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

1090ez

File 1040x1040x Tax FormsFree Tax Filing H&r BlockAarp Org TaxaideFree Tax FileH And R Block For Military1040x Form 20142013 Tax Form 1040ezFile A 2012 Tax ReturnPrint Free 1040ez Tax FormFree File 2012 Taxes OnlineFile Extension OnlineFile 2011 Income TaxFile A 1040ezFile 2005 TaxesWhere Can I File My Federal And State Taxes Online For Free2012 Form 1040ezTax Form For 2012Tax Planning Us 2009 Taxes2011 Amendment Tax FormFiling An Amended Tax ReturnFree State ReturnsBack Taxes HelpStudent Tax Return 2011Free Tax Form 1040ezFill State Taxes FreeWww Freefile Dor In GovFederal Tax Amendment FormH&r Block CouponsEztaxformStudent Income2012 Irs 1040ez InstructionsWhat If I Didn T File My 2012 TaxesFile 2010 Taxes Free OnlineForm 1040ez 2013Hrblock FreeH And R Block Tax ReturnFiling Taxes In The MilitaryCan You File Taxes On UnemploymentTaxact Online 2010

1090ez

1090ez Publication 595 - Main Contents Table of Contents Capital Construction FundCCF Accounts Types of Accounts You Must Maintain Within a CCF Tax Treatment of CCF Deposits Tax Treatment of CCF Earnings Tax Treatment of CCF Withdrawals More Information How To Get Tax Help Capital Construction Fund The following sections discuss CCF accounts and the types of bookkeeping accounts you must maintain when you invest in a CCF account. 1090ez They also discuss the income tax treatment of CCF deposits, earnings, and withdrawals. 1090ez CCF Accounts This section explains who can open a CCF account and how to use the account to defer income tax. 1090ez Opening a CCF account. 1090ez   If you are a U. 1090ez S. 1090ez citizen and you own or lease one or more eligible vessels (defined later), you can open a CCF account. 1090ez However, before you open your CCF account, you must enter into an agreement with the Secretary of Commerce through the NMFS. 1090ez This agreement will establish the following. 1090ez Agreement vessels. 1090ez Eligible vessels named in the agreement that will be the basis for the deferral of income tax. 1090ez Planned use of withdrawals. 1090ez Use of CCF funds to acquire, build, or rebuild a vessel. 1090ez CCF depository. 1090ez Where your CCF funds will be held. 1090ez    You can request an application kit or get additional information from NMFS at the following address. 1090ez NOAA/NMFS, Financial Services Division, F/MB5 Capital Construction Fund Program 1315 East-West Highway Silver Spring, MD 20910-3282    You can obtain information on the Capital Construction Fund Program at the following website: www. 1090ez nmfs. 1090ez noaa. 1090ez gov/mb/financial_services/ccf. 1090ez htm. 1090ez    You can call NMFS to request an application kit or get additional information at (301) 713-2393 (ext. 1090ez 204). 1090ez Their fax number is (301) 713-1939. 1090ez Eligible vessels. 1090ez   There are two types of vessels that may be considered eligible, those weighing 5 tons or more and those weighing less than 5 tons. 1090ez For each type, certain requirements must be met. 1090ez Vessel weighing 5 tons or more. 1090ez   To be considered eligible, the vessel must meet all the following requirements. 1090ez Be built or rebuilt in the United States. 1090ez Be documented under the laws of the United States. 1090ez Be used commercially in the fisheries of the United States. 1090ez Be operated in the foreign or domestic commerce of the United States. 1090ez Vessel weighing less than 5 tons. 1090ez   A small vessel, weighing at least 2 net tons but less than 5 net tons, must meet all the following requirements to be considered eligible. 1090ez Be built or rebuilt in the United States. 1090ez Be owned by a U. 1090ez S. 1090ez citizen. 1090ez Have a home port in the United States. 1090ez Be used commercially in the fisheries of the United States. 1090ez Deferring tax on CCF deposits and earnings. 1090ez   You can use a CCF account to defer income tax by taking the following actions. 1090ez Making deposits to your CCF account from taxable income. 1090ez Excluding from income deposits assigned to certain accounts (discussed later). 1090ez Making withdrawals from your CCF account when you acquire, build, or rebuild fishing vessels. 1090ez Reducing the basis of fishing vessels you acquire, build, or rebuild to recapture amounts previously excluded from tax. 1090ez    Reporting requirements. 1090ez Beginning with the tax year in which you establish your agreement, you must report annual deposit and withdrawal activity to the NMFS on NOAA Form 34-82. 1090ez This form is due within 30 days after you file your federal income tax return even if no deposits or withdrawals are made. 1090ez For more information, contact the NMFS at the address or phone number given earlier. 1090ez Types of Accounts You Must Maintain Within a CCF This section discusses the three types of bookkeeping accounts you must maintain when you invest in a CCF account. 1090ez Your total CCF deposits and earnings for any given year are limited to the amount attributed to these three accounts for that year. 1090ez Capital account. 1090ez   The capital account consists primarily of amounts attributable to the following items. 1090ez Allowable depreciation deductions for agreement vessels. 1090ez Any nontaxable return of capital from either (a) or (b), below. 1090ez The sale or other disposition of agreement vessels. 1090ez Insurance or indemnity proceeds attributable to agreement vessels. 1090ez Any tax-exempt interest earned on state or local bonds in your CCF account. 1090ez Capital gain account. 1090ez   The capital gain account consists of amounts attributable to the following items reduced by any capital losses from assets held in your CCF account for more than 6 months. 1090ez Any capital gain from either of the following sources. 1090ez The sale or other disposition of agreement vessels held for more than 6 months. 1090ez Insurance or indemnity proceeds attributable to agreement vessels held for more than 6 months. 1090ez Any capital gain from assets held in your CCF account for more than 6 months. 1090ez Ordinary income account. 1090ez   The ordinary income account consists of amounts attributable to the following items. 1090ez Any earnings (without regard to the carryback of any net operating or net capital loss) from the operation of agreement vessels in the fisheries of the United States or in the foreign or domestic commerce of the United States. 1090ez Any capital gain from the following sources reduced by any capital losses from assets held in your CCF account for 6 months or less. 1090ez The sale or other disposition of agreement vessels held for 6 months or less. 1090ez Insurance or indemnity proceeds attributable to agreement vessels held for 6 months or less. 1090ez Any capital gain from assets held in your CCF account for 6 months or less. 1090ez Any ordinary income (such as depreciation recapture) from either of the following sources. 1090ez The sale or other disposition of agreement vessels. 1090ez Insurance or indemnity proceeds attributable to agreement vessels. 1090ez Any interest (not including tax-exempt interest from state and local bonds), most dividends, and other ordinary income earned on the assets in your CCF account. 1090ez Tax Treatment of CCF Deposits This section explains the tax treatment of income used as the basis for CCF deposits. 1090ez Capital gains. 1090ez   Do not report any transaction that produces a capital gain if you deposit the net proceeds into your CCF account. 1090ez This treatment applies to either of the following transactions. 1090ez The sale or other disposition of an agreement vessel. 1090ez The receipt of insurance or indemnity proceeds attributable to an agreement vessel. 1090ez Depreciation recapture. 1090ez   Do not report any transaction that produces depreciation recapture if you deposit the net proceeds into your CCF account. 1090ez This treatment applies to either of the following transactions. 1090ez The sale or other disposition of an agreement vessel. 1090ez The receipt of insurance or indemnity proceeds attributable to an agreement vessel. 1090ez Earnings from operations. 1090ez   Report earnings from the operation of agreement vessels on your Schedule C or C-EZ (Form 1040) even if you deposit part of these earnings into your CCF account. 1090ez You subtract any part of the earnings you deposited into your CCF account from the amount you would otherwise enter as taxable income on Form 1040, line 43 (for 2005). 1090ez Next to line 43, write “CCF” and the amount of the deposits. 1090ez Do not deduct these CCF deposits on Schedule C or C-EZ (Form 1040). 1090ez If you deposit earnings from operations into your CCF account and you must complete other forms such as Form 6251, Alternative Minimum Tax (Individuals), or a worksheet for Schedule D (Form 1040), you will need to make an extra computation. 1090ez When the other form instructs you to use the amount from Form 1040, line 41 (for 2005), do not use that amount. 1090ez Instead, add Form 1040, lines 42 and 43 (for 2005), and use that amount. 1090ez Self-employment tax. 1090ez   You must use your net profit or loss from your fishing business to figure your self-employment tax. 1090ez Do not reduce your net profit or loss by any earnings from operations you deposit into your CCF account. 1090ez    Partnerships and S corporations. 1090ez The deduction for partnership earnings from operations deposited into a CCF account is separately stated on Schedule K (Form 1065), line 13d, and allocated to the partners on Schedule K-1 (Form 1065), box 13 (for 2005). 1090ez   The deduction for S corporation earnings deposited into a CCF account is separately stated on Schedule K (Form 1120S), line 12d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 12 (for 2005). 1090ez Tax Treatment of CCF Earnings This section explains the tax treatment of the earnings from the assets in your CCF account when the earnings are redeposited or left in your account. 1090ez However, if you choose to withdraw the earnings in the year earned, you must generally pay income tax on them. 1090ez Capital gains. 1090ez   Do not report any capital gains from the sale of capital assets held in your CCF account. 1090ez This includes capital gain distributions reported to you on Form 1099-DIV or a substitute statement. 1090ez However, you should attach a statement to your tax return to list the payers and the amounts and to identify the capital gains as “CCF account earnings. 1090ez ” Interest and dividends. 1090ez   Do not report any ordinary income (such as interest and dividends) you earn on the assets in your CCF account. 1090ez However, you should attach a statement to your return to list the payers and the amounts and to identify them as “CCF account earnings. 1090ez ”   If you are required to file Schedule B (Form 1040), you can add these earnings to the list of payers and amounts on line 1 or line 5 and identify them as “CCF earnings. 1090ez ” Then, subtract the same amounts from the list and identify them as “CCF deposits. 1090ez ” Tax-exempt interest. 1090ez   Do not report tax-exempt interest from state or local bonds you held in your CCF account. 1090ez You are not required to report this interest on Form 1040, line 8b. 1090ez Tax Treatment of CCF Withdrawals This section discusses the tax treatment of amounts you withdraw from your CCF account during the year. 1090ez Qualified Withdrawals A qualified withdrawal from a CCF account is one that is approved by NMFS for either of the following uses. 1090ez Acquiring, building, or rebuilding qualified vessels (defined next). 1090ez Making principal payments on the mortgage of a qualified vessel. 1090ez NMFS will not approve amounts withdrawn to purchase nets not continuously attached to the vessel, such as seine nets, gill set-nets, and gill drift-nets. 1090ez NMFS will approve amounts withdrawn to purchase trawl nets. 1090ez Qualified vessel. 1090ez   This is any vessel that meets all of the following requirements. 1090ez The vessel was built or rebuilt in the United States. 1090ez The vessel is documented under the laws of the United States. 1090ez The person maintaining the CCF account agrees with the Secretary of Commerce that the vessel will be operated in United States foreign trade, Great Lakes trade, noncontiguous domestic trade, or the fisheries of the United States. 1090ez How to determine the source of qualified withdrawals. 1090ez   When you make a qualified withdrawal, the amount is treated as being withdrawn in the following order from the accounts listed below. 1090ez The capital account. 1090ez The capital gain account. 1090ez The ordinary income account. 1090ez Excluding qualified withdrawals from tax. 1090ez   Do not report on your income tax return any qualified withdrawals from your CCF account. 1090ez Reduce the depreciable basis of fishing vessels you acquire, build, or rebuild when you make a qualified withdrawal from either the capital gain or the ordinary income account. 1090ez Nonqualified Withdrawals A nonqualified withdrawal from a CCF account is generally any withdrawal that is not a qualified withdrawal. 1090ez Qualified withdrawals are defined under Qualified Withdrawals, earlier. 1090ez Examples. 1090ez   Examples of nonqualified withdrawals include the following amounts from either the ordinary income account or the capital gain account. 1090ez Amounts remaining in a CCF account upon termination of your agreement with NMFS. 1090ez Amounts you withdraw and use to make principal payments on the mortgage of a vessel if the basis of that vessel and the bases of other vessels you own have already been reduced to zero. 1090ez Amounts determined by the IRS to cause your CCF account balance to exceed the amount appropriate to meet your planned use of withdrawals. 1090ez You will generally be given 3 years to revise your plans to cover this excess balance. 1090ez Amounts you leave in your account for more than 25 years. 1090ez There is a graduated schedule under which the percentage applied to determine the amount of the nonqualified withdrawal increases from 20% in the 26th year to 100% in the 30th year. 1090ez How to determine the source of nonqualified withdrawals. 1090ez    When you make a nonqualified withdrawal from your CCF account, the amount is treated as being withdrawn in the following order from the accounts listed below. 1090ez The ordinary income account. 1090ez The capital gain account. 1090ez The capital account. 1090ez Paying tax on nonqualified withdrawals. 1090ez   In general, nonqualified withdrawals are taxed separately from your other gross income and at the highest marginal tax rate in effect for the year of withdrawal. 1090ez However, nonqualified withdrawals treated as made from the capital gain account are taxed at a rate that cannot exceed 15% for individuals and 34% for corporations. 1090ez    Partnerships and S corporations. 1090ez Taxable nonqualified partnership withdrawals are separately stated on Schedule K (Form 1065), line 20c, and allocated to the partners on Schedule K-1 (Form 1065), box 20 (for 2005). 1090ez Taxable nonqualified withdrawals by an S corporation are separately stated on Schedule K (Form 1120S), line 17d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 17. 1090ez Interest. 1090ez   You must pay interest on the additional tax due to nonqualified withdrawals that are treated as made from either the ordinary income or the capital gain account. 1090ez The interest period begins on the last date for paying tax for the year for which you deposited the amount you withdrew from your CCF account. 1090ez The period ends on the last date for paying tax for the year in which you make the nonqualified withdrawal. 1090ez The interest rate on the nonqualified withdrawal is simple interest. 1090ez The rate is subject to change annually and is published in the Federal Register. 1090ez    You also can call NMFS at (301) 713-2393 (ext. 1090ez 204) to get the current interest rate. 1090ez Interest deduction. 1090ez   You can deduct the interest you pay on a nonqualified withdrawal as a trade or business expense. 1090ez Reporting the additional tax and interest. 1090ez   Attach a statement to your income tax return showing your computation of the tax and the interest on a nonqualified withdrawal. 1090ez Include the tax and interest on Form 1040, line 63 (for 2005). 1090ez To the left of line 63, write in the amount of tax and interest and “CCF. 1090ez ” Tax benefit rule. 1090ez   If any portion of your nonqualified withdrawal is properly attributable to contributions (not earnings on the contributions) you made to the CCF account that did not reduce your tax liability for any tax year prior to the withdrawal year, the following tax treatment applies. 1090ez The part that did not reduce your tax liability for any year prior to the withdrawal year is not taxed. 1090ez That part is allowed as a net operating loss deduction. 1090ez More Information This section briefly discussed the CCF program. 1090ez For more detailed information, see the following legislative authorities. 1090ez Section 607 of the Merchant Marine Act of 1936, as amended (46 U. 1090ez S. 1090ez C. 1090ez 1177). 1090ez Chapter 2, Part 259 of title 50 of the Code of Federal Regulations (50 C. 1090ez F. 1090ez R. 1090ez , Part 259). 1090ez Subchapter A, Part 3 of title 26 of the Code of Federal Regulations (26 C. 1090ez F. 1090ez R. 1090ez , Part 3). 1090ez Section 7518 of the Internal Revenue Code (IRC 7518). 1090ez The application kit you can obtain from NMFS at the address or phone number given earlier may contain copies of some of these sources of additional information. 1090ez Also, see their web page at www. 1090ez nmfs. 1090ez noaa. 1090ez gov/mb/financial_services/ccf. 1090ez htm. 1090ez How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 1090ez By selecting the method that is best for you, you will have quick and easy access to tax help. 1090ez Contacting your Taxpayer Advocate. 1090ez   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. 1090ez   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. 1090ez While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. 1090ez   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778, Call, write, or fax the Taxpayer Advocate office in your area, Call 1-800-829-4059 if you are a TTY/TDD user, or Visit www. 1090ez irs. 1090ez gov/advocate. 1090ez   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). 1090ez Free tax services. 1090ez   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 1090ez It contains a list of free tax publications and an index of tax topics. 1090ez It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 1090ez Internet. 1090ez You can access the IRS website 24 hours a day, 7 days a week, at www. 1090ez irs. 1090ez gov to: E-file your return. 1090ez Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 1090ez Check the status of your refund. 1090ez Click on Where's My Refund. 1090ez Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 1090ez Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 1090ez Download forms, instructions, and publications. 1090ez Order IRS products online. 1090ez Research your tax questions online. 1090ez Search publications online by topic or keyword. 1090ez View Internal Revenue Bulletins (IRBs) published in the last few years. 1090ez Figure your withholding allowances using our Form W-4 calculator. 1090ez Sign up to receive local and national tax news by email. 1090ez Get information on starting and operating a small business. 1090ez Phone. 1090ez Many services are available by phone. 1090ez Ordering forms, instructions, and publications. 1090ez Call 1-800-829-3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. 1090ez You should receive your order within 10 days. 1090ez Asking tax questions. 1090ez Call the IRS with your tax questions at 1-800-829-1040. 1090ez Solving problems. 1090ez You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 1090ez An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 1090ez Call your local Taxpayer Assistance Center for an appointment. 1090ez To find the number, go to www. 1090ez irs. 1090ez gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1090ez TTY/TDD equipment. 1090ez If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 1090ez TeleTax topics. 1090ez Call 1-800-829-4477 and press 2 to listen to pre-recorded messages covering various tax topics. 1090ez Refund information. 1090ez If you would like to check the status of your refund, call 1-800-829-4477 and press 1 for automated refund information and follow the recorded instructions or call 1-800-829-1954. 1090ez Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 1090ez Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 1090ez Evaluating the quality of our telephone services. 1090ez To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 1090ez One method is for a second IRS representative to sometimes listen in on or record telephone calls. 1090ez Another is to ask some callers to complete a short survey at the end of the call. 1090ez Walk-in. 1090ez Many products and services are available on a walk-in basis. 1090ez Products. 1090ez You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1090ez Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. 1090ez Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 1090ez Services. 1090ez You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 1090ez An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 1090ez If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 1090ez No appointment is necessary, but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 1090ez A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 1090ez To find the number, go to www. 1090ez irs. 1090ez gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1090ez Mail. 1090ez You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business days after your request is received. 1090ez National Distribution Center P. 1090ez O. 1090ez Box 8903 Bloomington, IL 61702-8903 CD-ROM for tax products. 1090ez You can order Publication 1796, IRS Tax Products on CD-ROM, and obtain: A CD that is released twice so you have the latest products. 1090ez The first release ships in late December and the final release ships in late February. 1090ez Current-year forms, instructions, and publications. 1090ez Prior-year forms, instructions, and publications. 1090ez Tax Map: an electronic research tool and finding aid. 1090ez Tax law frequently asked questions (FAQs). 1090ez Tax Topics from the IRS telephone response system. 1090ez Fill-in, print, and save features for most tax forms. 1090ez Internal Revenue Bulletins. 1090ez Toll-free and email technical support. 1090ez Buy the CD-ROM from National Technical Information Service (NTIS) at www. 1090ez irs. 1090ez gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee). 1090ez CD-ROM for small businesses. 1090ez Publication 3207, Small Business Resource Guide CD-ROM, has a new look and enhanced navigation features. 1090ez This CD includes: Helpful information, such as how to prepare a business plan, find financing for your business, and much more. 1090ez All the business tax forms, instructions, and publications needed to successfully manage a business. 1090ez Tax law changes. 1090ez IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic. 1090ez Web links to various government agencies, business associations, and IRS organizations. 1090ez “Rate the Product” survey—your opportunity to suggest changes for future editions. 1090ez An updated version of this CD is available each year in early April. 1090ez You can get a free copy by calling 1-800-829-3676 or by visiting www. 1090ez irs. 1090ez gov/smallbiz. 1090ez Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

A Brief Overview of Depreciation

Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.

Most types of tangible property (except, land), such as buildings, machinery, vehicles, furniture, and equipment are depreciable. Likewise, certain intangible property, such as patents, copyrights, and computer software is depreciable.

In order for a taxpayer to be allowed a depreciation deduction for a property, the property must meet all the following requirements:

  • The taxpayer must own the property. Taxpayers may also depreciate any capital improvements for property the taxpayer leases.
  • A taxpayer must use the property in business or in an income-producing activity. If a taxpayer uses a property for business and for personal purposes, the taxpayer can only deduct depreciation based only on the business use of that property.
  • The property must have a determinable useful life of more than one year.

Even if a taxpayer meets the preceding requirements for a property, a taxpayer cannot depreciate the following property:

  • Property placed in service and disposed of in same year.
  • Equipment used to build capital improvements. A taxpayer must add otherwise allowable depreciation on the equipment during the period of construction to the basis of the improvements.
  • Certain term interests.

Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income. The property ceases to be depreciable when the taxpayer has fully recovered the property’s cost or other basis or when the taxpayer retires it from service, whichever happens first.

A taxpayer must identify several items to ensure the proper depreciation of a property, including:

  • The depreciation method for the property
  • The class life of the asset
  • Whether the property is “Listed Property”
  • Whether the taxpayer elects to expense any portion of the asset
  • Whether the taxpayer qualifies for any “bonus” first year depreciation
  • The depreciable basis of the property

The Modified Accelerated Cost Recovery System (MACRS) is the proper depreciation method for most property. Additional information about MACRS, and the other components of depreciation are in Publication 946, How to Depreciate Property.

A taxpayer must use Form 4562, Depreciation and Amortization, to report depreciation on a tax return. Form 4562 is divided into six sections and the Instructions for Form 4562 contain information on how, and when to fill out each section.

Page Last Reviewed or Updated: 16-Sep-2013

The 1090ez

1090ez Publication 4492 - Main Contents Table of Contents DefinitionsHurricane Katrina Disaster Area Katrina Covered Disaster Area Gulf Opportunity (GO) Zone (Core Disaster Area) Hurricane Rita Disaster Area (Rita Covered Disaster Area) Rita GO Zone Hurricane Wilma Disaster Area Wilma Covered Disaster Area Wilma GO Zone Extended Tax Deadlines Charitable Giving IncentivesTemporary Suspension of Limits on Charitable Contributions Standard Mileage Rate for Charitable Use of Vehicles Mileage Reimbursements to Charitable Volunteers Charitable Deduction for Contributions of Food Inventory Charitable Deduction for Contributions of Book Inventories to Public Schools Casualty and Theft LossesTime limit for making election. 1090ez Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Hurricane Distributions Repayment of Qualified Hurricane Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for IndividualsEarned Income Credit and Child Tax Credit Additional Exemption for Housing Individuals Displaced by Hurricane Katrina Education Credits Recapture of Federal Mortgage Subsidy Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Tax Relief for Temporary Relocation Additional Tax Relief for BusinessesSpecial Depreciation Allowance Increased Section 179 Deduction Work Opportunity Credit Employee Retention Credit Hurricane Katrina Housing Credit Reforestation Costs Demolition and Clean-up Costs Increase in Rehabilitation Tax Credit Request for Copy or Transcript of Tax Return How To Get Tax Help Definitions The following definitions are used throughout this publication. 1090ez Hurricane Katrina Disaster Area The Hurricane Katrina disaster area covers the area for which the President declared a major disaster before September 14, 2005, because of Hurricane Katrina. 1090ez The Hurricane Katrina disaster area covers the entire states of Alabama, Florida, Louisiana, and Mississippi. 1090ez Katrina Covered Disaster Area A portion of the Hurricane Katrina disaster area has been designated by the IRS as a covered disaster area. 1090ez The Katrina covered disaster area covers the following areas in four states. 1090ez Alabama. 1090ez   The counties of Baldwin, Bibb, Choctaw, Clarke, Colbert, Cullman, Greene, Hale, Jefferson, Lamar, Lauderdale, Marengo, Marion, Mobile, Monroe, Perry, Pickens, Sumter, Tuscaloosa, Washington, Wilcox, and Winston. 1090ez Florida. 1090ez   The counties of Bay, Broward, Collier, Escambia, Franklin, Gulf, Miami-Dade, Monroe, Okaloosa, Santa Rosa, and Walton. 1090ez Louisiana. 1090ez   All parishes. 1090ez Mississippi. 1090ez   All counties. 1090ez Gulf Opportunity (GO) Zone (Core Disaster Area) The GO Zone (also called the core disaster area) covers the portion of the Hurricane Katrina disaster area determined by the Federal Emergency Management Agency (FEMA) to be eligible for either individual only or both individual and public assistance from the Federal Government. 1090ez The GO Zone covers the following areas in three states. 1090ez Alabama. 1090ez   The counties of Baldwin, Choctaw, Clarke, Greene, Hale, Marengo, Mobile, Pickens, Sumter, Tuscaloosa, and Washington. 1090ez Louisiana. 1090ez   The parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. 1090ez Bernard, St. 1090ez Charles, St. 1090ez Helena, St. 1090ez James, St. 1090ez John the Baptist, St. 1090ez Martin, St. 1090ez Mary, St. 1090ez Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge, and West Feliciana. 1090ez Mississippi. 1090ez   The counties of Adams, Amite, Attala, Choctaw, Claiborne, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Holmes, Humphreys, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo. 1090ez Hurricane Rita Disaster Area (Rita Covered Disaster Area) The Hurricane Rita disaster area (also designated by the IRS as the Rita covered disaster area) covers the area for which the President declared a major disaster before October 6, 2005, because of Hurricane Rita. 1090ez This area covers the entire states of Louisiana and Texas. 1090ez Rita GO Zone The Rita GO Zone covers the portion of the Hurricane Rita disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. 1090ez The Rita GO Zone covers the following areas in two states. 1090ez Louisiana. 1090ez   The parishes of Acadia, Allen, Ascension, Beauregard, Calcasieu, Cameron, Evangeline, Iberia, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Plaquemines, Sabine, St. 1090ez Landry, St. 1090ez Martin, St. 1090ez Mary, St. 1090ez Tammany, Terrebonne, Vermilion, Vernon, and West Baton Rouge. 1090ez Texas. 1090ez   The counties of Angelina, Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jasper, Jefferson, Liberty, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Shelby, Trinity, Tyler, and Walker. 1090ez Hurricane Wilma Disaster Area The Hurricane Wilma disaster area covers the area for which the President declared a major disaster before November 14, 2005, because of Hurricane Wilma. 1090ez The Hurricane Wilma disaster area covers the entire state of Florida. 1090ez Wilma Covered Disaster Area A portion of the Hurricane Wilma disaster area has been designated by the IRS as a covered disaster area. 1090ez The Wilma covered disaster area covers the following counties. 1090ez Florida. 1090ez   Brevard, Broward, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Osceola, Palm Beach, Polk, St. 1090ez Lucie, and Sarasota. 1090ez Wilma GO Zone The Wilma GO Zone covers the portion of the Hurricane Wilma disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. 1090ez The Wilma GO Zone covers the following counties. 1090ez Florida. 1090ez   Brevard, Broward, Collier, Glades, Hendry, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. 1090ez Lucie. 1090ez Extended Tax Deadlines The IRS has extended deadlines that apply to filing returns, paying taxes, and performing certain other time-sensitive acts for certain taxpayers affected by Hurricane Katrina, Rita, or Wilma, until February 28, 2006. 1090ez The extension applies to deadlines (either an original or extended due date) that occur during the following periods. 1090ez After August 28, 2005 (August 23, 2005, for Florida affected taxpayers), and before February 28, 2006, for taxpayers affected by Hurricane Katrina. 1090ez After September 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Rita. 1090ez After October 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Wilma. 1090ez Affected taxpayer. 1090ez   The following taxpayers are eligible for the extension. 1090ez Any individual whose main home is located in a covered disaster area. 1090ez Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 1090ez Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained or whose tax professional's office is in a covered disaster area. 1090ez The main home or principal place of business does not have to be located in the covered area. 1090ez Any individual visiting a county or parish in the Hurricane Katrina or Hurricane Rita covered disaster area that was injured or killed (and the estate of an individual killed) as a result of the hurricane or its aftermath. 1090ez Any estate or trust whose tax records needed to meet a filing or payment deadline are maintained in a covered disaster area. 1090ez Generally, any individual who is a worker assisting in the relief activities in a covered disaster area. 1090ez However, a relief worker assisting in the Wilma covered disaster area is not an affected taxpayer unless the worker is affiliated with a recognized government or philanthropic organization assisting in the relief activities. 1090ez The spouse of an affected taxpayer, solely with regard to a joint income tax return with that taxpayer. 1090ez   To ensure correct processing, affected taxpayers should write the assigned disaster designation (for example, “Hurricane Katrina”) in red ink at the top of any forms or documents filed with the IRS. 1090ez Affected taxpayers can also identify themselves to the IRS or ask hurricane-related questions by calling the special IRS disaster hotline at 1-866-562-5227. 1090ez Acts extended. 1090ez   Deadlines for performing the following acts are extended. 1090ez Filing any return of income, estate, gift, generation-skipping transfer, excise, or employment tax. 1090ez Paying any income, estate, gift, generation-skipping transfer, excise, or employment tax. 1090ez This includes making estimated tax payments. 1090ez Making certain contributions, distributions, recharacterizing contributions, or making a rollover to or from a qualified retirement plan. 1090ez Filing certain petitions with the Tax Court. 1090ez Filing a claim for credit or refund of any tax. 1090ez Bringing suit upon a claim for credit or refund. 1090ez Certain other acts described in Revenue Procedure 2005-27. 1090ez You can find Revenue Procedure 2005-27 on page 1050 of Internal Revenue Bulletin 2005-20 at www. 1090ez irs. 1090ez gov/pub/irs-irbs/irb05-20. 1090ez pdf. 1090ez Forgiveness of interest and penalties. 1090ez   The IRS may forgive the interest and penalties on any underpaid income, estate, gift, employment, or excise tax for the length of any extension. 1090ez Charitable Giving Incentives Temporary Suspension of Limits on Charitable Contributions Individuals. 1090ez   Qualified contributions are not subject to the overall limit on itemized deductions or the 50% adjusted gross income (AGI) limit. 1090ez A qualified contribution is a charitable contribution paid in cash or by check after August 27, 2005, and before January 1, 2006, to a 50% limit organization (other than certain private foundations described in section 509(a)(3)) if you make an election to have the 50% limit not apply to these contributions. 1090ez   Your deduction for qualified contributions is limited to your AGI minus your deduction for all other charitable contributions. 1090ez You can carry over any contributions you are not able to deduct for 2005 because of this limit. 1090ez In 2006, treat the carryover of your unused qualified contributions as a carryover of contributions subject to the 50% limit. 1090ez Exception. 1090ez   Qualified contributions do not include a contribution to a segregated fund or account for which you (or any person you appoint or designate) have or expect to have advisory privileges with respect to distributions or investments based on your contribution. 1090ez Corporations. 1090ez   A corporation may elect to deduct qualified cash contributions without regard to the 10% taxable income limit if the contributions were made after August 27, 2005, and before January 1, 2006, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3)), for Hurricane Katrina, Rita, or Wilma relief efforts. 1090ez The corporation's deduction for these qualified contributions is limited to 100% of taxable income (as modified for the 10% limit) minus the corporation's deduction for all other charitable contributions. 1090ez Any qualified contributions over this limit can be carried over to the next 5 years, subject to the 10% limit. 1090ez Partners and shareholders. 1090ez   Each partner in a partnership and each shareholder in an S corporation makes a separate election to have the appropriate limit not apply. 1090ez More information. 1090ez   For more information, see Publication 526 or Publication 542, Corporations. 1090ez Publication 526 includes a worksheet you can use to figure your deduction if any limits apply to your charitable contributions. 1090ez Standard Mileage Rate for Charitable Use of Vehicles The following are special standard mileage rates in effect in 2005 and 2006 for the cost of operating your automobile for providing charitable services solely related to Hurricane Katrina. 1090ez 29 cents per mile for the period August 25 through August 31, 2005. 1090ez 34 cents per mile for the period September 1 through December 31, 2005. 1090ez 32 cents per mile for the period January 1 through December 31, 2006. 1090ez Mileage Reimbursements to Charitable Volunteers You can exclude from income amounts you receive as mileage reimbursements for the use of a private passenger automobile for the benefit of a qualified charitable organization in providing relief related to Hurricane Katrina during the period beginning on August 25, 2005, and ending on December 31, 2006. 1090ez You cannot claim a deduction or credit for amounts you receive as a mileage reimbursement. 1090ez You must keep records of miles driven, time, place (or use), and purpose of the mileage. 1090ez The amount you can exclude from income cannot exceed the standard business mileage rate (shown below) for expenses incurred during the following periods. 1090ez 40. 1090ez 5 cents per mile for the period August 25 through August 31, 2005. 1090ez 48. 1090ez 5 cents per mile for the period September 1 through December 31, 2005. 1090ez 44. 1090ez 5 cents per mile for the period January 1 through December 31, 2006. 1090ez Charitable Deduction for Contributions of Food Inventory Any taxpayer engaged in a trade or business is eligible to claim a deduction for a contribution of “apparently wholesome food” inventory to a qualified charitable organization described in section 501(c)(3) (except for private nonoperating foundations) after August 27, 2005, and before January 1, 2006. 1090ez “Apparently wholesome food” is food that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. 1090ez The deduction is equal to the lesser of: The basis of the donated food plus one-half of the gain that would have been realized if the donated food had been sold at fair market value on the date of the donation, or Two times the basis of the donated food. 1090ez The taxpayer must receive written certification from the donee stating: The donated food is related to the purpose or function of the donee's basis for exemption under section 501(c)(3) and is to be used solely for the care of the ill, the needy, or infants; and The food was not given in exchange for money, other property, or services. 1090ez For a taxpayer other than a C corporation, the deduction is limited to 10% of the taxpayer's total net income from all trades or businesses from which the food contributions were made (figured without regard to the deduction for charitable contributions). 1090ez For example, if a taxpayer is a sole proprietor, a shareholder in an S corporation, and a partner in a partnership, and each made a contribution of apparently wholesome food inventory, the taxpayer's deduction is limited to 10% of the taxpayer's total net income from the sole proprietorship, S corporation, and partnership (figured without regard to the deduction for charitable contributions). 1090ez Charitable Deduction for Contributions of Book Inventories to Public Schools A corporation (other than an S corporation) may be allowed a charitable deduction for a qualified book contribution made after August 27, 2005, and before January 1, 2006, to a public school that: Provides elementary or secondary education (kindergarten through grade 12), and Normally maintains a regular faculty and curriculum and has a regular enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. 1090ez . 1090ez The deduction is equal to the lesser of: The basis of the donated books plus one-half of the gain that would have been realized if the donated books had been sold at fair market value on the date of the donation, or Two times the basis of the donated books. 1090ez The corporation must receive written certification from the school stating that the donated books are suitable for the organization's educational programs and will be used for such programs. 1090ez Casualty and Theft Losses The following paragraphs explain changes to casualty and theft losses that were caused by Hurricane Katrina, Rita, or Wilma. 1090ez For more information, see Publication 547. 1090ez Limits on personal casualty or theft losses caused by Hurricane Katrina, Rita, or Wilma. 1090ez   The following losses to personal use property are not subject to the $100 or 10% of adjusted gross income limits. 1090ez Losses that arose in the Hurricane Katrina disaster area after August 24, 2005, and that were caused by Hurricane Katrina. 1090ez Losses that arose in the Hurricane Rita disaster area after September 22, 2005, and that were caused by Hurricane Rita. 1090ez Losses that arose in the Hurricane Wilma disaster area after October 22, 2005, and that were caused by Hurricane Wilma. 1090ez Qualifying losses include losses from flooding or other casualty, and from theft, that arose in the hurricane disaster area and that were caused by the hurricane. 1090ez Special instructions for individuals who elect to claim a Hurricane Katrina, Rita, or Wilma casualty or theft loss for 2004. 1090ez   Casualty and theft losses are generally deductible only in the year the casualty occurred or theft was discovered. 1090ez However, Hurricane Katrina, Rita, and Wilma are Presidentially declared disasters. 1090ez Therefore, you can elect to deduct losses from these hurricanes on your tax return for the previous year. 1090ez If you make this election, use the following additional instructions to complete your forms. 1090ez   Individuals filing or amending their 2004 tax return whose only casualty or theft losses to personal use property claimed on that return were caused by Hurricane Katrina, Rita, or Wilma should write “Hurricane Katrina,” “Hurricane Rita,” or “Hurricane Wilma” at the top of Form 1040 or 1040X. 1090ez They must also complete and attach the 2004 Form 4684 and write “Hurricane Katrina,”“Hurricane Rita,” or “Hurricane Wilma” on the dotted line next to line 11 and enter -0- on lines 11 and 17. 1090ez   Individuals filing or amending their 2004 tax return who also have casualty or theft losses to personal use property not related to Hurricane Katrina, Rita, or Wilma should disregard the caution directing taxpayers to use only one Form 4684, located above line 13, and complete lines 13 through 18 on two Forms 4684. 1090ez The Form 1040 or 1040X and the first Form 4684 should be prepared as explained above for Hurricane Katrina, Rita, or Wilma losses only. 1090ez The second Form 4684 should be prepared in the normal manner for all gains and non-Hurricane Katrina, Rita or Wilma losses. 1090ez If both Forms 4684 have a loss on line 18, they should carry the combined losses from that line to Schedule A (Form 1040), line 19. 1090ez If there is a gain on line 15 of the second Form 4684, disregard the instruction to enter it on Schedule D (Form 1040), and instead enter on Schedule A (Form 1040), line 19, the excess of the loss from the first Form 4684 over the gain on line 15 of the second Form 4684. 1090ez , Time limit for making election. 1090ez   You must make this election to claim your casualty or theft loss in 2004 by the later of the following dates. 1090ez The due date (without extensions) for filing your 2005 income tax return. 1090ez The due date (with extensions) for filing your 2004 income tax return. 1090ez Example. 1090ez If you are a calendar year individual taxpayer, you have until April 17, 2006, to amend your 2004 tax return to claim a casualty or theft loss that occurred during 2005. 1090ez Replacement Period for Nonrecognition of Gain Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. 1090ez Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a Presidentially declared disaster area). 1090ez However, for property that was involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, a 5-year replacement period applies if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. 1090ez For more information, see the Instructions for Form 4684. 1090ez Net Operating Losses Qualified GO Zone loss. 1090ez   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. 1090ez However, the portion of an NOL that is a qualified GO Zone loss can be carried back to the 5 tax years before the NOL year. 1090ez In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. 1090ez   A qualified GO Zone loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified GO Zone casualty loss (as defined below), Moving expenses paid or incurred after August 27, 2005, and before January 1, 2008, for the employment of an individual whose main home was in the GO Zone before August 28, 2005, who was unable to remain in that home because of Hurricane Katrina, and whose main job location (after the move) is in the GO Zone, Temporary housing expenses paid or incurred after August 27, 2005, and before January 1, 2008, to house employees of the taxpayer whose main job location is in the GO Zone, Depreciation or amortization allowable for any qualified GO Zone property (even if you elected not to claim the special GO Zone depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred after August 27, 2005, and before January 1, 2008, for any damage from Hurricane Katrina to property located in the GO Zone. 1090ez Qualified GO Zone casualty loss. 1090ez   A qualified GO Zone casualty loss is any deductible section 1231 loss of property located in the GO Zone if the loss was caused by Hurricane Katrina. 1090ez For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by Hurricane Katrina of property located in the GO Zone. 1090ez Any such loss taken into account in figuring your qualified GO Zone loss is not eligible for the election to be treated as having occurred in the previous tax year. 1090ez 5-year NOL carryback of certain timber losses. 1090ez   Generally, you can carry the portion of an NOL due to income and deductions attributable to a farming business back to the 5 tax years before the NOL year. 1090ez You can treat income and deductions attributable to qualified timber property as attributable to a farming business if any portion of the property is located in the GO Zone, Rita GO Zone, or Wilma GO Zone, and the income and deductions are allocable to the part of your tax year which is after the applicable date below. 1090ez August 27, 2005, if any portion of the property is located in the GO Zone. 1090ez September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). 1090ez October 22, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the RITA GO Zone). 1090ez   These rules will not apply after 2006. 1090ez   However, these rules apply only to a timber producer who: Held qualified timber property (defined in Publication 535, Business Expenses) on the applicable date below: August 28, 2005, if any portion of the property is located in the GO Zone, September 23, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone), or October 23, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the Rita GO Zone); Is not a corporation with stock publicly traded on an established securities market; Is not a real estate investment trust; and Did not hold more than 500 acres of qualified timber property on the applicable date above. 1090ez More information. 1090ez   For more information on NOLs, see Publication 536 or Publication 542, Corporations. 1090ez IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for taxpayers who suffered economic losses as a result of Hurricane Katrina, Rita, or Wilma. 1090ez Definitions Qualified hurricane distribution. 1090ez   A qualified hurricane distribution is any distribution you received from an eligible retirement plan if all of the following apply. 1090ez The distribution was made: After August 24, 2005, and before January 1, 2007, for Hurricane Katrina; After September 22, 2005, and before January 1, 2007, for Hurricane Rita; or After October 22, 2005, and before January 1, 2007, for Hurricane Wilma. 1090ez Your main home was located in a hurricane disaster area listed below on the date shown for that area. 1090ez August 28, 2005, for the Hurricane Katrina disaster area. 1090ez September 23, 2005, for the Hurricane Rita disaster area. 1090ez October 23, 2005, for the Hurricane Wilma disaster area. 1090ez You sustained an economic loss because of Hurricane Katrina, Rita, or Wilma and your main home was in that hurricane disaster area on the date shown in (2) above for that hurricane. 1090ez Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 1090ez   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified hurricane distribution, regardless of whether the distribution was made on account of Hurricane Katrina, Rita, or Wilma. 1090ez Qualified hurricane distributions are permitted without regard to your need or the actual amount of your economic loss. 1090ez   The total of your qualified hurricane distributions from all plans is limited to $100,000. 1090ez If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose. 1090ez   A reduction or offset (after August 24, 2005, for Katrina; after September 22, 2005, for Rita; or after October 22, 2005, for Wilma) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified hurricane distribution. 1090ez Eligible retirement plan. 1090ez   An eligible retirement plan can be any of the following. 1090ez A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). 1090ez A qualified annuity plan. 1090ez A tax-sheltered annuity contract. 1090ez A governmental section 457 deferred compensation plan. 1090ez A traditional, SEP, SIMPLE, or Roth IRA. 1090ez Main home. 1090ez   Generally, your main home is the home where you live most of the time. 1090ez A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. 1090ez Taxation of Qualified Hurricane Distributions Qualified hurricane distributions are included in income in equal amounts over three years. 1090ez However, if you elect, you can include the entire distribution in your income in the year it was received. 1090ez Qualified hurricane distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). 1090ez However, any distributions you receive in excess of the $100,000 qualified hurricane distribution limit may be subject to the additional tax on early distributions. 1090ez For more information, see Form 8915. 1090ez Repayment of Qualified Hurricane Distributions If you choose, you generally can repay any portion of a qualified hurricane distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. 1090ez Also, you can repay a qualified hurricane distribution made on account of a hardship from a retirement plan. 1090ez However, see Exceptions below for qualified hurricane distributions you cannot repay. 1090ez You have three years from the day after the date you received the distribution to make a repayment. 1090ez Amounts that are repaid are treated as a qualified rollover and are not included in income. 1090ez Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 1090ez See Form 8915 for more information on how to report repayments. 1090ez Exceptions. 1090ez   You cannot repay the following types of distributions. 1090ez Qualified hurricane distributions received as a beneficiary (other than a surviving spouse). 1090ez Required minimum distributions. 1090ez Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. 1090ez Repayment of Qualified Distributions for the Purchase or Construction of a Main Home If you received a qualified distribution to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area, you can repay that distribution before March 1, 2006, to an eligible retirement plan after August 24, 2005 (Katrina); after September 22, 2005 (Rita); or after October 22, 2005 (Wilma). 1090ez For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. 1090ez To be a qualified distribution, the distribution must meet all of the following requirements. 1090ez The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. 1090ez The distribution was received in 2005 after February 28 and before: August 29 for Hurricane Katrina; September 24 for Hurricane Rita; or October 24 for Hurricane Wilma. 1090ez The distribution was to be used to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area that was not purchased or constructed because of Hurricane Katrina, Rita, or Wilma. 1090ez Amounts that are repaid before March 1, 2006, are treated as a qualified rollover and are not included in income. 1090ez Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 1090ez A qualified distribution not repaid before March 1, 2006, may be taxable for 2005 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. 1090ez You must file Form 8915 if you received a qualified distribution that you repaid, in whole or in part, before March 1, 2006. 1090ez Loans From Qualified Plans The following benefits are available to qualified individuals. 1090ez Increases to the limits for distributions treated as loans from employer plans. 1090ez A 1-year suspension for payments due on plan loans. 1090ez Qualified individual. 1090ez   You are a qualified individual if any of the following apply. 1090ez Your main home on August 28, 2005, was located in the Hurricane Katrina disaster area and you had an economic loss because of Hurricane Katrina. 1090ez Your main home on September 23, 2005, was located in the Hurricane Rita disaster area and you had an economic loss because of Hurricane Rita. 1090ez Your main home on October 23, 2005, was located in the Hurricane Wilma disaster area and you had an economic loss because of Hurricane Wilma. 1090ez Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 1090ez Limits on plan loans. 1090ez   The $50,000 limit for distributions treated as plan loans is increased to $100,000. 1090ez In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. 1090ez The higher limits apply only to loans received during the following period. 1090ez If your main home was located in the Hurricane Katrina disaster area, the period began on September 24, 2005, and ends on December 31, 2006. 1090ez If your main home was located in the Hurricane Rita or Wilma disaster area, the period began on December 21, 2005, and ends on December 31, 2006. 1090ez If you are a qualified individual based on Hurricane Katrina and another hurricane, use the period based on Hurricane Katrina. 1090ez One-year suspension of loan payments. 1090ez   Payments on plan loans due before 2007 may be suspended for 1 year by the plan administrator. 1090ez To qualify for the suspension, the due date for any loan payment must occur during the period beginning on: August 28, 2005, if your main home was located in the Hurricane Katrina disaster area. 1090ez September 23, 2005, if your main home was located in the Hurricane Rita disaster area. 1090ez October 23, 2005, if your main home was located in the Hurricane Wilma disaster area. 1090ez If you are a qualified individual based on more than one hurricane, use the period with the earliest beginning date. 1090ez Additional Tax Relief for Individuals Earned Income Credit and Child Tax Credit You can elect to use your 2004 earned income to figure your earned income credit (EIC) and additional child tax credit for 2005 if: Your 2005 earned income is less than your 2004 earned income, and At least one of the following statements is true. 1090ez Your main home on August 25, 2005, was in the Gulf Opportunity (GO) Zone. 1090ez Your main home on August 25, 2005, was in the Hurricane Katrina disaster area and you were displaced from that home because of Hurricane Katrina. 1090ez Your main home on September 23, 2005, was in the Rita GO Zone. 1090ez Your main home on September 23, 2005, was in the Hurricane Rita disaster area and you were displaced from that home because of Hurricane Rita. 1090ez Your main home on October 23, 2005, was in the Wilma GO Zone. 1090ez Your main home on October 23, 2005, was in the Hurricane Wilma disaster area and you were displaced from that home because of Hurricane Wilma. 1090ez Earned income. 1090ez    For the purpose of this election, your earned income for both the EIC and the additional child tax credit is the amount of earned income used to figure your EIC, even if you did not take the EIC and even if that amount is different than your earned income for the additional child tax credit. 1090ez If you are claiming only the additional child tax credit, you must figure the amount of your earned income for EIC purposes to determine your eligibility to make the election and the amount of the credit. 1090ez Joint returns. 1090ez   If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. 1090ez If you make the election, your 2004 earned income is the sum of your 2004 earned income and your spouse's 2004 earned income. 1090ez Making the election. 1090ez   If you make the election to use your 2004 earned income, the election applies for figuring both the EIC and the additional child tax credit. 1090ez However, you can make the election for the additional child tax credit even if you do not take the EIC. 1090ez   Electing to use your 2004 earned income may increase or decrease your EIC. 1090ez Take the following steps to decide whether to make the election. 1090ez Figure your 2005 EIC using your 2004 earned income. 1090ez Figure your 2005 additional child tax credit using your 2004 earned income for EIC purposes. 1090ez Add the results of (1) and (2). 1090ez Figure your 2005 EIC using your 2005 earned income. 1090ez Figure your 2005 additional child tax credit using your 2005 earned income for additional child tax credit purposes. 1090ez Add the results of (4) and (5). 1090ez Compare the results of (3) and (6). 1090ez If (3) is larger than (6), it is to your benefit to make the election. 1090ez If (3) is equal to or smaller than (6), making the election will not help you. 1090ez   If you elect to use your 2004 earned income and you are claiming the EIC, enter “PYEI” and the amount of your 2004 earned income on the dotted line next to line 66a of Form 1040, on the line next to line 41a of Form 1040A, or in the space to the left of line 8a of Form 1040EZ. 1090ez   If you elect to use your 2004 earned income and you are claiming the additional child tax credit, enter your 2004 earned income for EIC purposes (even if you did not claim the EIC) on Form 8812, Additional Child Tax Credit, line 4a, and check the box on that line. 1090ez   Because Form 8812 was released before the GO Zone legislation was enacted, the instructions refer only to individuals whose main home was in the Hurricane Katrina disaster area. 1090ez When completing Form 8812, line 4a, use the above rules to determine your eligibility to make the election (instead of the Form 8812 instructions). 1090ez Getting your 2004 tax return information. 1090ez   If you do not have your 2004 tax records, you can get the amount of earned income used to figure your 2004 EIC by calling 1-866-562-5227. 1090ez You can also get this information by visiting the IRS website at www. 1090ez irs. 1090ez gov. 1090ez   If you prefer to figure your 2004 earned income yourself, copies or transcripts of your filed and processed tax returns can help you reconstruct your tax records. 1090ez See Request for Copy or Transcript of Tax Return on page 16. 1090ez Additional Exemption for Housing Individuals Displaced by Hurricane Katrina You may be able to claim an additional exemption amount of $500 for providing housing in your main home for each individual displaced by Hurricane Katrina. 1090ez The additional exemption amount is claimed on new Form 8914. 1090ez The additional exemption amount is allowable once per taxpayer for a specific individual in 2005 or 2006, but not in both years. 1090ez The maximum additional exemption amount you can claim for all displaced individuals is $2,000 ($1,000 if married filing separately). 1090ez The additional exemption amount you claim for displaced individuals in 2005 will reduce the $2,000 maximum for 2006. 1090ez If two or more taxpayers share the same main home, only one taxpayer in that main home can claim the additional exemption amount for a specific displaced individual. 1090ez If married filing separately, only one spouse may claim the additional exemption amount for a specific displaced individual. 1090ez In order for you to be considered to have provided housing, you must have a legal interest in the main home (that is, own or rent the home). 1090ez To qualify as a displaced individual, the individual: Must have had his or her main home in the Hurricane Katrina disaster area on August 28, 2005, and he or she must have been displaced from that home. 1090ez If the individual's main home was located outside the core disaster area, that home must have been damaged by Hurricane Katrina or the individual must have been evacuated from that home because of Hurricane Katrina, Must have been provided housing in your main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed, and Cannot be your spouse or dependent. 1090ez You cannot claim the additional exemption amount if you received rent (or any other amount) from any source for providing the housing. 1090ez You are permitted to receive payments or reimbursements that do not relate to normal housing costs, including the following. 1090ez Food, clothing, or personal items consumed or used by the displaced individual. 1090ez Reimbursement for the cost of any long distance telephone calls made by the displaced individual. 1090ez Reimbursement for the cost of gasoline for the displaced individual's use of your vehicle. 1090ez However, you cannot claim the additional exemption amount if you received any reimbursement for the extra costs of heat, electricity, or water used by the displaced individual. 1090ez Also, you must report on Form 8914 the displaced individual's social security number or individual taxpayer identification number to claim an additional exemption amount. 1090ez For more information, see Form 8914. 1090ez Education Credits The education credits have been expanded for students attending an eligible educational institution located in the Gulf Opportunity Zone (GOZ students) for any tax year beginning in 2005 or 2006. 1090ez The Hope credit for a GOZ student is increased to 100% of the first $2,000 in qualified education expenses and 50% of the next $2,000 of qualified education expenses for a maximum credit of $3,000 per student. 1090ez The lifetime learning credit rate for a GOZ student is increased from 20% to 40%. 1090ez The definition of qualified education expenses for a GOZ student also has been expanded. 1090ez In addition to tuition and fees required for the student's enrollment or attendance at an eligible educational institution, qualified education expenses for a GOZ student include the following. 1090ez Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. 1090ez For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution. 1090ez For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts. 1090ez The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. 1090ez The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 1090ez You will need to contact the eligible educational institution for qualified room and board costs. 1090ez For more information, see Form 8863. 1090ez Recapture of Federal Mortgage Subsidy Generally, if you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. 1090ez However, you do not have to recapture any benefit if your mortgage loan was a qualified home improvement loan of not more than $15,000. 1090ez This amount is increased to $150,000 if the loan was provided before 2011 and was used to: Repair damage caused by Hurricane Katrina to a residence in the Hurricane Katrina disaster area, or Alter, repair, or improve an existing owner-occupied residence in the GO Zone, Rita GO Zone, or Wilma GO Zone. 1090ez Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Generally, discharges of nonbusiness debts (such as mortgages) made after August 24, 2005, and before January 1, 2007, are excluded from income for individuals whose main home was in the Hurricane Katrina disaster area on August 25, 2005. 1090ez If the individual's main home was located outside the core disaster area, the individual also must have had an economic loss because of Hurricane Katrina. 1090ez Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 1090ez This relief does not apply to any debt secured by real property located outside the Hurricane Katrina disaster area. 1090ez You may also have to reduce certain tax attributes by the amount excluded. 1090ez For more information, see Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). 1090ez Tax Relief for Temporary Relocation Under the Gulf Opportunity Zone Act of 2005, the IRS may adjust the internal revenue laws to ensure that taxpayers do not lose a deduction or credit or experience a change of filing status in 2005 or 2006 as a result of a temporary relocation caused by Hurricane Katrina, Rita, or Wilma. 1090ez However, any such adjustment must ensure that an individual is not taken into account by more than one taxpayer for the same tax benefit. 1090ez The IRS has exercised this authority as follows. 1090ez In determining whether you furnished over one-half of the cost of maintaining a household, you can exclude from total household costs any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. 1090ez In determining whether you provided more than one-half of an individual's support, you can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. 1090ez You can treat as a student an individual who enrolled in school before August 25, 2005, and who is unable to attend classes because of Hurricane Katrina, for each month of the enrollment period that individual is prevented by Hurricane Katrina from attending school as planned. 1090ez You can treat as a student an individual who enrolled in school before September 23, 2005, and who is unable to attend classes because of Hurricane Rita, for each month of the enrollment period that individual is prevented by Hurricane Rita from attending school as planned. 1090ez You can treat as a student an individual who enrolled in school before October 23, 2005, and who is unable to attend classes because of Hurricane Wilma, for each month of the enrollment period that individual is prevented by Hurricane Wilma from attending school as planned. 1090ez Additional Tax Relief for Businesses Special Depreciation Allowance You can take a special depreciation allowance for qualified Gulf Opportunity (GO) Zone property (as defined below) you place in service after August 27, 2005. 1090ez The allowance is an additional deduction of 50% of the property's depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction). 1090ez The special allowance applies only for the first year the property is placed in service. 1090ez The allowance is deductible for both the regular tax and the alternative minimum tax (AMT). 1090ez There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. 1090ez You can elect not to deduct the special GO Zone depreciation allowance for qualified property. 1090ez If you make this election for any property, it applies to all property in the same class placed in service during the year. 1090ez Qualified GO Zone property. 1090ez   Property that qualifies for the special GO Zone depreciation allowance includes the following. 1090ez Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. 1090ez Water utility property. 1090ez Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 1090ez (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. 1090ez ) Qualified leasehold improvement property. 1090ez Nonresidential real property and residential rental property. 1090ez   For more information on this property, see Publication 946. 1090ez Other tests to be met. 1090ez   To be qualified GO Zone property, the property must also meet all of the following tests. 1090ez You must have acquired the property, by purchase, after August 27, 2005, but only if no binding written contract for the acquisition was in effect before August 28, 2005. 1090ez The property must be placed in service before 2008 (2009 in the case of nonresidential real property and residential rental property). 1090ez Substantially all of the use of the property must be in the GO Zone and in the active conduct of your trade or business in the GO Zone. 1090ez The original use of the property in the GO Zone must begin with you after August 27, 2005. 1090ez Used property can be qualified GO Zone property if it has not previously been used within the GO Zone. 1090ez Also, additional capital expenditures you incurred after August 27, 2005, to recondition or rebuild your property meet the original use test if the original use of the property in the GO Zone began with you. 1090ez Excepted property. 1090ez   Qualified GO Zone property does not include any of the following. 1090ez Property required to be depreciated using the Alternative Depreciation System (ADS). 1090ez Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103. 1090ez Property for which you are claiming a commercial revitalization deduction. 1090ez Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. 1090ez Any gambling or animal racing property (as defined below). 1090ez Property in the same class as that for which you elected not to claim the special GO Zone depreciation allowance. 1090ez   Gambling or animal racing property is: Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and The portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet. 1090ez Recapture of special allowance. 1090ez   If, in any year after the year you claim the special allowance, the property ceases to be qualified GO Zone property, you may have to recapture as ordinary income any excess benefit you received from claiming the special allowance. 1090ez Increased Section 179 Deduction An increased section 179 deduction is allowable for qualified section 179 Gulf Opportunity (GO) Zone property (as defined later) placed in service in the GO Zone. 1090ez Increased dollar limit. 1090ez   The limit on the section 179 deduction ($105,000 for 2005, $108,000 for 2006) for qualified section 179 GO Zone property acquired after August 27, 2005, is increased by the smaller of: $100,000, or The cost of qualified section 179 GO Zone property placed in service during the year (including such property placed in service by your spouse, even if you are filing a separate return). 1090ez   The amount for which you can make the election is reduced if the cost of all qualified section 179 GO Zone property you placed in service during the year exceeds $420,000 for 2005 ($430,000 for 2006) increased by the smaller of: $600,000, or The cost of qualified section 179 GO Zone property placed in service during the year. 1090ez Qualified section 179 GO Zone property. 1090ez   Qualified section 179 GO Zone property is section 179 property that is qualified GO Zone property (explained earlier under Special Depreciation Allowance). 1090ez Section 179 property does not include nonresidential real property or residential rental property. 1090ez For more information, including the requirements that must be met for property to qualify for the section 179 deduction, see chapter 2 of Publication 946. 1090ez Work Opportunity Credit For the work opportunity credit, the definition of “targeted group employee” has been expanded to include a Hurricane Katrina employee. 1090ez Hurricane Katrina employee. 1090ez   A Hurricane Katrina employee is: A person who, on August 28, 2005, had a main home in the core disaster area and, within a two-year period beginning on that date, is hired to perform services principally in the core disaster area; or A person who, on August 28, 2005, had a main home in the core disaster area, was displaced from that main home as a result of Hurricane Katrina, and was hired during the period beginning on August 28, 2005, and ending on December 31, 2005. 1090ez Qualified wages. 1090ez   Generally, qualified wages do not include wages you paid to a targeted group employee who worked for you previously. 1090ez However, wages will qualify if: You paid them to an employee who is a Hurricane Katrina employee, The employee was not in your employment on August 28, 2005, and This is your first hire of the employee as a Hurricane Katrina employee after August 28, 2005. 1090ez   For more information, see Form 5884. 1090ez Certification requirements. 1090ez   An employee must provide to the employer reasonable evidence that he or she is a Hurricane Katrina employee. 1090ez An employer may accept a completed Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits, as such evidence. 1090ez The certification requirements described in Form 8850 do not apply to a Hurricane Katrina employee. 1090ez Do not send any Forms 8850 that have only box 1 checked to the state employment security agency. 1090ez Instead, the employer should keep these Forms 8850 with the employer's other records. 1090ez For more information, see Form 8850 and its instructions. 1090ez Employee Retention Credit An eligible employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone, the Rita GO Zone, or the Wilma GO Zone can claim the employee retention credit. 1090ez The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). 1090ez Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 1090ez Use Form 5884-A to claim the credit. 1090ez See the following rules and definitions for each hurricane. 1090ez Employers affected by Hurricane Katrina. 1090ez   The following definitions apply to employers affected by Hurricane Katrina. 1090ez Eligible employer. 1090ez   For this purpose, an eligible employer is any employer who conducted an active trade or business on August 28, 2005, in the GO Zone and whose trade or business was inoperable on any day after August 28, 2005, and before January 1, 2006, because of damage caused by Hurricane Katrina. 1090ez Eligible employee. 1090ez   For this purpose, an eligible employee is an employee whose principal place of employment on August 28, 2005, with such eligible employer was in the GO Zone. 1090ez An employee is not an eligible employee for purposes of Hurricane Katrina if the employee is treated as an eligible employee for the work opportunity credit. 1090ez Employers affected by Hurricane Rita. 1090ez   The following definitions apply to employers affected by Hurricane Rita. 1090ez Eligible employer. 1090ez   For this purpose, an eligible employer is any employer who conducted an active trade or business on September 23, 2005, in the Rita GO Zone and whose trade or business was inoperable on any day after September 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Rita. 1090ez Eligible employee. 1090ez   For this purpose, an eligible employee is an employee whose principal place of employment on September 23, 2005, with such eligible employer was in the Rita GO Zone. 1090ez An employee is not an eligible employee for purposes of Hurricane Rita if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina employee retention credit. 1090ez Employers affected by Hurricane Wilma. 1090ez   The following definitions apply to employers affected by Hurricane Wilma. 1090ez Eligible employer. 1090ez   For this purpose, an eligible employer is any employer who conducted an active trade or business on October 23, 2005, in the Wilma GO Zone and whose trade or business was inoperable on any day after October 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Wilma. 1090ez Eligible employee. 1090ez   For this purpose, an eligible employee is an employee whose principal place of employment on October 23, 2005, with such eligible employer was in the Wilma GO Zone. 1090ez An employee is not an eligible employee for purposes of Hurricane Wilma if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina or Rita employee retention credit. 1090ez Qualified wages. 1090ez   Qualified wages are wages you paid or incurred before January 1, 2006, (up to $6,000 per employee) for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable hurricane, and ending on the date your trade or business resumed significant operations at that place. 1090ez In addition, the wages must have been paid or incurred after the following date. 1090ez August 28, 2005, for Hurricane Katrina. 1090ez September 23, 2005, for Hurricane Rita. 1090ez October 23, 2005, for Hurricane Wilma. 1090ez    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. 1090ez    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). 1090ez Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. 1090ez Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. 1090ez   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. 1090ez For a special rule that applies to railroad employees, see section 51(h)(1)(B). 1090ez   Qualified wages do not include the following. 1090ez Wages paid to your dependent or a related individual. 1090ez See section 51(i)(1). 1090ez Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. 1090ez Wages for services of replacement workers during a strike or lockout. 1090ez   For more information, see Form 5884-A. 1090ez Hurricane Katrina Housing Credit An employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone can claim the Hurricane Katrina housing credit. 1090ez The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from January 1, 2006, through July 1, 2006. 1090ez The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). 1090ez Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 1090ez The employer must use Form 5884-A to claim the credit. 1090ez A qualified employee is an individual who had a main home in the GO Zone on August 28, 2005, and who performs substantially all employment services in the GO Zone for the employer furnishing the lodging. 1090ez The employee cannot be your dependent or a related individual. 1090ez See section 51(i)(1). 1090ez For more information, see Form 5884-A. 1090ez Reforestation Costs You may be able to elect to deduct a limited amount of reforestation costs for each qualified timber property. 1090ez The deduction for any tax year generally is limited to $10,000 ($5,000 if married filing separately, $0 for a trust). 1090ez However, this limit is increased if you paid or incurred reforestation costs after the applicable date below and any portion of the qualified timber property is located in one of the following areas. 1090ez August 27, 2005, if any portion of the property is located in the GO Zone. 1090ez September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). 1090ez October 22, 2005, if any portion of the property is located in the Wilma GO Zone. 1090ez The limit for each qualified timber property is increased by the smaller of: $10,000 ($5,000 if married filing separately, $0 for a trust), or The amount of reforestation costs you paid or incurred after the applicable date for the qualified timber property, any portion of which is located in the zone described above. 1090ez The increase in the limit applies only to costs paid or incurred before 2008. 1090ez However, these rules do not apply to any timber producer who: Held more than 500 acres of qualified timber property at any time during the tax year, Is a corporation with stock publicly traded on an established securities market, or Is a real estate investment trust. 1090ez For more information about the election to deduct reforestation costs, see chapter 8 in Publication 535, Business Expenses. 1090ez Demolition and Clean-up Costs You can elect to deduct 50% of any qualified GO Zone clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. 1090ez Qualified GO Zone clean-up costs are any amounts paid or incurred after August 27, 2005, and before January 1, 2008, for the removal of debris from, or the demolition of structures on, real property located in the GO Zone that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. 1090ez Increase in Rehabilitation Tax Credit The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred after August 27, 2005, and before January 1, 2009, on buildings located in the GO Zone as follows. 1090ez For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%. 1090ez For certified historic structures, the credit percentage is increased from 20% to 26%. 1090ez For more information, see Form 3468, Investment Credit. 1090ez Request for Copy or Transcript of Tax Return Request for copy of tax return. 1090ez   You can use Form 4506 to order a copy of your tax return. 1090ez Generally, there is a $39. 1090ez 00 fee for requesting each copy of a tax return. 1090ez If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, the fee will be waived if the assigned disaster designation (for example, “Hurricane Katrina”) is written in red across the top of the form when filed. 1090ez Request for transcript of tax return. 1090ez   You can use Form 4506-T to order a free transcript of your tax return. 1090ez A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. 1090ez You can also call 1-800-829-1040 to order a transcript. 1090ez How To Get Tax Help Special IRS assistance. 1090ez   The IRS is providing special help for those affected by Hurricane Katrina, Rita, or Wilma, as well as survivors and personal representatives of the victims. 1090ez We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by Hurricane Katrina, Rita, or Wilma, or who have other tax issues related to the hurricanes. 1090ez Call 1-866-562-5227 Monday through Friday In English-7 a. 1090ez m. 1090ez to 10 p. 1090ez m. 1090ez local time In Spanish-8 a. 1090ez m. 1090ez to 9:30 p. 1090ez m. 1090ez local time   The IRS website at www. 1090ez irs. 1090ez gov has notices and other tax relief information. 1090ez Check it periodically for any new guidance. 1090ez Other help from the IRS. 1090ez   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. 1090ez By selecting the method that is best for you, you will have quick and easy access to tax help. 1090ez Contacting your Taxpayer Advocate. 1090ez   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. 1090ez   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. 1090ez While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. 1090ez   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778. 1090ez Call, write, or fax the Taxpayer Advocate office in your area. 1090ez Call 1-800-829-4059 if you are a TTY/TDD user. 1090ez Visit www. 1090ez irs. 1090ez gov/advocate. 1090ez   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). 1090ez Free tax services. 1090ez   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 1090ez It contains a list of free tax publications and an index of tax topics. 1090ez It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 1090ez Internet. 1090ez You can access the IRS website 24 hours a day, 7 days a week, at www. 1090ez irs. 1090ez gov to: E-file your return. 1090ez Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 1090ez Check the status of your refund. 1090ez Click on Where's My Refund. 1090ez Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 1090ez Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 1090ez Download forms, instructions, and publications. 1090ez Order IRS products online. 1090ez Research your tax questions online. 1090ez Search publications online by topic or keyword. 1090ez View Internal Revenue Bulletins (IRBs) published in the last few years. 1090ez Figure your withholdin