos (IRS, por sus siglas en inglés) se lo calculará. Turbotax El Crédito Calculado por el IRS Si opta por que el IRS le calcule el crédito, lea el tema presentado a continuación relacionado con el formulario que usted va a presentar (el Formulario 1040 o el Formulario 1040A). Turbotax Si desea que el IRS le calcule su impuesto, vea el capítulo 30 . Turbotax Formulario 1040. Turbotax   Si desea que el IRS le calcule el crédito, vea Datos a Incluir en el Formulario 1040 bajo Impuestos Calculados por el IRS en el capítulo 30. Turbotax Formulario 1040A. Turbotax   Si desea que el IRS le calcule el crédito, vea Datos a Incluir en el Formulario 1040A bajo Impuestos Calculados por el IRS en el capítulo 30. Turbotax El Crédito Calculado por Usted Mismo Si opta por calcular el crédito usted mismo, llene la primera página del Anexo R (Formulario 1040A o 1040). Turbotax Luego, llene la Parte III del Anexo R (Formulario 1040A o 1040). Turbotax Si presenta el Formulario 1040A, anote en la línea 30 de este formulario la cantidad proveniente de la línea 22 del Anexo R (Formulario 1040A o 1040). Turbotax Si presenta el Formulario 1040, anote en la línea 53 de este formulario la cantidad proveniente de la línea 22 del Anexo R (Formulario 1040A o 1040), marque el recuadro c y escriba “Sch R” en la línea al lado de dicho recuadro. Turbotax Para leer una explicación detallada sobre cómo llenar la Parte III del Anexo R, vea Figuring the Credit Yourself (Cómo calcular el crédito usted mismo), en la Publicación 524, en inglés. Turbotax Límite del crédito. Turbotax   La cantidad del crédito que puede reclamar, por lo general, suele limitarse a la cantidad de impuestos que tiene que pagar. Turbotax Utilice la Credit Limit Worksheet (Hoja de trabajo para calcular el límite del crédito), en las Instrucciones del Anexo R (Formulario 1040A o Formulario 1040) para determinar si su crédito es limitado. Turbotax Prev  Up  Next   Home   More Online Publications
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The Turbotax

Turbotax 5. Turbotax   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Turbotax Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Turbotax When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Turbotax Otherwise, these are capital expenses that must be added to the basis of the land. Turbotax (See chapter 6 for information on determining basis. Turbotax ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Turbotax The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Turbotax See 25% Limit on Deduction , later. Turbotax Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Turbotax These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Turbotax You must include in income most government payments for approved conservation practices. Turbotax However, you can exclude some payments you receive under certain cost-sharing conservation programs. Turbotax For more information, see Agricultural Program Payments in chapter 3. Turbotax To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Turbotax Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Turbotax You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Turbotax You are not farming if you are engaged only in forestry or the growing of timber. Turbotax Farm defined. Turbotax   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Turbotax It also includes plantations, ranches, ranges, and orchards. Turbotax A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Turbotax It does not include an area where they are merely caught or harvested. Turbotax A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Turbotax Farm rental. Turbotax   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Turbotax If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Turbotax   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Turbotax Example. Turbotax You own a farm in Iowa and live in California. Turbotax You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Turbotax You cannot deduct your soil conservation expenses for this farm. Turbotax You must capitalize the expenses and add them to the basis of the land. Turbotax     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Turbotax Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Turbotax If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Turbotax Keep a copy of the plan with your books and records to support your deductions. Turbotax Conservation plan. Turbotax   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Turbotax There are three types of approved plans. Turbotax NRCS individual site plans. Turbotax These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Turbotax NRCS county plans. Turbotax These plans include a listing of farm conservation practices approved for the county where the farmland is located. Turbotax You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Turbotax Comparable state agency plans. Turbotax These plans are approved by state agencies and can be approved individual site plans or county plans. Turbotax   A list of NRCS conservation programs is available at www. Turbotax nrcs. Turbotax usda. Turbotax gov/programs. Turbotax Individual site plans can be obtained from NRCS offices and the comparable state agencies. Turbotax Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Turbotax These expenses include, but are not limited to, the following. Turbotax The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Turbotax The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Turbotax The eradication of brush. Turbotax The planting of windbreaks. Turbotax You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Turbotax These expenses are added to the basis of the land. Turbotax If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Turbotax See chapter 3 for information about payments eligible for the cost-sharing exclusion. Turbotax New farm or farmland. Turbotax   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Turbotax You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Turbotax The new farming activity does not have to be the same as the old farming activity. Turbotax For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Turbotax Land not used for farming. Turbotax   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Turbotax For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Turbotax You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Turbotax Depreciable conservation assets. Turbotax   You generally cannot deduct your expenses for depreciable conservation assets. Turbotax However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Turbotax See Assessment for Depreciable Property , later. Turbotax   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Turbotax These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Turbotax You recover your capital investment through annual allowances for depreciation. Turbotax   You can deduct soil and water conservation expenses for nondepreciable earthen items. Turbotax Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Turbotax Water well. Turbotax   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Turbotax It is a capital expense. Turbotax You recover your cost through depreciation. Turbotax You also must capitalize your cost for drilling a test hole. Turbotax If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Turbotax You can recover the total cost through depreciation deductions. Turbotax   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Turbotax Abandonment means that all economic benefits from the well are terminated. Turbotax For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Turbotax Endangered species recovery expenses. Turbotax   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Turbotax Otherwise, these are capital expenses that must be added to the basis of the land. Turbotax   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Turbotax See Internal Revenue Code section 175 for more information. Turbotax Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Turbotax You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Turbotax Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Turbotax This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Turbotax The depreciable property must be used in the district's soil and water conservation activities. Turbotax However, the following limits apply to these assessments. Turbotax The total assessment limit. Turbotax The yearly assessment limit. Turbotax After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Turbotax The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Turbotax See Table 5-1 for a brief summary of these limits. Turbotax Table 5-1. Turbotax Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Turbotax Your deductible share of the cost to the district for the property. Turbotax Your gross income from farming. Turbotax No one taxpayer can deduct more than 10% of the total assessment. Turbotax Any amount over 10% is a capital expense and is added to the basis of your land. Turbotax If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Turbotax If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Turbotax You can deduct the remainder in equal amounts over the next 9 tax years. Turbotax Limit for all conservation expenses, including assessments for depreciable property. Turbotax Amounts greater than 25% can be carried to the following year and added to that year's expenses. Turbotax The total is then subject to the 25% of gross income from farming limit in that year. Turbotax To ensure your deduction is within the deduction limits, keep records to show the following. Turbotax The total assessment against all members of the district for the depreciable property. Turbotax Your deductible share of the cost to the district for the depreciable property. Turbotax Your gross income from farming. Turbotax Total assessment limit. Turbotax   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Turbotax This applies whether you pay the assessment in one payment or in installments. Turbotax If your assessment is more than 10% of the total amount assessed, both the following rules apply. Turbotax The amount over 10% is a capital expense and is added to the basis of your land. Turbotax If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Turbotax Yearly assessment limit. Turbotax   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Turbotax If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Turbotax If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Turbotax You can deduct the remainder in equal amounts over the next 9 tax years. Turbotax Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Turbotax Example 1. Turbotax This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Turbotax Of the assessment, $1,500 is for digging drainage ditches. Turbotax You can deduct this part as a soil or conservation expense as if you had paid it directly. Turbotax The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Turbotax The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Turbotax The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Turbotax The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Turbotax To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Turbotax Add $500 to the result for a total of $570. Turbotax Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Turbotax You can deduct the balance at the rate of $70 a year over the next 9 years. Turbotax You add $70 to the $1,500 portion of the assessment for drainage ditches. Turbotax You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Turbotax Example 2. Turbotax Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Turbotax The total amount assessed by the district against all its members for depreciable equipment is $5,500. Turbotax The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Turbotax The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Turbotax Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Turbotax You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Turbotax Sale or other disposal of land during 9-year period. Turbotax   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Turbotax Death of farmer during 9-year period. Turbotax   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Turbotax 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Turbotax Gross income from farming. Turbotax   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Turbotax Gains from sales of draft, breeding, or dairy livestock are included. Turbotax Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Turbotax Carryover of deduction. Turbotax   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Turbotax However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Turbotax Example. Turbotax In 2012, you have gross income of $32,000 from two farms. Turbotax During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Turbotax However, your deduction is limited to 25% of $32,000, or $8,000. Turbotax The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Turbotax The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Turbotax Any expenses over the limit in that year are carried to 2014 and later years. Turbotax Net operating loss. Turbotax   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Turbotax If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Turbotax When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Turbotax If you do not choose to deduct the expenses, you must capitalize them. Turbotax Change of method. Turbotax   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Turbotax To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Turbotax You or your authorized representative must sign the request. Turbotax   The request must include the following information. Turbotax Your name and address. Turbotax The first tax year the method or change of method is to apply. Turbotax Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Turbotax If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Turbotax The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Turbotax A statement that you will account separately in your books for the expenses to which this method or change of method relates. Turbotax Send your request to the following  address. Turbotax  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Turbotax Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Turbotax However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Turbotax Gain on sale of farmland. Turbotax   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Turbotax If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Turbotax See Section 1252 property under Other Gains in chapter 9. Turbotax Prev  Up  Next   Home   More Online Publications