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Free File Fillable Forms 2012

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Free File Fillable Forms 2012

Free file fillable forms 2012 4. Free file fillable forms 2012   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Free file fillable forms 2012 Rent-to-own contract. Free file fillable forms 2012 What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? Introduction The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Free file fillable forms 2012 MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Free file fillable forms 2012 Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Free file fillable forms 2012 To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Free file fillable forms 2012 This chapter explains how to determine which MACRS depreciation system applies to your property. Free file fillable forms 2012 It also discusses other information you need to know before you can figure depreciation under MACRS. Free file fillable forms 2012 This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Free file fillable forms 2012 It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Free file fillable forms 2012 Finally, it explains when and how to recapture MACRS depreciation. Free file fillable forms 2012 Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Free file fillable forms 2012 Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Free file fillable forms 2012 You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Free file fillable forms 2012 If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Free file fillable forms 2012 Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Free file fillable forms 2012 If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Free file fillable forms 2012 Required use of ADS. Free file fillable forms 2012   You must use ADS for the following property. Free file fillable forms 2012 Listed property used 50% or less in a qualified business use. Free file fillable forms 2012 See chapter 5 for information on listed property. Free file fillable forms 2012 Any tangible property used predominantly outside the United States during the year. Free file fillable forms 2012 Any tax-exempt use property. Free file fillable forms 2012 Any tax-exempt bond-financed property. Free file fillable forms 2012 All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Free file fillable forms 2012 Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Free file fillable forms 2012 If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Free file fillable forms 2012 Electing ADS. Free file fillable forms 2012   Although your property may qualify for GDS, you can elect to use ADS. Free file fillable forms 2012 The election generally must cover all property in the same property class that you placed in service during the year. Free file fillable forms 2012 However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Free file fillable forms 2012 Once you make this election, you can never revoke it. Free file fillable forms 2012   You make the election by completing line 20 in Part III of Form 4562. Free file fillable forms 2012 Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Free file fillable forms 2012 These property classes are also listed under column (a) in section B, Part III, of Form 4562. Free file fillable forms 2012 For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Free file fillable forms 2012 3-year property. Free file fillable forms 2012 Tractor units for over-the-road use. Free file fillable forms 2012 Any race horse over 2 years old when placed in service. Free file fillable forms 2012 (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Free file fillable forms 2012 ) Any other horse (other than a race horse) over 12 years old when placed in service. Free file fillable forms 2012 Qualified rent-to-own property (defined later). Free file fillable forms 2012 5-year property. Free file fillable forms 2012 Automobiles, taxis, buses, and trucks. Free file fillable forms 2012 Computers and peripheral equipment. Free file fillable forms 2012 Office machinery (such as typewriters, calculators, and copiers). Free file fillable forms 2012 Any property used in research and experimentation. Free file fillable forms 2012 Breeding cattle and dairy cattle. Free file fillable forms 2012 Appliances, carpets, furniture, etc. Free file fillable forms 2012 , used in a residential rental real estate activity. Free file fillable forms 2012 Certain geothermal, solar, and wind energy property. Free file fillable forms 2012 7-year property. Free file fillable forms 2012 Office furniture and fixtures (such as desks, files, and safes). Free file fillable forms 2012 Agricultural machinery and equipment. Free file fillable forms 2012 Any property that does not have a class life and has not been designated by law as being in any other class. Free file fillable forms 2012 Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Free file fillable forms 2012 Any natural gas gathering line placed in service after April 11, 2005. Free file fillable forms 2012 See Natural gas gathering line and electric transmission property , later. Free file fillable forms 2012 10-year property. Free file fillable forms 2012 Vessels, barges, tugs, and similar water transportation equipment. Free file fillable forms 2012 Any single purpose agricultural or horticultural structure. Free file fillable forms 2012 Any tree or vine bearing fruits or nuts. Free file fillable forms 2012 Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Free file fillable forms 2012 15-year property. Free file fillable forms 2012 Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Free file fillable forms 2012 Any retail motor fuels outlet (defined later), such as a convenience store. Free file fillable forms 2012 Any municipal wastewater treatment plant. Free file fillable forms 2012 Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Free file fillable forms 2012 Any qualified restaurant property (defined later) placed in service before January 1, 2014. Free file fillable forms 2012 Initial clearing and grading land improvements for gas utility property. Free file fillable forms 2012 Electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity placed in service after April 11, 2005. Free file fillable forms 2012 See Natural gas gathering line and electric transmission property , later. Free file fillable forms 2012 Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Free file fillable forms 2012 Any qualified retail improvement property placed in service before January 1, 2014. Free file fillable forms 2012 20-year property. Free file fillable forms 2012 Farm buildings (other than single purpose agricultural or horticultural structures). Free file fillable forms 2012 Municipal sewers not classified as 25-year property. Free file fillable forms 2012 Initial clearing and grading land improvements for electric utility transmission and distribution plants. Free file fillable forms 2012 25-year property. Free file fillable forms 2012 This class is water utility property, which is either of the following. Free file fillable forms 2012 Property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20-year property. Free file fillable forms 2012 Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Free file fillable forms 2012 Residential rental property. Free file fillable forms 2012 This is any building or structure, such as a rental home (including a mobile home), if 80% or more of its gross rental income for the tax year is from dwelling units. Free file fillable forms 2012 A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Free file fillable forms 2012 It does not include a unit in a hotel, motel, or other establishment where more than half the units are used on a transient basis. Free file fillable forms 2012 If you occupy any part of the building or structure for personal use, its gross rental income includes the fair rental value of the part you occupy. Free file fillable forms 2012 Nonresidential real property. Free file fillable forms 2012 This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Free file fillable forms 2012 5 years. Free file fillable forms 2012 Qualified rent-to-own property. Free file fillable forms 2012   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Free file fillable forms 2012 It is tangible personal property generally used in the home for personal use. Free file fillable forms 2012 It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Free file fillable forms 2012 Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Free file fillable forms 2012   If some of the property you rent to others under a rent-to-own agreement is of a type that may be used by the renters for either personal or business purposes, you still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Free file fillable forms 2012 However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Free file fillable forms 2012 Rent-to-own dealer. Free file fillable forms 2012   You are a rent-to-own dealer if you meet all the following requirements. Free file fillable forms 2012 You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Free file fillable forms 2012 A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Free file fillable forms 2012 The property is tangible personal property of a type generally used within the home for personal use. Free file fillable forms 2012 Rent-to-own contract. Free file fillable forms 2012   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Free file fillable forms 2012 Provides a beginning date and a maximum period of time, not to exceed 156 weeks or 36 months from the beginning date, for which the contract can be in effect (including renewals or options to extend). Free file fillable forms 2012 Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Free file fillable forms 2012 If the payments are decreasing, no payment can be less than 40% of the largest payment. Free file fillable forms 2012 Provides for total payments that generally exceed the normal retail price of the property plus interest. Free file fillable forms 2012 Provides for total payments that do not exceed $10,000 for each item of property. Free file fillable forms 2012 Provides that the customer has no legal obligation to make all payments outlined in the contract and that, at the end of each weekly or monthly payment period, the customer can either continue to use the property by making the next payment or return the property in good working order with no further obligations and no entitlement to a return of any prior payments. Free file fillable forms 2012 Provides that legal title to the property remains with the rent-to-own dealer until the customer makes either all the required payments or the early purchase payments required under the contract to acquire legal title. Free file fillable forms 2012 Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Free file fillable forms 2012 Motorsports entertainment complex. Free file fillable forms 2012   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Free file fillable forms 2012 The events must be open to the public for the price of admission. Free file fillable forms 2012 Qualified smart electric grid system. Free file fillable forms 2012   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service after October 3, 2008, by a taxpayer who is a supplier of electrical energy or a provider of electrical energy services. Free file fillable forms 2012 Smart grid property includes electronics and related equipment that is capable of: Sensing, collecting, and monitoring data of or from all portions of a utility's electric distribution grid, Providing real-time, two-way communications to monitor or to manage the grid, and Providing real-time analysis of an event prediction based on collected data that can be used to provide electric distribution system reliability, quality, and performance. Free file fillable forms 2012 Retail motor fuels outlet. Free file fillable forms 2012   Real property is a retail motor fuels outlet if it is used to a substantial extent in the retail marketing of petroleum or petroleum products (whether or not it is also used to sell food or other convenience items) and meets any one of the following three tests. Free file fillable forms 2012 It is not larger than 1,400 square feet. Free file fillable forms 2012 50% or more of the gross revenues generated from the property are derived from petroleum sales. Free file fillable forms 2012 50% or more of the floor space in the property is devoted to petroleum marketing sales. Free file fillable forms 2012 A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Free file fillable forms 2012 Qualified leasehold improvement property. Free file fillable forms 2012    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Free file fillable forms 2012   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Free file fillable forms 2012 A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Free file fillable forms 2012 Examples include the following. Free file fillable forms 2012 A complete liquidation of a subsidiary. Free file fillable forms 2012 A transfer to a corporation controlled by the transferor. Free file fillable forms 2012 An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Free file fillable forms 2012 Qualified restaurant property. Free file fillable forms 2012   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Free file fillable forms 2012 Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Free file fillable forms 2012 Qualified smart electric meter. Free file fillable forms 2012   A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier of electric energy or a provider of electric energy services and which is capable of being used by you as part of a system that: Measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day; Provides for the exchange of information between the supplier or provider and the customer's smart electric meter in support of time-based rates or other forms of demand response; Provides data to the supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Free file fillable forms 2012 Net metering means allowing a customer a credit, if any, as complies with applicable federal and state laws and regulations for providing electricity to the supplier or provider. Free file fillable forms 2012 Natural gas gathering line and electric transmission property. Free file fillable forms 2012   Any natural gas gathering line placed in service after April 11, 2005, is treated as 7-year property, and electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Free file fillable forms 2012 The original use of the property must have begun with you after April 11, 2005. Free file fillable forms 2012 Original use means the first use to which the property is put, whether or not by you. Free file fillable forms 2012 Therefore, property used by any person before April 12, 2005, is not original use. Free file fillable forms 2012 Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Free file fillable forms 2012 However, original use does not include the cost of reconditioned or rebuilt property you acquired. Free file fillable forms 2012 Property containing used parts will not be treated as reconditioned or rebuilt if the cost of the used parts is not more than 20% of the total cost of the property. Free file fillable forms 2012 The property must not be placed in service under a binding contract in effect before April 12, 2005. Free file fillable forms 2012 The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Free file fillable forms 2012 Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Free file fillable forms 2012 What Is the Placed in Service Date? You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. Free file fillable forms 2012 The placed in service date for your property is the date the property is ready and available for a specific use. Free file fillable forms 2012 It is therefore not necessarily the date it is first used. Free file fillable forms 2012 If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Free file fillable forms 2012 See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Free file fillable forms 2012 What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Free file fillable forms 2012 For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Free file fillable forms 2012 Reduce that amount by any credits and deductions allocable to the property. Free file fillable forms 2012 The following are examples of some credits and deductions that reduce basis. Free file fillable forms 2012 Any deduction for section 179 property. Free file fillable forms 2012 Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Free file fillable forms 2012 Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Free file fillable forms 2012 Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Free file fillable forms 2012 Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Free file fillable forms 2012 Any deduction for removal of barriers to the disabled and the elderly. Free file fillable forms 2012 Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Free file fillable forms 2012 Any special depreciation allowance. Free file fillable forms 2012 Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Free file fillable forms 2012 For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Free file fillable forms 2012 Enter the basis for depreciation under column (c) in Part III of Form 4562. Free file fillable forms 2012 For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Free file fillable forms 2012 Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Free file fillable forms 2012 It is determined based on the depreciation system (GDS or ADS) used. Free file fillable forms 2012 Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Free file fillable forms 2012 Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Free file fillable forms 2012 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Free file fillable forms 2012 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Free file fillable forms 2012 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Free file fillable forms 2012 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Free file fillable forms 2012 431. Free file fillable forms 2012 5 years for property placed in service before May 13, 1993 (or before January 1, 1994, if the purchase or construction of the property is under a binding contract in effect before May 13, 1993, or if construction began before May 13, 1993). Free file fillable forms 2012 The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Free file fillable forms 2012 Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Free file fillable forms 2012 Enter the appropriate recovery period on Form 4562 under column (d) in section B of Part III, unless already shown (for 25-year property, residential rental property, and nonresidential real property). Free file fillable forms 2012 Office in the home. Free file fillable forms 2012   If your home is a personal-use single family residence and you begin to use part of your home as an office, depreciate that part of your home as nonresidential real property over 39 years (31. Free file fillable forms 2012 5 years if you began using it for business before May 13, 1993). Free file fillable forms 2012 However, if your home is an apartment in an apartment building that you own and the building is residential rental property as defined earlier under Which Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Free file fillable forms 2012 5 years. Free file fillable forms 2012 See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Free file fillable forms 2012 Home changed to rental use. Free file fillable forms 2012   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Free file fillable forms 2012 5 years. Free file fillable forms 2012 Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Free file fillable forms 2012 The following table shows these shorter recovery periods. Free file fillable forms 2012 Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Free file fillable forms 2012 Use this chart to find the correct percentage table to use for qualified Indian reservation property. Free file fillable forms 2012 IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Free file fillable forms 2012   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Free file fillable forms 2012 You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Free file fillable forms 2012 The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Free file fillable forms 2012   The following property is not qualified property. Free file fillable forms 2012 Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Free file fillable forms 2012 Property acquired directly or indirectly from a related person. Free file fillable forms 2012 Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Free file fillable forms 2012 These activities are defined in section 4 of the Indian Regulatory Act (25 U. Free file fillable forms 2012 S. Free file fillable forms 2012 C. Free file fillable forms 2012 2703). Free file fillable forms 2012 Any property you must depreciate under ADS. Free file fillable forms 2012 Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Free file fillable forms 2012 Qualified infrastructure property. Free file fillable forms 2012   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Free file fillable forms 2012 Qualified infrastructure property is property that meets all the following rules. Free file fillable forms 2012 It is qualified property, as defined earlier, except that it is outside the reservation. Free file fillable forms 2012 It benefits the tribal infrastructure. Free file fillable forms 2012 It is available to the general public. Free file fillable forms 2012 It is placed in service in connection with the active conduct of a trade or business within a reservation. Free file fillable forms 2012 Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Free file fillable forms 2012 Related person. Free file fillable forms 2012   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Free file fillable forms 2012 Indian reservation. Free file fillable forms 2012   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Free file fillable forms 2012 S. Free file fillable forms 2012 C. Free file fillable forms 2012 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Free file fillable forms 2012 S. Free file fillable forms 2012 C. Free file fillable forms 2012 1903(10)). Free file fillable forms 2012 Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Free file fillable forms 2012 For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Free file fillable forms 2012 Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Free file fillable forms 2012 The following table shows some of the ADS recovery periods. Free file fillable forms 2012 Property Recovery  Period Rent-to-own property 4 years Automobiles and light duty trucks 5 years Computers and peripheral equipment 5 years High technology telephone station equipment installed on customer premises 5 years High technology medical equipment 5 years Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit or nuts 20 years Initial clearing and grading land  improvements for gas utility property 20 years Initial clearing and grading land  improvements for electric utility  transmission and distribution plants 25 years Electric transmission property used in the transmission at 69 or more kilovolts of electricity 30 years Natural gas distribution lines 35 years Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Free file fillable forms 2012 Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Free file fillable forms 2012 Tax-exempt use property subject to a lease. Free file fillable forms 2012   The ADS recovery period for any property leased under a lease agreement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership) cannot be less than 125% of the lease term. Free file fillable forms 2012 Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Free file fillable forms 2012 See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Free file fillable forms 2012 Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Free file fillable forms 2012 The recovery period begins on the later of the following dates. Free file fillable forms 2012 The date you place the addition or improvement in service. Free file fillable forms 2012 The date you place in service the property to which you made the addition or improvement. Free file fillable forms 2012 If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Free file fillable forms 2012 Example. Free file fillable forms 2012 You own a rental home that you have been renting out since 1981. Free file fillable forms 2012 If you put an addition on the home and place the addition in service this year, you would use MACRS to figure your depreciation deduction for the addition. Free file fillable forms 2012 Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Free file fillable forms 2012 5 years because the home to which the addition is made would be residential rental property if you had placed it in service this year. Free file fillable forms 2012 Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Free file fillable forms 2012 The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Free file fillable forms 2012 The mid-month convention. Free file fillable forms 2012   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Free file fillable forms 2012   Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. Free file fillable forms 2012 This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Free file fillable forms 2012   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Free file fillable forms 2012 The mid-quarter convention. Free file fillable forms 2012   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year. Free file fillable forms 2012   Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. Free file fillable forms 2012 This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Free file fillable forms 2012   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Free file fillable forms 2012    For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. Free file fillable forms 2012 However, it does not reflect any reduction in basis for any special depreciation allowance. Free file fillable forms 2012 The half-year convention. Free file fillable forms 2012   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Free file fillable forms 2012   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Free file fillable forms 2012 This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Free file fillable forms 2012   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Free file fillable forms 2012 Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Free file fillable forms 2012 The 200% declining balance method over a GDS recovery period. Free file fillable forms 2012 The 150% declining balance method over a GDS recovery period. Free file fillable forms 2012 The straight line method over a GDS recovery period. Free file fillable forms 2012 The straight line method over an ADS recovery period. Free file fillable forms 2012 For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Free file fillable forms 2012 If you made this election, continue to use the same method and recovery period for that property. Free file fillable forms 2012 Table 4–1 lists the types of property you can depreciate under each method. Free file fillable forms 2012 It also gives a brief explanation of the method, including any benefits that may apply. Free file fillable forms 2012 Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate it under GDS using the 150% declining balance method unless you are a farmer who must depreciate the property under ADS using the straight line method or you elect to depreciate the property under GDS or ADS using the straight line method. Free file fillable forms 2012 You can depreciate real property using the straight line method under either GDS or ADS. Free file fillable forms 2012 Fruit or nut trees and vines. Free file fillable forms 2012   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Free file fillable forms 2012 ADS required for some farmers. Free file fillable forms 2012   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Free file fillable forms 2012 You must use ADS for all property you place in service in any year the election is in effect. Free file fillable forms 2012 See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Free file fillable forms 2012 Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Free file fillable forms 2012 You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Free file fillable forms 2012 However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free file fillable forms 2012 Attach the election to the amended return and write “Filed pursuant to section 301. Free file fillable forms 2012 9100-2” on the election statement. Free file fillable forms 2012 File the amended return at the same address you filed the original return. Free file fillable forms 2012 Once you make the election, you cannot change it. Free file fillable forms 2012 If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Free file fillable forms 2012 However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Free file fillable forms 2012 150% election. Free file fillable forms 2012   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Free file fillable forms 2012 Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Free file fillable forms 2012 Straight line election. Free file fillable forms 2012   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Free file fillable forms 2012 Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Free file fillable forms 2012 Election of ADS. Free file fillable forms 2012   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Free file fillable forms 2012 ADS uses the straight line method of depreciation over fixed ADS recovery periods. Free file fillable forms 2012 Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Free file fillable forms 2012   Make the election by completing line 20 in Part III of Form 4562. Free file fillable forms 2012 Farm property. Free file fillable forms 2012   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Free file fillable forms 2012 The straight line method over a GDS recovery period. Free file fillable forms 2012 The straight line method over an ADS recovery period. Free file fillable forms 2012 Table 4-1. Free file fillable forms 2012 Depreciation Methods Note. Free file fillable forms 2012 The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Free file fillable forms 2012 Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction GDS using 150% DB • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1 GDS using SL • Nonresidential real property • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • Provides for equal yearly deductions (except for the first and last years) ADS using SL • Listed property used 50% or less for business • Property used predominantly outside the U. Free file fillable forms 2012 S. Free file fillable forms 2012  • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Free file fillable forms 2012 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Free file fillable forms 2012 Then, you are ready to figure your depreciation deduction. Free file fillable forms 2012 You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Free file fillable forms 2012 Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Free file fillable forms 2012 These percentage tables are in Appendix A near the end of this publication. Free file fillable forms 2012 Which table to use. Free file fillable forms 2012    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Free file fillable forms 2012 The percentage tables immediately follow the guide. Free file fillable forms 2012 Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Free file fillable forms 2012 You must apply the rates in the percentage tables to your property's unadjusted basis. Free file fillable forms 2012 You cannot use the percentage tables for a short tax year. Free file fillable forms 2012 See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Free file fillable forms 2012 Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Free file fillable forms 2012 You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Free file fillable forms 2012 Basis adjustments other than those made due to the items listed in (4) include an increase in basis for the recapture of a clean-fuel deduction or credit and a reduction in basis for a casualty loss. Free file fillable forms 2012 Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Free file fillable forms 2012   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Free file fillable forms 2012 For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Free file fillable forms 2012 See Figuring the Deduction Without Using the Tables, later. Free file fillable forms 2012 Basis adjustment due to casualty loss. Free file fillable forms 2012   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Free file fillable forms 2012 For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Free file fillable forms 2012 See Figuring the Deduction Without Using the Tables, later. Free file fillable forms 2012 Example. Free file fillable forms 2012 On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Free file fillable forms 2012 It cost $39,000 and she elected a section 179 deduction of $24,000. Free file fillable forms 2012 She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Free file fillable forms 2012 Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Free file fillable forms 2012 She figured her MACRS depreciation deduction using the percentage tables. Free file fillable forms 2012 For 2012, her MACRS depreciation deduction was $268. Free file fillable forms 2012 In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Free file fillable forms 2012 She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Free file fillable forms 2012 Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Free file fillable forms 2012 She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Free file fillable forms 2012 She must now figure her depreciation for 2013 without using the percentage tables. Free file fillable forms 2012 Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Free file fillable forms 2012 Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Free file fillable forms 2012 However, you do reduce your original basis by other amounts, including the following. Free file fillable forms 2012 Any amortization taken on the property. Free file fillable forms 2012 Any section 179 deduction claimed. Free file fillable forms 2012 Any special depreciation allowance taken on the property. Free file fillable forms 2012 For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Free file fillable forms 2012 If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Free file fillable forms 2012 MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Free file fillable forms 2012 Use a separate worksheet for each item of property. Free file fillable forms 2012 Then, use the information from this worksheet to prepare Form 4562. Free file fillable forms 2012 Do not use this worksheet for automobiles. Free file fillable forms 2012 Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Free file fillable forms 2012 MACRS Worksheet Part I   1. Free file fillable forms 2012 MACRS system (GDS or ADS)   2. Free file fillable forms 2012 Property class   3. Free file fillable forms 2012 Date placed in service   4. Free file fillable forms 2012 Recovery period   5. Free file fillable forms 2012 Method and convention   6. Free file fillable forms 2012 Depreciation rate (from tables)   Part II   7. Free file fillable forms 2012 Cost or other basis* $     8. Free file fillable forms 2012 Business/investment use   %   9. Free file fillable forms 2012 Multiply line 7 by line 8   $ 10. Free file fillable forms 2012 Total claimed for section 179 deduction and other items   $ 11. Free file fillable forms 2012 Subtract line 10 from line 9. Free file fillable forms 2012 This is your tentative basis for depreciation   $ 12. Free file fillable forms 2012 Multiply line 11 by . Free file fillable forms 2012 50 if the 50% special depreciation allowance applies. Free file fillable forms 2012 This is your special depreciation allowance. Free file fillable forms 2012 Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   $ 13. Free file fillable forms 2012 Subtract line 12 from line 11. Free file fillable forms 2012 This is your basis for depreciation     14. Free file fillable forms 2012 Depreciation rate (from line 6)     15. Free file fillable forms 2012 Multiply line 13 by line 14. Free file fillable forms 2012 This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Free file fillable forms 2012 The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Free file fillable forms 2012 Example. Free file fillable forms 2012 You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Free file fillable forms 2012 You use the furniture only for business. Free file fillable forms 2012 This is the only property you placed in service this year. Free file fillable forms 2012 You did not elect a section 179 deduction and the property is not qualified property for purposes of claiming a special depreciation allowance so your property's unadjusted basis is its cost, $10,000. Free file fillable forms 2012 You use GDS and the half-year convention to figure your depreciation. Free file fillable forms 2012 You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Free file fillable forms 2012 Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Free file fillable forms 2012 You figure your depreciation deduction using the MACRS worksheet as follows. Free file fillable forms 2012 MACRS Worksheet Part I 1. Free file fillable forms 2012 MACRS system (GDS or ADS) GDS 2. Free file fillable forms 2012 Property class 7-year 3. Free file fillable forms 2012 Date placed in service 8/11/13 4. Free file fillable forms 2012 Recovery period 7-Year 5. Free file fillable forms 2012 Method and convention 200%DB/Half-Year 6. Free file fillable forms 2012 Depreciation rate (from tables) . Free file fillable forms 2012 1429 Part II 7. Free file fillable forms 2012 Cost or other basis* $10,000     8. Free file fillable forms 2012 Business/investment use 100 %   9. Free file fillable forms 2012 Multiply line 7 by line 8   $10,000 10. Free file fillable forms 2012 Total claimed for section 179 deduction and other items   -0- 11. Free file fillable forms 2012 Subtract line 10 from line 9. Free file fillable forms 2012 This is your tentative basis for depreciation   $10,000 12. Free file fillable forms 2012 Multiply line 11 by . Free file fillable forms 2012 50 if the 50% special depreciation allowance applies. Free file fillable forms 2012 This is your special depreciation allowance. Free file fillable forms 2012 Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   -0- 13. Free file fillable forms 2012 Subtract line 12 from line 11. Free file fillable forms 2012 This is your basis for depreciation   $10,000 14. Free file fillable forms 2012 Depreciation rate (from line 6)   . Free file fillable forms 2012 1429 15. Free file fillable forms 2012 Multiply line 13 by line 14. Free file fillable forms 2012 This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Free file fillable forms 2012 If there are no adjustments to the basis of the property other than depreciation, your depreciation deduction for each subsequent year of the recovery period will be as follows. Free file fillable forms 2012 Year   Basis Percentage Deduction 2014 $ 10,000 24. Free file fillable forms 2012 49%   $2,449   2015   10,000 17. Free file fillable forms 2012 49   1,749   2016   10,000 12. Free file fillable forms 2012 49   1,249   2017   10,000 8. Free file fillable forms 2012 93   893   2018   10,000 8. Free file fillable forms 2012 92   892   2019   10,000 8. Free file fillable forms 2012 93   893   2020   10,000 4. Free file fillable forms 2012 46   446   Examples The following examples are provided to show you how to use the percentage tables. Free file fillable forms 2012 In both examples, assume the following. Free file fillable forms 2012 You use the property only for business. Free file fillable forms 2012 You use the calendar year as your tax year. Free file fillable forms 2012 You use GDS for all the properties. Free file fillable forms 2012 Example 1. Free file fillable forms 2012 You bought a building and land for $120,000 and placed it in service on March 8. Free file fillable forms 2012 The sales contract showed that the building cost $100,000 and the land cost $20,000. Free file fillable forms 2012 It is nonresidential real property. Free file fillable forms 2012 The building's unadjusted basis is its original cost, $100,000. Free file fillable forms 2012 You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Free file fillable forms 2012 March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Free file fillable forms 2012 Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Free file fillable forms 2012 033%   $2,033   2nd   100,000 2. Free file fillable forms 2012 564   2,564   3rd   100,000 2. Free file fillable forms 2012 564   2,564   Example 2. Free file fillable forms 2012 During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Free file fillable forms 2012 You placed the machine in service in January, the furniture in September, and the computer in October. Free file fillable forms 2012 You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Free file fillable forms 2012 You placed property in service during the last 3 months of the year, so you must first determine if you have to use the mid-quarter convention. Free file fillable forms 2012 The total bases of all property you placed in service during the year is $10,000. Free file fillable forms 2012 The $5,000 basis of the computer, which you placed in service during the last 3 months (the fourth quarter) of your tax year, is more than 40% of the total bases of all property ($10,000) you placed in service during the year. Free file fillable forms 2012 Therefore, you must use the mid-quarter convention for all three items. Free file fillable forms 2012 You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Free file fillable forms 2012 The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Free file fillable forms 2012 The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Free file fillable forms 2012 Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Free file fillable forms 2012 Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Free file fillable forms 2012 Year Property Basis Percentage Deduction 1st Machine $4,000 25. Free file fillable forms 2012 00 $1,000   2nd Machine 4,000 21. Free file fillable forms 2012 43 857   1st Furniture 1,000 10. Free file fillable forms 2012 71 107   2nd Furniture 1,000 25. Free file fillable forms 2012 51 255   1st Computer 5,000 5. Free file fillable forms 2012 00 250   2nd Computer 5,000 38. Free file fillable forms 2012 00 1,900   Sale or Other Disposition Before the Recovery Period Ends If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. Free file fillable forms 2012 You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. Free file fillable forms 2012 After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Free file fillable forms 2012 Half-year convention used. Free file fillable forms 2012   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Free file fillable forms 2012 Mid-quarter convention used. Free file fillable forms 2012   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Free file fillable forms 2012 Quarter Percentage First 12. Free file fillable forms 2012 5% Second 37. Free file fillable forms 2012 5 Third 62. Free file fillable forms 2012 5 Fourth 87. Free file fillable forms 2012 5 Example. Free file fillable forms 2012 On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Free file fillable forms 2012 You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Free file fillable forms 2012 Your unadjusted basis for the property was $10,000. Free file fillable forms 2012 You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Free file fillable forms 2012 Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Free file fillable forms 2012 Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Free file fillable forms 2012 80% of $10,000). Free file fillable forms 2012 You disposed of the property on April 6, 2013. Free file fillable forms 2012 To determine your depreciation deduction for 2013, first figure the deduction for the full year. Free file fillable forms 2012 This is $1,368 (13. Free file fillable forms 2012 68% of $10,000). Free file fillable forms 2012 April is in the second quarter of the year, so you multiply $1,368 by 37. Free file fillable forms 2012 5% to get your depreciation deduction of $513 for 2013. Free file fillable forms 2012 Mid-month convention used. Free file fillable forms 2012   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Free file fillable forms 2012 The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Free file fillable forms 2012 The denominator is 12. Free file fillable forms 2012 Example. Free file fillable forms 2012 On July 2, 2011, you purchased and placed in service residential rental property. Free file fillable forms 2012 The property cost $100,000, not including the cost of land. Free file fillable forms 2012 You used Table A-6 to figure your MACRS depreciation for this property. Free file fillable forms 2012 You sold the property on March 2, 2013. Free file fillable forms 2012 You file your tax return based on the calendar year. Free file fillable forms 2012 A full year of depreciation for 2013 is $3,636. Free file fillable forms 2012 This is $100,000 multiplied by . Free file fillable forms 2012 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Free file fillable forms 2012 You then apply the mid-month convention for the 2½ months of use in 2013. Free file fillable forms 2012 Treat the month of disposition as one-half month of use. Free file fillable forms 2012 Multiply $3,636 by the fraction, 2. Free file fillable forms 2012 5 over 12, to get your 2013 depreciation deduction of $757. Free file fillable forms 2012 50. Free file fillable forms 2012 Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Free file fillable forms 2012 Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Free file fillable forms 2012 Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Free file fillable forms 2012 Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Free file fillable forms 2012 You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Free file fillable forms 2012 The straight line method is explained later. Free file fillable forms 2012 You figure depreciation for the year you place property in service as follows. Free file fillable forms 2012 Multiply your adjusted basis in the property by the declining balance rate. Free file fillable forms 2012 Apply the applicable convention. Free file fillable forms 2012 You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Free file fillable forms 2012 Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Free file fillable forms 2012 Multiply this new adjusted basis by the same declining balance rate used in earlier years. Free file fillable forms 2012 If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Free file fillable forms 2012 Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Free file fillable forms 2012 Declining balance rate. Free file fillable forms 2012   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Free file fillable forms 2012 For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Free file fillable forms 2012 00 (200%) by 3 to get 0. Free file fillable forms 2012 6667, or a 66. Free file fillable forms 2012 67% declining balance rate. Free file fillable forms 2012 For 15-year property depreciated using the 150% declining balance method, divide 1. Free file fillable forms 2012 50 (150%) by 15 to get 0. Free file fillable forms 2012 10, or a 10% declining balance rate. Free file fillable forms 2012   The following table shows the declining balance rate for each property class and the first year for which the straight line method gives an equal or greater deduction. Free file fillable forms 2012 Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Free file fillable forms 2012 667% 3rd 5-year 200% DB 40. Free file fillable forms 2012 0 4th 7-year 200% DB 28. Free file fillable forms 2012 571 5th 10-year 200% DB 20. Free file fillable forms 2012 0 7th 15-year 150% DB 10. Free file fillable forms 2012 0 7th 20-year 150% DB 7. Free file fillable forms 2012 5 9th Straight Line Method When using the straight line method, you apply a different depreciation rate each year to the adjusted basis of your property. Free file fillable forms 2012 You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Free file fillable forms 2012 You figure depreciation for the year you place property in service as follows. Free file fillable forms 2012 Multiply your adjusted basis in the property by the straight line rate. Free file fillable forms 2012 Apply the applicable convention. Free file fillable forms 2012 You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Free file fillable forms 2012 Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Free file fillable forms 2012 Determine the depreciation rate for the year. Free file fillable forms 2012 Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Free file fillable forms 2012 If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Free file fillable forms 2012 Straight line rate. Free file fillable forms 2012   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Free file fillable forms 2012 When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Free file fillable forms 2012 If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Free file fillable forms 2012 0 (100%). Free file fillable forms 2012 Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Free file fillable forms 2012 It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Free file fillable forms 2012 See Straight line rate in the previous discussion. Free file fillable forms 2012 Use the applicable convention as explained in the following discussions. Free file fillable forms 2012 Half-year convention. Free file fillable forms 2012   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Free file fillable forms 2012 You deduct a full year of depreciation for any other year during the recovery period. Free file fillable forms 2012   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Free file fillable forms 2012 If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Free file fillable forms 2012 If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final 6 months of the recovery period is the amount of your unrecovered basis in the property. Free file fillable forms 2012 Mid-quarter convention. Free file fillable forms 2012   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Free file fillable forms 2012   A quarter of a full 12-month tax year is a period of 3 months. Free file fillable forms 2012 The first quarter in a year begins on the first day of the tax year. Free file fillable forms 2012 The second quarter begins on the first day of the fourth month of the tax year. Free file fillable forms 2012 The third quarter begins on the first day of the seventh month of the tax year. Free file fillable forms 2012 The fourth quarter begins on the first day of the tenth month of the tax year. Free file fillable forms 2012 A calendar year is divided into the following quarters. Free file fillable forms 2012 Quarter Months First January, February, March Second April, May, June Third July, August, September Fourth October, November, December   Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by the percentage listed below for the quarter you place the property in service. Free file fillable forms 2012 Quarter Percentage First 87. Free file fillable forms 2012 5% Second 62. Free file fillable forms 2012 5 Third 37. Free file fillable forms 2012 5 Fourth 12. Free file fillable forms 2012 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Free file fillable forms 2012 Quarter Percentage First 12. Free file fillable forms 2012 5% Second 37. Free file fillable forms 2012 5 Third 62. Free file fillable forms 2012 5 Fourth 87. Free file fillable forms 2012 5   If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final quarter of the recovery period is the amount of your unrecovered basis in the property. Free file fillable forms 2012 Mid-month convention. Free file fillable forms 2012   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Free file fillable forms 2012 Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Free file fillable forms 2012 The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Free file fillable forms 2012 5). Free file fillable forms 2012 The denominator is 12. Free file fillable forms 2012   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Free file fillable forms 2012 If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Free file fillable forms 2012 Example. Free file fillable forms 2012 You use the calendar year and place nonresidential real property in service in August. Free file fillable forms 2012 The property is in service 4 full months (September, October, November, and December). Free file fillable forms 2012 Your numerator is 4. Free file fillable forms 2012 5 (4 full months plus 0. Free file fillable forms 2012 5). Free file fillable forms 2012 You multiply the depreciation for a full year by 4. Free file fillable forms 2012 5/12, or 0. Free file fillable forms 2012 375. Free file fillable forms 2012 Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Free file fillable forms 2012 Figures are rounded for purposes of the examples. Free file fillable forms 2012 Assume for all the examples that you use a calendar year as your tax year. Free file fillable forms 2012 Example 1—200% DB method and half-year convention. Free file fillable forms 2012 In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Free file fillable forms 2012 You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Free file fillable forms 2012 You use GDS and the 200% declining balance (DB) method to figure your depreciation. Free file fillable forms 2012 When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Free file fillable forms 2012 You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Free file fillable forms 2012 First year. Free file fillable forms 2012 You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Free file fillable forms 2012 The result is 40%. Free file fillable forms 2012 You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Free file fillable forms 2012 You apply the half-year convention by dividing the result ($400) by 2. Free file fillable forms 2012 Depreciation for the first year under the 200% DB method is $200. Free file fillable forms 2012 You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Free file fillable forms 2012 The result is 20%. Free file fillable forms 2012 You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Free file fillable forms 2012 You apply the half-year convention by dividing the result ($200) by 2. Free file fillable forms 2012 Depreciation for the first year under the SL method is $100. Free file fillable forms 2012 The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Free file fillable forms 2012 Second year. Free file fillable forms 2012 You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Free file fillable forms 2012 You multiply the result ($800) by the DB rate (40%). Free file fillable forms 2012 Depreciation for the second year under the 200% DB method is $320. Free file fillable forms 2012 You figure the SL depreciation rate by dividing 1 by 4. Free file fillable forms 2012 5, the number of years remaining in the recovery period. Free file fillable forms 2012 (Based on the half-year convention, you used only half a year of the recovery period in the first year. Free file fillable forms 2012 ) You multiply the reduced adjusted basis ($800) by the result (22. Free file fillable forms 2012 22%). Free file fillable forms 2012 Depreciation under the SL method for the second year is $178. Free file fillable forms 2012 The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Free file fillable forms 2012 Third year. Free file fillable forms 2012 You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Free file fillable forms 2012 You multiply the result ($480) by the DB rate (40%). Free file fillable forms 2012 Depreciation for the third year under the 200% DB method is $192. Free file fillable forms 2012 You figure the SL depreciation rate by dividing 1 by 3. Free file fillable forms 2012 5. Free file fillable forms 2012 You multiply the reduced adjusted basis ($480) by the result (28. Free file fillable forms 2012 57%). Free file fillable forms 2012 Depreciation under the SL method for the third year is $137. Free file fillable forms 2012 The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Free file fillable forms 2012 Fourth year. Free file fillable forms 2012 You reduce the adjusted basis ($480) by the de
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Free file fillable forms 2012 7. Free file fillable forms 2012   Filing Information Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: What, When, and Where To FileResident Aliens Nonresident Aliens Amended Returns and Claims for Refund Other Forms You May Have To File PenaltiesCivil Penalties Criminal Penalties Introduction This chapter provides the basic filing information that you may need. Free file fillable forms 2012 Topics - This chapter discusses: Forms aliens must file, When and where to file, Penalties, and Amended returns and claims for refund. Free file fillable forms 2012 Useful Items - You may want to see: Forms (and Instructions) 1040 U. Free file fillable forms 2012 S. Free file fillable forms 2012 Individual Income Tax Return 1040A U. Free file fillable forms 2012 S. Free file fillable forms 2012 Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Free file fillable forms 2012 S. Free file fillable forms 2012 Nonresident Alien Income Tax Return 1040NR-EZ U. Free file fillable forms 2012 S. Free file fillable forms 2012 Income Tax Return for Certain Nonresident Aliens With No Dependents See chapter 12 for information about getting these forms. Free file fillable forms 2012 What, When, and Where To File What return you must file as well as when and where you file that return, depends on your status at the end of the tax year as a resident or a nonresident alien. Free file fillable forms 2012 Resident Aliens Resident aliens should file Form 1040EZ, 1040A, or 1040 at the address shown in the instructions for that form. Free file fillable forms 2012 The due date for filing the return and paying any tax due is April 15 of the year following the year for which you are filing a return (but see the Tip, later). Free file fillable forms 2012 Under U. Free file fillable forms 2012 S. Free file fillable forms 2012 immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. Free file fillable forms 2012 Extensions of time to file. Free file fillable forms 2012   You are allowed an automatic extension to June 15 to file if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. Free file fillable forms 2012 You can get an extension of time to October 15 to file your return if you get an extension by April 15 (June 15 if you qualify for the June 15 extension). Free file fillable forms 2012 Use Form 4868 to get the extension to October 15. Free file fillable forms 2012 In addition to this 6-month extension, taxpayers who are out of the country (as defined in the Form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Free file fillable forms 2012 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Free file fillable forms 2012 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Free file fillable forms 2012   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U. Free file fillable forms 2012 S. Free file fillable forms 2012 citizens and resident aliens abroad who expect to qualify for special tax treatment). Free file fillable forms 2012    If the due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day which is not a Saturday, Sunday, or legal holiday. Free file fillable forms 2012 You may be able to file your return electronically. Free file fillable forms 2012 See IRS e-file in your form instructions. Free file fillable forms 2012 Nonresident Aliens Nonresident aliens who are required to file an income tax return should use Form 1040NR or, if qualified, Form 1040NR-EZ. Free file fillable forms 2012 If you are any of the following, you must file a return. Free file fillable forms 2012 A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during 2013. Free file fillable forms 2012 (But see Exceptions , later. Free file fillable forms 2012 ) You must file even if: Your income did not come from a trade or business conducted in the United States, You have no income from U. Free file fillable forms 2012 S. Free file fillable forms 2012 sources, or Your income is exempt from income tax. Free file fillable forms 2012 A nonresident alien individual not engaged in a trade or business in the United States with U. Free file fillable forms 2012 S. Free file fillable forms 2012 income on which the tax liability was not satisfied by the withholding of tax at the source. Free file fillable forms 2012 A representative or agent responsible for filing the return of an individual described in (1) or (2). Free file fillable forms 2012 A fiduciary for a nonresident alien estate or trust. Free file fillable forms 2012 You must also file if you want to: Claim a refund of overwithheld or overpaid tax, or Claim the benefit of any deductions or credits. Free file fillable forms 2012 For example, if you have no U. Free file fillable forms 2012 S. Free file fillable forms 2012 business activities but have income from real property that you choose to treat as effectively connected income (discussed in chapter 4), you must timely file a true and accurate return to take any allowable deductions against that income. Free file fillable forms 2012 For information on what is timely, see When to file for deductions and credits under When To File, later. Free file fillable forms 2012 Exceptions. Free file fillable forms 2012   You do not need to file Form 1040NR or Form 1040NR-EZ if you meet either of the following conditions. Free file fillable forms 2012 Your only U. Free file fillable forms 2012 S. Free file fillable forms 2012 trade or business was the performance of personal services, and Your wages were less than $3,900, and You have no other need to file a return to claim a refund of overwithheld taxes, to satisfy additional withholding at source, or to claim income exempt or partly exempt by treaty. Free file fillable forms 2012 You were a nonresident alien student, teacher, or trainee who was temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa and you have no income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Free file fillable forms 2012 Even if you have left the United States and filed a Form 1040-C, U. Free file fillable forms 2012 S. Free file fillable forms 2012 Departing Alien Income Tax Return, on departure, you still must file an annual U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax return. Free file fillable forms 2012 If you are married and both you and your spouse are required to file, you must each file a separate return. Free file fillable forms 2012 Form 1040NR-EZ You can use Form 1040NR-EZ if all of the following conditions are met. Free file fillable forms 2012 You do not claim any dependents. Free file fillable forms 2012 You cannot be claimed as a dependent on someone else's U. Free file fillable forms 2012 S. Free file fillable forms 2012 tax return. Free file fillable forms 2012 If you were married, you do not claim an exemption for your spouse. Free file fillable forms 2012 Your taxable income is less than $100,000. Free file fillable forms 2012 The only itemized deduction you can claim is for state and local income taxes. Free file fillable forms 2012 Note. Free file fillable forms 2012 Residents of India who were students or business apprentices may be able to take the standard deduction instead of the itemized deduction for state and local income taxes. Free file fillable forms 2012 See chapter 5. Free file fillable forms 2012 Your only U. Free file fillable forms 2012 S. Free file fillable forms 2012 source income is from wages, salaries, tips, taxable refunds of state and local income taxes, scholarship or fellowship grants, and nontaxable interest or dividends. Free file fillable forms 2012 (If you had taxable interest or dividend income, you cannot use this form. Free file fillable forms 2012 ) You are not claiming any adjustments to income other than the student loan interest deduction or scholarship and fellowship grants excluded. Free file fillable forms 2012 You are not claiming any tax credits. Free file fillable forms 2012 This is not an “expatriation return. Free file fillable forms 2012 ” See Expatriation Tax in chapter 4. Free file fillable forms 2012 The only taxes you owe are: The income tax from the Tax Table. Free file fillable forms 2012 The social security and Medicare tax from Form 4137 or Form 8919. Free file fillable forms 2012 You are not claiming a credit for excess social security and tier 1 RRTA tax withheld. Free file fillable forms 2012 You are not filing Form 8959, to figure the amount of Additional Medicare Tax you owe and/or the amount of Additional Medicare Tax withheld by your employer, if any. Free file fillable forms 2012 If you do not meet all of the above conditions, you must file Form 1040NR. Free file fillable forms 2012 When To File If you are an employee and you receive wages subject to U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax withholding, you will generally file by the 15th day of the 4th month after your tax year ends. Free file fillable forms 2012 For the 2013 calendar year, file your return by April 15, 2014. Free file fillable forms 2012 If you are not an employee who receives wages subject to U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Free file fillable forms 2012 For the 2013 calendar year, file your return by June 16, 2014 (because June 15 is a Sunday. Free file fillable forms 2012 ) Extensions of time to file. Free file fillable forms 2012   If you cannot file your return by the due date, file Form 4868 or use one of the electronic filing options explained in the Form 4868 instructions. Free file fillable forms 2012 For the 2013 calendar year, this will extend the due date to October 15, 2014 (December 15, 2014, if the regular due date of your return is June 16, 2014). Free file fillable forms 2012 You must file the extension by the regular due date of your return. Free file fillable forms 2012   In addition to the 6-month extension to October 15, taxpayers whose main place of business is outside the United States and Puerto Rico and who live outside those jurisdictions can request a discretionary 2-month extension of time to file their returns (to December 15 for calendar year taxpayers). Free file fillable forms 2012 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Free file fillable forms 2012 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Free file fillable forms 2012 When to file for deductions and credits. Free file fillable forms 2012   To get the benefit of any allowable deductions or credits, you must timely file a true and accurate return. Free file fillable forms 2012 For this purpose, a return is timely if it is filed within 16 months of the due date just discussed. Free file fillable forms 2012 However, if you did not file a 2012 tax return and 2013 is not the first year for which you are required to file one, your 2013 return is timely for this purpose if it is filed by the earlier of: The date that is 16 months after the due date for filing your 2013 return, or The date the IRS notifies you that your 2013 return has not been filed and that you cannot claim certain deductions and credits. Free file fillable forms 2012 The allowance of the following credits is not affected by this time requirement. Free file fillable forms 2012 Credit for withheld taxes. Free file fillable forms 2012 Credit for excise tax on certain uses of gasoline and special fuels. Free file fillable forms 2012 Credit for tax paid by a mutual fund (or other regulated investment company) or a real estate investment trust on undistributed long-term capital gains. Free file fillable forms 2012 Protective return. Free file fillable forms 2012   If your activities in the United States were limited and you do not believe that you had any gross income effectively connected with a U. Free file fillable forms 2012 S. Free file fillable forms 2012 trade or business during the year, you can file a protective return (Form 1040NR) by the deadline explained above. Free file fillable forms 2012 By filing a protective return, you protect your right to receive the benefit of deductions and credits in the event it is later determined that some or all of your income is effectively connected. Free file fillable forms 2012 You are not required to report any effectively connected income or any deductions on the protective return, but you must give the reason the return is being filed. Free file fillable forms 2012   If you believe some of your activities resulted in effectively connected income, file your return reporting that income and related deductions by the regular due date. Free file fillable forms 2012 To protect your right to claim deductions or credits resulting from other activities, attach a statement to that return explaining that you wish to protect your right to claim deductions and credits if it is later determined that the other activities produced effectively connected income. Free file fillable forms 2012   You can follow the same procedure if you believe you have no U. Free file fillable forms 2012 S. Free file fillable forms 2012 tax liability because of a U. Free file fillable forms 2012 S. Free file fillable forms 2012 tax treaty. Free file fillable forms 2012 Be sure to also complete item L on page 5 of Form 1040NR. Free file fillable forms 2012 Waiver of filing deadline. Free file fillable forms 2012   The IRS may waive the filing deadline if you establish that, based on the facts and circumstances, you acted reasonably and in good faith in failing to file a U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax return (including a protective return) and you cooperate with the IRS in determining your U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax liability for the tax year for which you did not file a return. Free file fillable forms 2012 Where To File If you are not enclosing a payment, file Form 1040NR-EZ and Form 1040NR at the following address. Free file fillable forms 2012  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Free file fillable forms 2012 O. Free file fillable forms 2012 Box 1303 Charlotte, NC 28201-1303 Aliens from the U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islands. Free file fillable forms 2012    If you are a bona fide resident of the U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islands during your entire tax year and work temporarily in the United States, you must pay your income taxes to the U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islands and file your income tax returns at the following address. Free file fillable forms 2012 Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Free file fillable forms 2012 Thomas, VI 00802   Report all income from U. Free file fillable forms 2012 S. Free file fillable forms 2012 sources, as well as income from other sources, on your return. Free file fillable forms 2012 For information on filing U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islands returns, contact the U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islands Bureau of Internal Revenue. Free file fillable forms 2012   Chapter 8 discusses withholding from U. Free file fillable forms 2012 S. Free file fillable forms 2012 wages of U. Free file fillable forms 2012 S. Free file fillable forms 2012 Virgin Islanders. Free file fillable forms 2012 Aliens from Guam or the Commonwealth of the Northern Mariana Islands. Free file fillable forms 2012   If you are a bona fide resident of Guam or the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you must file your return with, and pay any tax due to, Guam or the CNMI. Free file fillable forms 2012 Report all income, including income from U. Free file fillable forms 2012 S. Free file fillable forms 2012 sources, on your return. Free file fillable forms 2012 It is not necessary to file a separate U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax return. Free file fillable forms 2012    Bona fide residents of Guam should file their Guam returns at the following address. Free file fillable forms 2012   Department of Revenue and Taxation Government of Guam P. Free file fillable forms 2012 O. Free file fillable forms 2012 Box 23607 GMF, GU 96921    Bona fide residents of the CNMI should file their CNMI income tax returns at the following address. Free file fillable forms 2012   Department of Finance Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Free file fillable forms 2012 O. Free file fillable forms 2012 Box 5234 CHRB Saipan, MP 96950   If you are not a bona fide resident of Guam or the CNMI, see Pub. Free file fillable forms 2012 570, Tax Guide for Individuals With Income From U. Free file fillable forms 2012 S. Free file fillable forms 2012 Possessions, for information on where to file your return. Free file fillable forms 2012 Amended Returns and Claims for Refund If you find changes in your income, deductions, or credits after you mail your return, file Form 1040X, Amended U. Free file fillable forms 2012 S. Free file fillable forms 2012 Individual Income Tax Return. Free file fillable forms 2012 Also use Form 1040X if you should have filed Form 1040, 1040A, or 1040EZ instead of Form 1040NR or 1040NR-EZ, or vice versa. Free file fillable forms 2012 If you amend Form 1040NR or Form 1040NR-EZ or file the correct return, attach the corrected return (Form 1040, Form 1040NR, etc. Free file fillable forms 2012 ) to Form 1040X. Free file fillable forms 2012 Print “Amended” across the top. Free file fillable forms 2012 Ordinarily, an amended return claiming a refund must be filed within 3 years from the date your return was filed or within 2 years from the time the tax was paid, whichever is later. Free file fillable forms 2012 A return filed before the final due date is considered to have been filed on the due date. Free file fillable forms 2012 Other Forms You May Have To File You may be required to file information returns to report certain foreign income or assets, or monetary transactions. Free file fillable forms 2012 FinCen Form 105 FinCEN Form 105 (formerly Customs Form 4790), Report of International Transportation of Currency or Monetary Instruments, must be filed by each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped, currency or other monetary instruments in a total amount of more than $10,000 at one time from the United States to any place outside the United States, or into the United States from any place outside the United States. Free file fillable forms 2012 The filing requirement also applies to each person who receives in the United States currency or monetary instruments totaling more than $10,000 at one time from any place outside of the United States. Free file fillable forms 2012 The term “monetary instruments” means the following: Coin and currency of the United States or of any other country, Travelers' checks in any form, Investment securities or stock in bearer form or otherwise in such form that title to them passes upon delivery, Negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title to them passes upon delivery, and Checks, promissory notes, and money orders which are signed but on which the name of the payee has been omitted. Free file fillable forms 2012 However, the term does not include: Checks or money orders made payable to the order of a named person which have not been endorsed or which contain restrictive endorsements, Warehouse receipts, or Bills of lading. Free file fillable forms 2012 A transfer of funds through normal banking procedures (wire transfer) that does not involve the physical transportation of currency or monetary instruments is not required to be reported on FinCEN Form 105. Free file fillable forms 2012 Filing requirements. Free file fillable forms 2012   FinCEN Form 105 filing requirements follow. Free file fillable forms 2012 Recipients. Free file fillable forms 2012   Each person who receives currency or other monetary instruments in the United States must file FinCEN Form 105 within 15 days after receipt, with the Customs officer in charge at any port of entry or departure, or by mail at the following address. Free file fillable forms 2012 Commissioner of Customs  Attention: Currency Transportation Reports Washington, DC 20229 Shippers or mailers. Free file fillable forms 2012   If the currency or other monetary instrument does not accompany the person entering or departing the United States, FinCEN Form 105 can be filed by mail at the above address on or before the date of entry, departure, mailing, or shipping. Free file fillable forms 2012 Travelers. Free file fillable forms 2012   Travelers must file FinCEN Form 105 with the Customs officer in charge at any Customs port of entry or departure, when entering or departing the United States. Free file fillable forms 2012 Penalties. Free file fillable forms 2012   Civil and criminal penalties are provided for failing to file a report, filing a report containing material omissions or misstatements, or filing a false or fraudulent report. Free file fillable forms 2012 Also, the entire amount of the currency or monetary instrument may be subject to seizure and forfeiture. Free file fillable forms 2012 More information. Free file fillable forms 2012   More information regarding the filing of FinCEN Form 105 can be found in the instructions on the back of the form. Free file fillable forms 2012 Form 8938 You may have to file Form 8938, Statement of Specified Foreign Financial Assets, to report the ownership of specified foreign financial asset(s) if you are one of the following individuals. Free file fillable forms 2012 A resident alien of the United States for any part of the tax year. Free file fillable forms 2012 A resident alien of the United States who elects to be treated as a resident of a foreign country under the provisions of a U. Free file fillable forms 2012 S. Free file fillable forms 2012 income tax treaty. Free file fillable forms 2012 See Effect of Tax Treaties in chapter 1. Free file fillable forms 2012 A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. Free file fillable forms 2012 See chapter 1 for information about this election. Free file fillable forms 2012 A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. Free file fillable forms 2012 See Publication 570, Tax Guide for Individuals With Income From U. Free file fillable forms 2012 S. Free file fillable forms 2012 Possessions, for a definition of bona fide resident. Free file fillable forms 2012 You must file Form 8938 if the total value of those assets exceeds an applicable threshold (the “reporting threshold”). Free file fillable forms 2012 The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Free file fillable forms 2012 Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Free file fillable forms 2012 S. Free file fillable forms 2012 person. Free file fillable forms 2012 You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Free file fillable forms 2012 More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Free file fillable forms 2012 Penalties The law provides penalties for failure to file returns or pay taxes as required. Free file fillable forms 2012 Civil Penalties If you do not file your return and pay your tax by the due date, you may have to pay a penalty. Free file fillable forms 2012 You may also have to pay a penalty if you substantially understate your tax, file a frivolous tax submission, or fail to supply your taxpayer identification number. Free file fillable forms 2012 If you provide fraudulent information on your return, you may have to pay a civil fraud penalty. Free file fillable forms 2012 Filing late. Free file fillable forms 2012   If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. Free file fillable forms 2012 The penalty is based on the tax not paid by the due date (without regard to extensions). Free file fillable forms 2012 The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. Free file fillable forms 2012 Fraud. Free file fillable forms 2012   If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%. Free file fillable forms 2012 Return over 60 days late. Free file fillable forms 2012   If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Free file fillable forms 2012 Exception. Free file fillable forms 2012   You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect. Free file fillable forms 2012 Paying tax late. Free file fillable forms 2012   You will have to pay a failure-to-pay penalty of ½ of 1% (. Free file fillable forms 2012 50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. Free file fillable forms 2012 This penalty does not apply during the automatic 6-month extension of time to file period, if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return. Free file fillable forms 2012   The monthly rate of the failure-to-pay penalty is half the usual rate (. Free file fillable forms 2012 25% instead of . Free file fillable forms 2012 50%) if an installment agreement is in effect for that month. Free file fillable forms 2012 You must have filed your return by the due date (including extensions) to qualify for this reduced penalty. Free file fillable forms 2012   If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at least 10 days after the day that the notice is issued. Free file fillable forms 2012 If a notice and demand for immediate payment is issued, the rate will increase to 1% at the start of the first month beginning after the day that the notice and demand is issued. Free file fillable forms 2012   This penalty cannot be more than 25% of your unpaid tax. Free file fillable forms 2012 You will not have to pay the penalty if you can show that you had a good reason for not paying your tax on time. Free file fillable forms 2012 Combined penalties. Free file fillable forms 2012   If both the failure-to-file penalty and the failure-to-pay penalty (discussed earlier) apply in any month, the 5% (or 15%) failure-to-file penalty is reduced by the failure-to-pay penalty. Free file fillable forms 2012 However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Free file fillable forms 2012 Accuracy-related penalty. Free file fillable forms 2012   You may have to pay an accuracy-related penalty if you underpay your tax because: You show negligence or disregard of rules or regulations, You substantially understate your income tax, You claim tax benefits for a transaction that lacks economic substance, or You fail to disclose a foreign financial asset. Free file fillable forms 2012 The penalty is equal to 20% of the underpayment. Free file fillable forms 2012 The penalty is 40% of any portion of the underpayment that is attributable to an undisclosed noneconomic substance transaction or an undisclosed foreign financial asset transaction. Free file fillable forms 2012 The penalty will not be figured on any part of an underpayment on which the fraud penalty (discussed later) is charged. Free file fillable forms 2012 Negligence or disregard. Free file fillable forms 2012   The term “negligence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. Free file fillable forms 2012 Negligence also includes failure to keep adequate books and records. Free file fillable forms 2012 You will not have to pay a negligence penalty if you have a reasonable basis for a position you took. Free file fillable forms 2012   The term “disregard” includes any careless, reckless, or intentional disregard. Free file fillable forms 2012 Adequate disclosure. Free file fillable forms 2012   You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a position that has at least a reasonable basis. Free file fillable forms 2012 See Disclosure statement , later. Free file fillable forms 2012   This exception will not apply to an item that is attributable to a tax shelter. Free file fillable forms 2012 In addition, it will not apply if you fail to keep adequate books and records, or substantiate items properly. Free file fillable forms 2012 Substantial understatement of income tax. Free file fillable forms 2012   You understate your tax if the tax shown on your return is less than the correct tax. Free file fillable forms 2012 The understatement is substantial if it is more than the larger of 10% of the correct tax or $5,000. Free file fillable forms 2012 However, the amount of the understatement is reduced to the extent the understatement is due to: Substantial authority, or Adequate disclosure and a reasonable basis. Free file fillable forms 2012   If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. Free file fillable forms 2012 However, there is a reduction for a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not the proper treatment. Free file fillable forms 2012 Substantial authority. Free file fillable forms 2012   Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstances. Free file fillable forms 2012 Consideration will be given to court opinions, Treasury regulations, revenue rulings, revenue procedures, and notices and announcements issued by the IRS and published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours. Free file fillable forms 2012 Disclosure statement. Free file fillable forms 2012   To adequately disclose the relevant facts about your tax treatment of an item, use Form 8275, Disclosure Statement. Free file fillable forms 2012 You must also have a reasonable basis for treating the item the way you did. Free file fillable forms 2012   In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2012-51, 2012-51 IRB 719 (or later update) are considered adequately disclosed on your return without filing Form 8275. Free file fillable forms 2012   Use Form 8275-R, Regulation Disclosure Statement, to disclose items or positions contrary to regulations. Free file fillable forms 2012 Transaction lacking economic substance. Free file fillable forms 2012   For more information on economic substance, see section 7701(o). Free file fillable forms 2012 Foreign financial asset. Free file fillable forms 2012   For more information on undisclosed foreign financial assets, see section 6662(j) or the Instructions for Form 8938. Free file fillable forms 2012 Reasonable cause. Free file fillable forms 2012   You will not have to pay a penalty if you show a good reason (reasonable cause) for the way you treated an item. Free file fillable forms 2012 You must also show that you acted in good faith. Free file fillable forms 2012 This does not apply to a transaction that lacks economic substance. Free file fillable forms 2012 Filing erroneous claim for refund or credit. Free file fillable forms 2012   You may have to pay a penalty if you file an erroneous claim for refund or credit. Free file fillable forms 2012 The penalty is equal to 20% of the disallowed amount of the claim, unless you can show a reasonable basis for the way you treated an item. Free file fillable forms 2012 However, any disallowed amount due to a transaction that lacks economic substance will not be treated as having a reasonable basis. Free file fillable forms 2012 The penalty will not be figured on any part of the disallowed amount of the claim that relates to the earned income credit or on which the accuracy-related or fraud penalties are charged. Free file fillable forms 2012 Frivolous tax submission. Free file fillable forms 2012   You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. Free file fillable forms 2012 A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect. Free file fillable forms 2012 For more information on frivolous returns, frivolous submissions, and a list of positions that are identified as frivolous, see Notice 2010-33, 2010-17 IRB 609 available at www. Free file fillable forms 2012 irs. Free file fillable forms 2012 gov/irb/2010-17_irb/ar13. Free file fillable forms 2012 html. Free file fillable forms 2012   You will have to pay the penalty if you filed this kind of return or submission based on a frivolous position or a desire to delay or interfere with the administration of federal tax laws. Free file fillable forms 2012 This includes altering or striking out the preprinted language above the space provided for your signature. Free file fillable forms 2012   This penalty is added to any other penalty provided by law. Free file fillable forms 2012 Fraud. Free file fillable forms 2012   If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud will be added to your tax. Free file fillable forms 2012 Failure to supply taxpayer identification number. Free file fillable forms 2012   If you do not include your social security number (SSN) or individual taxpayer identification number (ITIN) or the SSN or ITIN of another person where required on a return, statement, or other document, you will be subject to a penalty of $50 for each failure. Free file fillable forms 2012 You will also be subject to a penalty of $50 if you do not give your SSN or ITIN to another person when it is required on a return, statement, or other document. Free file fillable forms 2012   For example, if you have a bank account that earns interest, you must give your SSN or ITIN to the bank. Free file fillable forms 2012 The number must be shown on the Form 1099-INT or other statement the bank sends you. Free file fillable forms 2012 If you do not give the bank your SSN or ITIN, you will be subject to the $50 penalty. Free file fillable forms 2012 (You also may be subject to “backup” withholding of income tax. Free file fillable forms 2012 )   You will not have to pay the penalty if you are able to show that the failure was due to reasonable cause and not willful neglect. Free file fillable forms 2012 Criminal Penalties You may be subject to criminal prosecution (brought to trial) for actions such as: Tax evasion, Willful failure to file a return, supply information, or pay any tax due, Fraud and false statements, or Preparing and filing a fraudulent return. Free file fillable forms 2012 Prev  Up  Next   Home   More Online Publications