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E File Form 1040x

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E File Form 1040x

E file form 1040x Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. E file form 1040x Dispositions — mass asset accounts. E file form 1040x Early dispositions — 15-year real property. E file form 1040x Early dispositions — 18- and 19-year real property. E file form 1040x Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. E file form 1040x It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. E file form 1040x These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. E file form 1040x If you placed property in service during this period, you must continue to figure your depreciation under ACRS. E file form 1040x If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. E file form 1040x Listed property includes cars, other means of transportation, and certain computers. E file form 1040x Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. E file form 1040x ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. E file form 1040x It does not matter that the underlying property is depreciated under ACRS or one of the other methods. E file form 1040x ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. E file form 1040x The alternate ACRS method used a recovery percentage based on a modified straight line method. E file form 1040x The law prescribes fixed percentages to be uses for each class of property. E file form 1040x Property depreciable under ACRS is called recovery property. E file form 1040x The recovery class of property determines the recovery period. E file form 1040x Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. E file form 1040x Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. E file form 1040x To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. E file form 1040x You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. E file form 1040x For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. E file form 1040x What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. E file form 1040x It includes new or used and real or personal property. E file form 1040x The property must be for use in a trade or business or for the production of income. E file form 1040x Property you acquired before 1981 or after 1986 is not ACRS recovery property. E file form 1040x For information on depreciating property acquired before 1981, see chapter 2. E file form 1040x For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. E file form 1040x Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. E file form 1040x It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. E file form 1040x Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. E file form 1040x Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. E file form 1040x Intangible property. E file form 1040x   Intangible property is not depreciated under ACRS. E file form 1040x Property depreciated under methods not expressed in a term of years. E file form 1040x   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. E file form 1040x This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). E file form 1040x Public utility property. E file form 1040x   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. E file form 1040x Additions or improvements to ACRS property after 1986. E file form 1040x   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. E file form 1040x ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. E file form 1040x It does not matter that the underlying property is depreciated under ACRS or one of the other methods. E file form 1040x How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. E file form 1040x Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. E file form 1040x Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. E file form 1040x Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. E file form 1040x However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. E file form 1040x If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. E file form 1040x If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. E file form 1040x See Publication 551. E file form 1040x Classes of Recovery Property All recovery property under ACRS is in one of the following classes. E file form 1040x The class for your property was determined when you began to depreciate it. E file form 1040x 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. E file form 1040x Race horses over 2 years old when placed in service are 3-year property. E file form 1040x Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. E file form 1040x The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. E file form 1040x You cannot claim depreciation for this property after 1988. E file form 1040x 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. E file form 1040x It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). E file form 1040x The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. E file form 1040x You cannot claim depreciation for this property after 1990. E file form 1040x 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. E file form 1040x Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. E file form 1040x You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. E file form 1040x For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. E file form 1040x The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. E file form 1040x Example. E file form 1040x On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. E file form 1040x You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. E file form 1040x On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. E file form 1040x The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). E file form 1040x Your ACRS deduction was $3,000 (8% × $37,500). E file form 1040x In 1987, your ACRS deduction was $5,250 (14% × $37,500). E file form 1040x In 1988, your ACRS deduction was $4,500 (12% × $37,500). E file form 1040x In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). E file form 1040x In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). E file form 1040x 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. E file form 1040x It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. E file form 1040x Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. E file form 1040x You could group 15-year real property by month and year placed in service. E file form 1040x In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. E file form 1040x You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. E file form 1040x Example. E file form 1040x On March 5, 1984, you placed an apartment building in service in your business. E file form 1040x It is 15-year real property. E file form 1040x After subtracting the value of the land, your unadjusted basis in the building is $250,000. E file form 1040x You use the calendar year as your tax year. E file form 1040x March is the third month of your tax year. E file form 1040x Your ACRS deduction for 1984 was $25,000 (10% × $250,000). E file form 1040x For 1985, the percentage for the third month of the second year of the recovery period is 11%. E file form 1040x Your deduction was $27,500 (11% × $250,000). E file form 1040x For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. E file form 1040x For 1989 through 1992, the percentage for the third month is 6%. E file form 1040x Your deduction each year is $15,000 (6% × $250,000). E file form 1040x For 1993, 1994, and 1995, the percentage for the third month is 5%. E file form 1040x Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. E file form 1040x Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. E file form 1040x Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. E file form 1040x Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. E file form 1040x Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. E file form 1040x The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. E file form 1040x Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. E file form 1040x Use the percentages listed under that month for each year of the recovery period. E file form 1040x Table 2 shows percentages for low-income housing placed in service before May 9, 1985. E file form 1040x Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. E file form 1040x Example. E file form 1040x In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. E file form 1040x You use the calendar year as your tax year. E file form 1040x You use Table C–3 because the property was placed in service after May 8, 1985. E file form 1040x Your unadjusted basis for the property, not including the land, was $59,000. E file form 1040x Your deduction for 1986 through 2001 is shown in the following table. E file form 1040x Year Rate Deduction 1986 8. E file form 1040x 9% $5,251 1987 12. E file form 1040x 1% 7,139 1988 10. E file form 1040x 5% 6,195 1989 9. E file form 1040x 1% 5,369 1990 7. E file form 1040x 9% 4,661 1991 6. E file form 1040x 9% 4,071 1992 5. E file form 1040x 9% 3,481 1993 5. E file form 1040x 2% 3,068 1994 4. E file form 1040x 6% 2,714 1995 4. E file form 1040x 6% 2,714 1996 4. E file form 1040x 6% 2,714 1997 4. E file form 1040x 6% 2,714 1998 4. E file form 1040x 6% 2,714 1999 4. E file form 1040x 5% 2,655 2000 4. E file form 1040x 5% 2,655 2001 1. E file form 1040x 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. E file form 1040x It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. E file form 1040x The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. E file form 1040x There are also tables for 18-year real property in the Appendix. E file form 1040x Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. E file form 1040x Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. E file form 1040x Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. E file form 1040x Use the percentages listed under that month for each year of the recovery period. E file form 1040x Example. E file form 1040x On April 28, 1985, you bought and placed in service a rental house. E file form 1040x The house, not including the land, cost $95,000. E file form 1040x This is your unadjusted basis for the house. E file form 1040x You use the calendar year as your tax year. E file form 1040x Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. E file form 1040x You use Table 4 to figure your deduction for the house. E file form 1040x April is the fourth month of your tax year. E file form 1040x Your deduction for 1985 through 2003 is shown in the following table. E file form 1040x Year Rate Deduction 1985 7. E file form 1040x 0% $6,650 1986 9. E file form 1040x 0% 8,550 1987 8. E file form 1040x 0% 7,600 1988 7. E file form 1040x 0% 6,650 1989 7. E file form 1040x 0% 6,650 1990 6. E file form 1040x 0% 5,700 1991 5. E file form 1040x 0% 4,750 1992 5. E file form 1040x 0% 4,750 1993 5. E file form 1040x 0% 4,750 1994 5. E file form 1040x 0% 4,750 1995 5. E file form 1040x 0% 4,750 1996 5. E file form 1040x 0% 4,750 1997 5. E file form 1040x 0% 4,750 1998 4. E file form 1040x 0% 3,800 1999 4. E file form 1040x 0% 3,800 2000 4. E file form 1040x 0% 3,800 2001 4. E file form 1040x 0% 3,800 2002 4. E file form 1040x 0% 3,800 2003 1. E file form 1040x 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. E file form 1040x It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. E file form 1040x The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. E file form 1040x Table 6 shows the percentages for 19-year real property. E file form 1040x You find the month in your tax year that you placed the property in service. E file form 1040x You use the percentages listed under that month for each year of the recovery period. E file form 1040x Recovery Periods Each item of recovery property is assigned to a class of property. E file form 1040x The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. E file form 1040x The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. E file form 1040x This alternate ACRS method uses a recovery percentage based on a modified straight line method. E file form 1040x This alternate ACRS method generally uses percentages other than those from the tables. E file form 1040x If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. E file form 1040x This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. E file form 1040x   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. E file form 1040x 00% 10 years 10. E file form 1040x 00% 12 years 8. E file form 1040x 333% 15 years 6. E file form 1040x 667% 25 years 4. E file form 1040x 00% 35 years 2. E file form 1040x 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. E file form 1040x There are tables for 18- and 19-year real property later in this publication in the Appendix. E file form 1040x For 15-year real property, see 15-year real property, later. E file form 1040x 3-, 5-, and 10-year property. E file form 1040x   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. E file form 1040x This applies throughout the recovery period you selected. E file form 1040x Half-year convention. E file form 1040x   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. E file form 1040x This applied regardless of when in the tax year you placed the property in service. E file form 1040x For each of the remaining years in the recovery period, you take a full year's deduction. E file form 1040x If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. E file form 1040x Example. E file form 1040x You operate a small upholstery business. E file form 1040x On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. E file form 1040x You elected to use the alternate ACRS method. E file form 1040x You did not elect to take a section 179 deduction. E file form 1040x You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. E file form 1040x The saw is 5-year property, but you decided to recover its cost over 12 years. E file form 1040x For 1986, your ACRS deduction reflected the half-year convention. E file form 1040x In the first year, you deducted half of the amount determined for a full year. E file form 1040x Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. E file form 1040x 00     Electric saw   12 years straight line = 8. E file form 1040x 333% 8. E file form 1040x 333% ÷ $500 = $41. E file form 1040x 67 Half-year convention -½ of $41. E file form 1040x 67= 20. E file form 1040x 84 Total ACRS deduction for 1986 $1,320. E file form 1040x 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. E file form 1040x Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. E file form 1040x 333% 8. E file form 1040x 333% ÷ $500 = $41. E file form 1040x 67 Total annual ACRS deduction for 1987 through 1990 $2,641. E file form 1040x 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. E file form 1040x Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. E file form 1040x 00     Electric saw   12 years straight line = 8. E file form 1040x 333% 8. E file form 1040x 333% ÷ $500 = $41. E file form 1040x 67 Total ACRS deduction for 1991 $1,341. E file form 1040x 67       The truck is fully depreciated after 1991. E file form 1040x You take a full year of depreciation for the saw for the years 1992 through 1997. E file form 1040x Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. E file form 1040x 333% 8. E file form 1040x 333% ÷ $500 = $41. E file form 1040x 67 Total annual ACRS deduction for 1992 through 1997 $41. E file form 1040x 67       You take a half-year of depreciation for the saw for 1998. E file form 1040x Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. E file form 1040x 333% 8. E file form 1040x 333% ÷ $500 = $41. E file form 1040x 67 Half-year convention -½ of $41. E file form 1040x 67= 20. E file form 1040x 84 Total ACRS deduction for 1998 $20. E file form 1040x 84       The saw is fully depreciated after 1998. E file form 1040x 15-year real property. E file form 1040x   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. E file form 1040x The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. E file form 1040x If you selected a 15-year recovery period, you use the percentage (6. E file form 1040x 667%) from the schedule above. E file form 1040x You prorate this percentage for the number of months the property was in service in the first year. E file form 1040x If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. E file form 1040x Alternate periods for 18-year real property. E file form 1040x   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. E file form 1040x The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. E file form 1040x There are two tables for each alternate recovery period. E file form 1040x One table shows the percentage for property placed in service after June 22, 1984. E file form 1040x The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. E file form 1040x Alternate periods for 19-year real property. E file form 1040x   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. E file form 1040x If you selected a 19-year recovery period, use Table 9 to determine your deduction. E file form 1040x If you select a 35- or 45-year recovery period, use either Table 13 or 14. E file form 1040x Example. E file form 1040x You placed in service an apartment building on August 3, 1986. E file form 1040x The building is 19-year real property. E file form 1040x The sales contract allocated $300,000 to the building and $100,000 to the land. E file form 1040x You use the calendar year as your tax year. E file form 1040x You chose the alternate ACRS method over a recovery period of 35 years. E file form 1040x For 1986, you figure your ACRS deduction usingTable 13. E file form 1040x August is the eighth month of your tax year. E file form 1040x The percentage from Table 13 for the eighth month is 1. E file form 1040x 1%. E file form 1040x Your deduction was $3,300 ($300,000 ÷ 1. E file form 1040x 1%). E file form 1040x The deduction rate from ACRS Table 13 for years 2 through 20 is 2. E file form 1040x 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. E file form 1040x 9%). E file form 1040x Alternate periods for low-income housing. E file form 1040x   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. E file form 1040x If you selected a 15-year period for this property, use 6. E file form 1040x 667% as the percentage. E file form 1040x If you selected a 35- or 45-year period, use either Table 11, 12, or 15. E file form 1040x Election. E file form 1040x   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. E file form 1040x Revocation of election. E file form 1040x   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. E file form 1040x The Commissioner grants consent only in extraordinary circumstances. E file form 1040x Any request for a revocation will be considered a request for a ruling. E file form 1040x ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. E file form 1040x Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. E file form 1040x You figure this by multiplying the unadjusted basis by the recovery percentage. E file form 1040x You then multiply the ACRS deduction determined for a full tax year by a fraction. E file form 1040x The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. E file form 1040x For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. E file form 1040x The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. E file form 1040x The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. E file form 1040x The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). E file form 1040x You use the full ACRS percentages during the remaining years of the recovery period. E file form 1040x For the first tax year after the recovery period, the unrecovered basis will be deductible. E file form 1040x Exception. E file form 1040x   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. E file form 1040x You compute the number of months using either a full month or mid-month convention. E file form 1040x This is true regardless of the number of months in the tax year and the recovery period and method used. E file form 1040x Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. E file form 1040x You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. E file form 1040x You generally recognize gain or loss on the disposition of an asset by sale. E file form 1040x However, nonrecognition rules can allow you to postpone some gain. E file form 1040x See Publication 544. E file form 1040x If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. E file form 1040x Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. E file form 1040x Early dispositions. E file form 1040x   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. E file form 1040x When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. E file form 1040x Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. E file form 1040x   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. E file form 1040x This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. E file form 1040x Dispositions — mass asset accounts. E file form 1040x   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. E file form 1040x A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. E file form 1040x Examples of mass assets include minor items of office, plant, and store furniture and fixtures. E file form 1040x   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. E file form 1040x You leave the unadjusted basis of the property in the account until recovered in future years. E file form 1040x If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. E file form 1040x Early dispositions — 15-year real property. E file form 1040x   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. E file form 1040x You use a full-month convention. E file form 1040x For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. E file form 1040x This applies whether you use the regular ACRS method or elected the alternate ACRS method. E file form 1040x Example. E file form 1040x You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). E file form 1040x You file your return based on a calendar year. E file form 1040x Your rate from Table 1 for the third month is 10%. E file form 1040x Your ACRS deduction for 1984 was $9,800 ($98. E file form 1040x 000 ÷ 10%). E file form 1040x For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. E file form 1040x For 1989 through 1992, you figured your ACRS deductions using 6% for each year. E file form 1040x The deduction each year was $98,000 ÷ 6%. E file form 1040x For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. E file form 1040x You sell the house on June 1, 1995. E file form 1040x You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. E file form 1040x The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). E file form 1040x You then prorate this amount to the 5 months in 1995 during which it was rented. E file form 1040x Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). E file form 1040x Early dispositions — 18- and 19-year real property. E file form 1040x   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. E file form 1040x For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. E file form 1040x For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. E file form 1040x Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. E file form 1040x Count the month of disposition as half a month of use. E file form 1040x Example. E file form 1040x You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). E file form 1040x You file your return based on a calendar year. E file form 1040x Your rate from Table 4 for the seventh month is 4%. E file form 1040x You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). E file form 1040x In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. E file form 1040x You sell the house on September 24, 1995. E file form 1040x Figure your ACRS deduction for 1995 for the months of use. E file form 1040x The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). E file form 1040x Prorate this amount for the 8. E file form 1040x 5 months in 1995 that you held the property. E file form 1040x Under the mid-month convention, you count September as half a month. E file form 1040x Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. E file form 1040x 5/12). E file form 1040x Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. E file form 1040x Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. E file form 1040x This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. E file form 1040x You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. E file form 1040x Section 1245 property generally includes all personal property. E file form 1040x See Section 1245 property in chapter 4 of Publication 544 for more information. E file form 1040x You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. E file form 1040x You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. E file form 1040x Section 1250 property includes most real property. E file form 1040x See Section 1250 property in chapter 4 of Publication 544 for more information. E file form 1040x This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. E file form 1040x Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. E file form 1040x Any 15-, 18-, or 19-year real property that is subsidized low-income housing. E file form 1040x For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. E file form 1040x See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. E file form 1040x Prev  Up  Next   Home   More Online Publications
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The E File Form 1040x

E file form 1040x Publication 531 - Main Content Table of Contents Keeping a Daily Tip RecordElectronic tip record. E file form 1040x Reporting Tips to Your EmployerElectronic tip statement. E file form 1040x Final report. E file form 1040x Tip Rate Determination and Education Program Reporting Tips on Your Tax Return Allocated Tips How To Get Tax Help Keeping a Daily Tip Record Why keep a daily tip record. E file form 1040x   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. E file form 1040x How to keep a daily tip record. E file form 1040x   There are two ways to keep a daily tip record. E file form 1040x You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. E file form 1040x You should keep your daily tip record with your tax or other personal records. E file form 1040x You must keep your records for as long as they are important for administration of the federal tax law. E file form 1040x For information on how long to keep records, see How Long to Keep Records in chapter 1 of Publication 17, Your Federal Income Tax. E file form 1040x    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. E file form 1040x To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244, Employee's Daily Record of Tips and Report to Employer. E file form 1040x Publication 1244 is also available at www. E file form 1040x irs. E file form 1040x gov/pub1244. E file form 1040x Publication 1244 includes a 1-year supply of Form 4070A. E file form 1040x Each day, write in the information asked for on the form. E file form 1040x A filled-in Form 4070A is shown on the following page. E file form 1040x   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. E file form 1040x Although you do not report these tips to your employer, you must report them on your tax return. E file form 1040x   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). E file form 1040x Then, each workday, write the date and the following information. E file form 1040x Cash tips you get directly from customers or from other employees. E file form 1040x Tips from credit and debit card charge customers that your employer pays you. E file form 1040x The value of any noncash tips you get, such as tickets, passes, or other items of value. E file form 1040x The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. E file form 1040x Please click here for the text description of the image. E file form 1040x Sample Filled-in Form 4070A from Publication 1244 Electronic tip record. E file form 1040x   You can use an electronic system provided by your employer to record your daily tips. E file form 1040x If you do, you must receive and keep a paper copy of this record. E file form 1040x Service charges. E file form 1040x    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. E file form 1040x This is part of your wages, not a tip. E file form 1040x The following factors determine if you have a tip or service charge: The payment is made free from compulsion; The customer has the right to determine the amount of payment; The payment is not subject to negotiation or dictated by employer policy; and The customer generally has the right to determine who receives the payment. E file form 1040x See examples below. E file form 1040x Example 1. E file form 1040x Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. E file form 1040x Jane's bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. E file form 1040x Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. E file form 1040x Do not include the 18% charge in your tip diary. E file form 1040x Service charges that are paid to you are considered wages, not tips. E file form 1040x Example 2. E file form 1040x Good Food Restaurant includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. E file form 1040x David's bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of the charges for food and beverages at the bottom of the bill beneath the signature line. E file form 1040x Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. E file form 1040x Be sure to include this amount in your tip diary. E file form 1040x Sample Filled-in Form 4070 from Publication 1244 Please click here for the text description of the image. E file form 1040x Filled-in Form 4070 Reporting Tips to Your Employer Why report tips to your employer. E file form 1040x   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). E file form 1040x What tips to report. E file form 1040x   Report to your employer only cash, check, and debit and credit card tips you receive. E file form 1040x   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. E file form 1040x   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. E file form 1040x Do not report to your employer any portion of the tips you receive that you pass on to other employees. E file form 1040x However, you must report tips you receive from other employees. E file form 1040x   Do not report the value of any noncash tips, such as tickets or passes, to your employer. E file form 1040x You do not pay social security, Medicare, Additional Medicare, or railroad retirement taxes on these tips. E file form 1040x How to report. E file form 1040x   If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. E file form 1040x Fill in the information asked for on the form, sign and date the form, and give it to your employer. E file form 1040x A sample filled-in Form 4070 is shown above. E file form 1040x To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. E file form 1040x   If you do not use Form 4070, give your employer a statement with the following information. E file form 1040x Your name, address, and social security number. E file form 1040x Your employer's name, address, and business name (if it is different from your employer's name). E file form 1040x The month (or the dates of any shorter period) in which you received tips. E file form 1040x The total tips required to be reported for that period. E file form 1040x You must sign and date the statement. E file form 1040x Be sure to keep a copy with your tax or other personal records. E file form 1040x   Your employer may require you to report your tips more than once a month. E file form 1040x However, the statement cannot cover a period of more than 1 calendar month. E file form 1040x Electronic tip statement. E file form 1040x   Your employer can have you furnish your tip statements electronically. E file form 1040x When to report. E file form 1040x   Give your report for each month to your employer by the 10th of the next month. E file form 1040x If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. E file form 1040x Example. E file form 1040x You must report your tips received in September 2014 by October 10, 2014. E file form 1040x Final report. E file form 1040x   If your employment ends during the month, you can report your tips when your employment ends. E file form 1040x Penalty for not reporting tips. E file form 1040x   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, Additional Medicare, or railroad retirement taxes you owe on the unreported tips. E file form 1040x (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. E file form 1040x ) The penalty amount is in addition to the taxes you owe. E file form 1040x   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. E file form 1040x To do so, attach a statement to your return explaining why you did not report them. E file form 1040x Giving your employer money for taxes. E file form 1040x   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. E file form 1040x If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. E file form 1040x   If you do not give your employer enough money, your employer will apply your regular pay and any money you give to the taxes, in the following order. E file form 1040x All taxes on your regular pay. E file form 1040x Social security, Medicare, Additional Medicare, or railroad retirement taxes on your reported tips. E file form 1040x Federal, state, and local income taxes on your reported tips. E file form 1040x    Any taxes that remain unpaid can be collected by your employer from your next paycheck. E file form 1040x If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. E file form 1040x See Publication 505, Tax Withholding and Estimated Tax, for more information. E file form 1040x    Uncollected taxes. E file form 1040x You must report on your tax return any social security and Medicare taxes, or railroad retirement taxes that remained uncollected at the end of 2013. E file form 1040x These uncollected taxes will be shown on your 2013 Form W-2. E file form 1040x See Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. E file form 1040x Tip Rate Determination and Education Program Your employer may participate in the Tip Rate Determination and Education Program. E file form 1040x The program was developed to help employees and employers understand and meet their tip reporting responsibilities. E file form 1040x There are two agreements under the program: the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). E file form 1040x A variation of the TRAC program, the Employer Tip Reporting Alternative Commitment, (EmTRAC) was designed to allow employers in the food and beverage industry to design and receive approval for their own TRAC programs. E file form 1040x For information on the EmTRAC program, see Notice 2001-1, which is on page 261 of Internal Revenue Bulletin 2001-2 at www. E file form 1040x irs. E file form 1040x gov/pub/irs-irbs/irb01-02. E file form 1040x pdf. E file form 1040x If you are employed in the gaming industry, your employer may participate in the Gaming Industry Tip Compliance Agreement Program. E file form 1040x See Revenue Procedure 2007-32, 2007-22 I. E file form 1040x R. E file form 1040x B. E file form 1040x 1322, available at www. E file form 1040x irs. E file form 1040x gov/pub/irs-irbs/irb07_22. E file form 1040x pdf. E file form 1040x Your employer can provide you with a copy of any applicable agreement. E file form 1040x To find out more about these agreements, visit IRS. E file form 1040x gov and enter “restaurant tip reporting” in the search box. E file form 1040x You may also call 1-800-829-4933, visit www. E file form 1040x irs. E file form 1040x gov/localcontacts for the IRS Taxpayer Assistance Center in your area, or send an email to Tip. E file form 1040x Program@irs. E file form 1040x gov and request information on this program. E file form 1040x Reporting Tips on Your Tax Return How to report tips. E file form 1040x   Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; Form 1040EZ, line 1; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. E file form 1040x What tips to report. E file form 1040x   Generally, you must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. E file form 1040x Any tips you reported to your employer as required in 2013 are included in the wages shown in box 1 of your Form W-2. E file form 1040x Add to the amount in box 1 only the tips you did not report to your employer. E file form 1040x   However, any tips you received in 2013 that you reported to your employer as required after 2013 but before January 11, 2014, are not included in the wages shown in box 1 of your 2013 Form W-2. E file form 1040x Do not include the amount of these tips on your 2013 tax return. E file form 1040x Instead, include them on your 2014 tax return. E file form 1040x Tips you received in 2012 that you reported to your employer as required after 2012 but before January 11, 2013, are included in the wages shown in box 1 of your 2013 Form W-2. E file form 1040x Although these tips were received in 2012, you must report them on your 2013 tax return. E file form 1040x   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. E file form 1040x Do not report on your income tax return any portion of the tips you receive that you pass on to other employees. E file form 1040x However, you must report tips you receive from other employees. E file form 1040x    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. E file form 1040x    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. E file form 1040x   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. E file form 1040x Cash and charge tips you received that totaled less than $20 for any month. E file form 1040x The value of noncash tips, such as tickets, passes, or other items of value. E file form 1040x Example. E file form 1040x Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. E file form 1040x Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. E file form 1040x He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. E file form 1040x Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages + $7,000 reported tips) in box 1. E file form 1040x He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. E file form 1040x Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. E file form 1040x    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. E file form 1040x To report these taxes, you must file a return even if you would not otherwise have to file. E file form 1040x You must use Form 1040, Form 1040NR, Form 1040NR-EZ, Form 1040-SS, or 1040-PR (as appropriate) for this purpose. E file form 1040x (You cannot file Form 1040EZ or Form 1040A. E file form 1040x )    Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure social security and Medicare taxes. E file form 1040x Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. E file form 1040x Use Form 8959 to figure Additional Medicare Tax. E file form 1040x If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. E file form 1040x To get railroad retirement credit, you must report tips to your employer. E file form 1040x Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. E file form 1040x    You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. E file form 1040x For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. E file form 1040x   If your employer could not collect all the social security and Medicare taxes, or railroad retirement taxes you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). E file form 1040x You must report these amounts as additional tax on your return. E file form 1040x   If you worked in the U. E file form 1040x S. E file form 1040x possessions and received Form W-2AS, Form W-2CM, Form W-2GU, or Form W-2VI, any uncollected taxes on tips will be shown in box 12 with codes A and B. E file form 1040x If you received Form 499R-2/W-2PR, any uncollected taxes will be shown in boxes 22 and 23. E file form 1040x Unlike the uncollected portion of the regular (1. E file form 1040x 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported on Form W-2. E file form 1040x   To report these uncollected taxes, you must file a return even if you would not otherwise have to file. E file form 1040x You can report these taxes on Form 1040, in the space next to line 60; Form 1040NR, line 59; Form 1040-SS, Part I, line 6; or Form 1040-PR, Part I, line 6. E file form 1040x See the instructions for the appropriate form and line number indicated, and Form 8959. E file form 1040x (You cannot file Form 1040A, Form 1040EZ, or Form 1040NR-EZ. E file form 1040x ) Self-employed persons. E file form 1040x    If you receive tips as a self-employed person, you should report these tips as income on Schedule C or C-EZ. E file form 1040x See Publication 334, Tax Guide for Small Business, for more information on reporting business income. E file form 1040x Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. E file form 1040x They are not included in box 1 with your wages and reported tips. E file form 1040x If box 8 is blank, this discussion does not apply to you. E file form 1040x What are allocated tips. E file form 1040x   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. E file form 1040x Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. E file form 1040x No income, social security, Medicare, Additional Medicare, or railroad retirement taxes are withheld on allocated tips. E file form 1040x How were your allocated tips figured. E file form 1040x   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). E file form 1040x Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. E file form 1040x For information about the exact allocation method used, ask your employer. E file form 1040x Must you report your allocated tips on your tax return. E file form 1040x   You must report tips you received in 2013 (including both cash and noncash tips) on your tax return as explained in What tips to report , earlier. E file form 1040x Any tips you reported to your employer in 2013 as required (explained under Reporting Tips to Your Employer , earlier) are included in the wages shown in box 1 of your Form W-2. E file form 1040x Add to the amount in box 1 only the tips you did not report to your employer as required. E file form 1040x This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated amount. E file form 1040x   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. E file form 1040x How to report allocated tips. E file form 1040x   If you received any tips in 2013 that you did not report to your employer as required (including allocated tips that you are required to report on your tax return), add these tips to the amount in box 1 of your Form(s) W-2 and report this amount as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. E file form 1040x (You cannot file Form 1040A or Form 1040EZ). E file form 1040x    Because social security, Medicare, or Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. E file form 1040x Complete Form 4137 and include the allocated tips on line 1 of the form as provided in its instructions. E file form 1040x See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. E file form 1040x How to request an approved lower rate. E file form 1040x   Your employer can use a tip rate lower than 8% (but not lower than 2%) to figure allocated tips only if the IRS approves the lower rate. E file form 1040x Either the employer or the employees can request approval of a lower rate by filing a petition with the IRS. E file form 1040x The petition must include specific information about the establishment that will justify the lower rate. E file form 1040x A user fee must be paid with the petition. E file form 1040x    An employee petition can be filed only with the consent of a majority of the directly tipped employees (waiters, bartenders, and others who receive tips directly from customers). E file form 1040x The petition must state the total number of directly tipped employees and the number of employees consenting to the petition. E file form 1040x Employees filing the petition must promptly notify the employer, and the employer must promptly give the IRS a copy of all Forms 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, filed for the establishment for the previous 3 years. E file form 1040x   For more information about how to file a petition and what information to include, see Allocation of Tips in the Instructions for Form 8027. E file form 1040x How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. E file form 1040x Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. E file form 1040x Free help with your tax return. E file form 1040x   Free help in preparing your return is available nationwide from IRS-certified volunteers. E file form 1040x The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. E file form 1040x The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. E file form 1040x Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. E file form 1040x Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. E file form 1040x To find the nearest VITA or TCE site, visit IRS. E file form 1040x gov or call 1-800-906-9887. E file form 1040x   As part of the TCE program, AARP offers the Tax-Aide counseling program. E file form 1040x To find the nearest AARP Tax-Aide site, visit AARP's website at www. E file form 1040x aarp. E file form 1040x org/money/taxaide or call 1-888-227-7669. E file form 1040x   For more information on these programs, go to IRS. E file form 1040x gov and enter “VITA” in the search box. E file form 1040x Internet. E file form 1040x IRS. E file form 1040x gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. E file form 1040x Apply for an Employer Identification Number (EIN). E file form 1040x Go to IRS. E file form 1040x gov and enter Apply for an EIN in the search box. E file form 1040x Request an Electronic Filing PIN by going to IRS. E file form 1040x gov and entering Electronic Filing PIN in the search box. E file form 1040x Check the status of your 2013 refund with Where's My Refund? Go to IRS. E file form 1040x gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. E file form 1040x If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. E file form 1040x Check the status of your amended return. E file form 1040x Go to IRS. E file form 1040x gov and enter Where's My Amended Return in the search box. E file form 1040x Download forms, instructions, and publications, including some accessible versions. E file form 1040x Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. E file form 1040x gov or IRS2Go. E file form 1040x Tax return and tax account transcripts are generally available for the current year and past three years. E file form 1040x Figure your income tax withholding with the IRS Withholding Calculator on IRS. E file form 1040x gov. E file form 1040x Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. E file form 1040x Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. E file form 1040x gov. E file form 1040x Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. E file form 1040x gov or IRS2Go. E file form 1040x Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. E file form 1040x An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. E file form 1040x Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. E file form 1040x If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. E file form 1040x Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. E file form 1040x Locate the nearest volunteer help site with the VITA Locator Tool on IRS. E file form 1040x gov. E file form 1040x Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. E file form 1040x The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. E file form 1040x Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. E file form 1040x AARP offers the Tax-Aide counseling program as part of the TCE program. E file form 1040x Visit AARP's website to find the nearest Tax-Aide location. E file form 1040x Research your tax questions. E file form 1040x Search publications and instructions by topic or keyword. E file form 1040x Read the Internal Revenue Code, regulations, or other official guidance. E file form 1040x Read Internal Revenue Bulletins. E file form 1040x Sign up to receive local and national tax news by email. E file form 1040x Phone. E file form 1040x You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. E file form 1040x Download the free IRS2Go mobile app from the iTunes app store or from Google Play. E file form 1040x Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. E file form 1040x Call to locate the nearest volunteer help site, 1-800-906-9887. E file form 1040x Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. E file form 1040x The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. E file form 1040x Most VITA and TCE sites offer free electronic filing. E file form 1040x Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. E file form 1040x Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. E file form 1040x Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. E file form 1040x The automated Where's My Refund? information is available 24 hours a day, 7 days a week. E file form 1040x If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. E file form 1040x Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. E file form 1040x Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. E file form 1040x Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. E file form 1040x Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. E file form 1040x Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). E file form 1040x You should receive your order within 10 business days. E file form 1040x Call to order transcripts of your tax returns or tax account, 1-800-908-9946. E file form 1040x Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. E file form 1040x Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. E file form 1040x Call to ask tax questions, 1-800-829-1040. E file form 1040x Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. E file form 1040x The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. E file form 1040x These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. E file form 1040x gsa. E file form 1040x gov/fedrelay. E file form 1040x Walk-in. E file form 1040x You can find a selection of forms, publications and services — in-person, face-to-face. E file form 1040x Products. E file form 1040x You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. E file form 1040x Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. E file form 1040x Services. E file form 1040x You can walk in to your local TAC most business days for personal, face-to-face tax help. E file form 1040x An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. E file form 1040x If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. E file form 1040x No appointment is necessary—just walk in. E file form 1040x Before visiting, check www. E file form 1040x irs. E file form 1040x gov/localcontacts for hours of operation and services provided. E file form 1040x Mail. E file form 1040x You can send your order for forms, instructions, and publications to the address below. E file form 1040x You should receive a response within 10 business days after your request is received. E file form 1040x  Internal Revenue Service 1201 N. E file form 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. E file form 1040x   The Taxpayer Advocate Service (TAS) is your voice at the IRS. E file form 1040x Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. E file form 1040x What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. E file form 1040x We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. E file form 1040x You face (or your business is facing) an immediate threat of adverse action. E file form 1040x You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. E file form 1040x   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. E file form 1040x Here's why we can help: TAS is an independent organization within the IRS. E file form 1040x Our advocates know how to work with the IRS. E file form 1040x Our services are free and tailored to meet your needs. E file form 1040x We have offices in every state, the District of Columbia, and Puerto Rico. E file form 1040x How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. E file form 1040x irs. E file form 1040x gov/advocate, or call us toll-free at 1-877-777-4778. E file form 1040x How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. E file form 1040x If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. E file form 1040x irs. E file form 1040x gov/sams. E file form 1040x Low Income Taxpayer Clinics. E file form 1040x   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. E file form 1040x Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. E file form 1040x Visit www. E file form 1040x TaxpayerAdvocate. E file form 1040x irs. E file form 1040x gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. E file form 1040x Prev  Up  Next   Home   More Online Publications