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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Free State File Turbotax

Form 1040ez 20112012 Form 1040 EzIrs State Tax FormsTaxes Military1040ez 2011 FormTurbotax Login 2010FreefilefillableformsIrs Gov VitaAmending A 2011 Tax Return2012 Amended Tax ReturnHow To File 2011 Tax ReturnTax Software For 2012Efile 2007 Tax Returns For FreeFile 1040nrFile Last Years Taxes2011 Free Tax FileIrs Amended Tax Return FormForm 1040 VE File State And Federal Taxes For FreeCan I Do My State Taxes Online For FreeTax Amendment FormsFile Tax ReturnE File 1040nr1040 Com2010 1040ez InstructionsFor 1040xFree Tax Filing2009 Tax Return FormFiling A 1040x Amended Tax ReturnState Efile1040x Form 2011 TurbotaxFree Military Tax FilingFederal Tax Form 1040ez2011 State Tax FormWhere Can I Get A State Tax FormTax EzHow Can I Amend My 2010 Tax Return1040ez Form 2014Irs Form 1040ezFile My 1040x Electronically

Free State File Turbotax

Free state file turbotax 4. Free state file turbotax   Transportation Table of Contents Parking fees. Free state file turbotax Advertising display on car. Free state file turbotax Car pools. Free state file turbotax Hauling tools or instruments. Free state file turbotax Union members' trips from a union hall. Free state file turbotax Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. Free state file turbotax These expenses include the cost of transportation by air, rail, bus, taxi, etc. Free state file turbotax , and the cost of driving and maintaining your car. Free state file turbotax Transportation expenses include the ordinary and necessary costs of all of the following. Free state file turbotax Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Free state file turbotax Tax home is defined in chapter 1. Free state file turbotax Visiting clients or customers. Free state file turbotax Going to a business meeting away from your regular workplace. Free state file turbotax Getting from your home to a temporary workplace when you have one or more regular places of work. Free state file turbotax These temporary workplaces can be either within the area of your tax home or outside that area. Free state file turbotax Transportation expenses do not include expenses you have while traveling away from home overnight. Free state file turbotax Those expenses are travel expenses discussed in chapter 1 . Free state file turbotax However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. Free state file turbotax See Car Expenses , later. Free state file turbotax Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Free state file turbotax However, there may be exceptions to this general rule. Free state file turbotax You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Free state file turbotax Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. Free state file turbotax Illustration of transportation expenses. Free state file turbotax    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. Free state file turbotax You may want to refer to it when deciding whether you can deduct your transportation expenses. Free state file turbotax Temporary work location. Free state file turbotax   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Free state file turbotax   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Free state file turbotax   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Free state file turbotax   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Free state file turbotax It will not be treated as temporary after the date you determine it will last more than 1 year. Free state file turbotax   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Free state file turbotax You may have deductible travel expenses as discussed in chapter 1 . Free state file turbotax No regular place of work. Free state file turbotax   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Free state file turbotax   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Free state file turbotax   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Free state file turbotax These are nondeductible commuting expenses. Free state file turbotax Two places of work. Free state file turbotax   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Free state file turbotax However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Free state file turbotax   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Free state file turbotax You cannot deduct them. Free state file turbotax Armed Forces reservists. Free state file turbotax   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Free state file turbotax You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . Free state file turbotax   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Free state file turbotax In this case, your transportation generally is a nondeductible commuting expense. Free state file turbotax However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Free state file turbotax   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Free state file turbotax   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Free state file turbotax These expenses are discussed in chapter 1 . Free state file turbotax   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. Free state file turbotax For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. Free state file turbotax Commuting expenses. Free state file turbotax   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Free state file turbotax These costs are personal commuting expenses. Free state file turbotax You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Free state file turbotax You cannot deduct commuting expenses even if you work during the commuting trip. Free state file turbotax Example. Free state file turbotax You sometimes use your cell phone to make business calls while commuting to and from work. Free state file turbotax Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Free state file turbotax These activities do not change the trip from personal to business. Free state file turbotax You cannot deduct your commuting expenses. Free state file turbotax Parking fees. Free state file turbotax    Fees you pay to park your car at your place of business are nondeductible commuting expenses. Free state file turbotax You can, however, deduct business-related parking fees when visiting a customer or client. Free state file turbotax Advertising display on car. Free state file turbotax   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Free state file turbotax If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Free state file turbotax Car pools. Free state file turbotax   You cannot deduct the cost of using your car in a nonprofit car pool. Free state file turbotax Do not include payments you receive from the passengers in your income. Free state file turbotax These payments are considered reimbursements of your expenses. Free state file turbotax However, if you operate a car pool for a profit, you must include payments from passengers in your income. Free state file turbotax You can then deduct your car expenses (using the rules in this publication). Free state file turbotax Hauling tools or instruments. Free state file turbotax   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Free state file turbotax However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Free state file turbotax Union members' trips from a union hall. Free state file turbotax   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Free state file turbotax Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Free state file turbotax Office in the home. Free state file turbotax   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Free state file turbotax (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Free state file turbotax ) Examples of deductible transportation. Free state file turbotax   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Free state file turbotax Example 1. Free state file turbotax You regularly work in an office in the city where you live. Free state file turbotax Your employer sends you to a 1-week training session at a different office in the same city. Free state file turbotax You travel directly from your home to the training location and return each day. Free state file turbotax You can deduct the cost of your daily round-trip transportation between your home and the training location. Free state file turbotax Example 2. Free state file turbotax Your principal place of business is in your home. Free state file turbotax You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Free state file turbotax Example 3. Free state file turbotax You have no regular office, and you do not have an office in your home. Free state file turbotax In this case, the location of your first business contact inside the metropolitan area is considered your office. Free state file turbotax Transportation expenses between your home and this first contact are nondeductible commuting expenses. Free state file turbotax Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Free state file turbotax While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. Free state file turbotax Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. Free state file turbotax You generally can use one of the two following methods to figure your deductible expenses. Free state file turbotax Standard mileage rate. Free state file turbotax Actual car expenses. Free state file turbotax If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Free state file turbotax See Leasing a Car , later. Free state file turbotax In this publication, “car” includes a van, pickup, or panel truck. Free state file turbotax For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. Free state file turbotax Rural mail carriers. Free state file turbotax   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. Free state file turbotax Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. Free state file turbotax   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Free state file turbotax You must complete Form 2106 and attach it to your Form 1040, U. Free state file turbotax S. Free state file turbotax Individual Income Tax Return. Free state file turbotax   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Free state file turbotax It is given as an equipment maintenance allowance (EMA) to employees of the U. Free state file turbotax S. Free state file turbotax Postal Service. Free state file turbotax It is at the rate contained in the 1991 collective bargaining agreement. Free state file turbotax Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Free state file turbotax See your employer for information on your reimbursement. Free state file turbotax    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Free state file turbotax Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Free state file turbotax For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Free state file turbotax If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. Free state file turbotax You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. Free state file turbotax See Choosing the standard mileage rate and Standard mileage rate not allowed, later. Free state file turbotax You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Free state file turbotax See chapter 6 for more information on reimbursements . Free state file turbotax Choosing the standard mileage rate. Free state file turbotax   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Free state file turbotax Then, in later years, you can choose to use either the standard mileage rate or actual expenses. Free state file turbotax   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Free state file turbotax For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. Free state file turbotax   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Free state file turbotax You cannot revoke the choice. Free state file turbotax However, in later years, you can switch from the standard mileage rate to the actual expenses method. Free state file turbotax If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Free state file turbotax Example. Free state file turbotax Larry is an employee who occasionally uses his own car for business purposes. Free state file turbotax He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. Free state file turbotax Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. Free state file turbotax   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. Free state file turbotax Standard mileage rate not allowed. Free state file turbotax   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Free state file turbotax (See Rural mail carriers , earlier. Free state file turbotax ) Note. Free state file turbotax You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. Free state file turbotax Five or more cars. Free state file turbotax   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. Free state file turbotax However, you may be able to deduct your actual expenses for operating each of the cars in your business. Free state file turbotax See Actual Car Expenses , later, for information on how to figure your deduction. Free state file turbotax   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. Free state file turbotax   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. Free state file turbotax Example 1. Free state file turbotax Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. Free state file turbotax She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. Free state file turbotax Example 2. Free state file turbotax Tony and his employees use his four pickup trucks in his landscaping business. Free state file turbotax During the year, he traded in two of his old trucks for two newer ones. Free state file turbotax Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. Free state file turbotax Example 3. Free state file turbotax Chris owns a repair shop and an insurance business. Free state file turbotax He and his employees use his two pickup trucks and van for the repair shop. Free state file turbotax Chris alternates using his two cars for the insurance business. Free state file turbotax No one else uses the cars for business purposes. Free state file turbotax Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. Free state file turbotax Example 4. Free state file turbotax Maureen owns a car and four vans that are used in her housecleaning business. Free state file turbotax Her employees use the vans, and she uses the car to travel to various customers. Free state file turbotax Maureen cannot use the standard mileage rate for the car or the vans. Free state file turbotax This is because all five vehicles are used in Maureen's business at the same time. Free state file turbotax She must use actual expenses for all vehicles. Free state file turbotax Interest. Free state file turbotax   If you are an employee, you cannot deduct any interest paid on a car loan. Free state file turbotax This applies even if you use the car 100% for business as an employee. Free state file turbotax   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. Free state file turbotax For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). Free state file turbotax You cannot deduct the part of the interest expense that represents your personal use of the car. Free state file turbotax    If you use a home equity loan to purchase your car, you may be able to deduct the interest. Free state file turbotax See Publication 936, Home Mortgage Interest Deduction, for more information. Free state file turbotax Personal property taxes. Free state file turbotax   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. Free state file turbotax You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. Free state file turbotax   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Free state file turbotax If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). Free state file turbotax Parking fees and tolls. Free state file turbotax   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Free state file turbotax (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Free state file turbotax ) Sale, trade-in, or other disposition. Free state file turbotax   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. Free state file turbotax See Disposition of a Car , later. Free state file turbotax Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. Free state file turbotax If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. Free state file turbotax Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Free state file turbotax Continue to keep records, as explained later in chapter 5 . Free state file turbotax Business and personal use. Free state file turbotax   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. Free state file turbotax You can divide your expense based on the miles driven for each purpose. Free state file turbotax Example. Free state file turbotax You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. Free state file turbotax You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. Free state file turbotax Employer-provided vehicle. Free state file turbotax   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. Free state file turbotax You cannot use the standard mileage rate. Free state file turbotax See Vehicle Provided by Your Employer in chapter 6. Free state file turbotax Interest on car loans. Free state file turbotax   If you are an employee, you cannot deduct any interest paid on a car loan. Free state file turbotax This interest is treated as personal interest and is not deductible. Free state file turbotax If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. Free state file turbotax Taxes paid on your car. Free state file turbotax   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Free state file turbotax Enter the amount paid on line 7 of Schedule A (Form 1040). Free state file turbotax Sales taxes. Free state file turbotax   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. Free state file turbotax Fines and collateral. Free state file turbotax   You cannot deduct fines you pay or collateral you forfeit for traffic violations. Free state file turbotax Casualty and theft losses. Free state file turbotax   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. Free state file turbotax See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. Free state file turbotax Depreciation and section 179 deductions. Free state file turbotax   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Free state file turbotax Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. Free state file turbotax However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Free state file turbotax Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. Free state file turbotax The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. Free state file turbotax   Generally, there are limits on these deductions. Free state file turbotax Special rules apply if you use your car 50% or less in your work or business. Free state file turbotax   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. Free state file turbotax   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. Free state file turbotax Car defined. Free state file turbotax   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Free state file turbotax Its unloaded gross vehicle weight must not be more than 6,000 pounds. Free state file turbotax A car includes any part, component, or other item physically attached to it or usually included in the purchase price. Free state file turbotax   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. Free state file turbotax Qualified nonpersonal use vehicles. Free state file turbotax   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Free state file turbotax They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Free state file turbotax Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. Free state file turbotax More information. Free state file turbotax   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. Free state file turbotax Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. Free state file turbotax If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. Free state file turbotax There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. Free state file turbotax See Depreciation Limits, later. Free state file turbotax You can claim the section 179 deduction only in the year you place the car in service. Free state file turbotax For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. Free state file turbotax Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. Free state file turbotax A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. Free state file turbotax Example. Free state file turbotax In 2012, you bought a new car and used it for personal purposes. Free state file turbotax In 2013, you began to use it for business. Free state file turbotax Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. Free state file turbotax However, you can claim a depreciation deduction for the business use of the car starting in 2013. Free state file turbotax See Depreciation Deduction , later. Free state file turbotax More than 50% business use requirement. Free state file turbotax   You must use the property more than 50% for business to claim any section 179 deduction. Free state file turbotax If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Free state file turbotax The result is the cost of the property that can qualify for the section 179 deduction. Free state file turbotax Example. Free state file turbotax Peter purchased a car in April 2013 for $24,500 and used it 60% for business. Free state file turbotax Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). Free state file turbotax But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. Free state file turbotax Limits. Free state file turbotax   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. Free state file turbotax Limit on the amount of the section 179 deduction. Free state file turbotax   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. Free state file turbotax   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. Free state file turbotax If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Free state file turbotax   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. Free state file turbotax   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Free state file turbotax   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. Free state file turbotax You must allocate the dollar limit (after any reduction) between you. Free state file turbotax   For more information on the above section 179 deduction limits, see Publication 946. Free state file turbotax Limit for sport utility and certain other vehicles. Free state file turbotax   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. Free state file turbotax This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. Free state file turbotax However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Free state file turbotax    Limit on total section 179, special depreciation allowance, and depreciation deduction. Free state file turbotax   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. Free state file turbotax The limit is reduced if your business use of the car is less than 100%. Free state file turbotax See Depreciation Limits , later, for more information. Free state file turbotax Example. Free state file turbotax In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. Free state file turbotax However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). Free state file turbotax Cost of car. Free state file turbotax   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. Free state file turbotax For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. Free state file turbotax Your cost includes only the cash you paid. Free state file turbotax Basis of car for depreciation. Free state file turbotax   The amount of the section 179 deduction reduces your basis in your car. Free state file turbotax If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. Free state file turbotax The resulting amount is the basis in your car you use to figure your depreciation deduction. Free state file turbotax When to choose. Free state file turbotax   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. Free state file turbotax How to choose. Free state file turbotax    Employees use Form 2106 to make this choice and report the section 179 deduction. Free state file turbotax All others use Form 4562. Free state file turbotax   File the appropriate form with either of the following. Free state file turbotax Your original tax return filed for the year the property was placed in service (whether or not you file it timely). Free state file turbotax An amended return filed within the time prescribed by law. Free state file turbotax An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Free state file turbotax The amended return must also include any resulting adjustments to taxable income. Free state file turbotax    You must keep records that show the specific identification of each piece of qualifying section 179 property. Free state file turbotax These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Free state file turbotax Revoking an election. Free state file turbotax   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. Free state file turbotax Recapture of section 179 deduction. Free state file turbotax   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. Free state file turbotax If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Free state file turbotax Any section 179 deduction claimed on the car is included in calculating the excess depreciation. Free state file turbotax For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. Free state file turbotax Dispositions. Free state file turbotax   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. Free state file turbotax You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). Free state file turbotax For information on the disposition of a car, see Disposition of a Car , later. Free state file turbotax Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. Free state file turbotax The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). Free state file turbotax The special depreciation allowance applies only for the first year the car is placed in service. Free state file turbotax To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). Free state file turbotax Combined depreciation. Free state file turbotax   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Free state file turbotax For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Free state file turbotax See Depreciation Limits , later in this chapter. Free state file turbotax Qualified car. Free state file turbotax   To be a qualified car (including trucks and vans), the car must meet all of the following tests. Free state file turbotax You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. Free state file turbotax Election not to claim the special depreciation allowance. Free state file turbotax   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. Free state file turbotax If you make this election, it applies to all 5-year property placed in service during the year. Free state file turbotax   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. Free state file turbotax    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. Free state file turbotax Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. Free state file turbotax This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. Free state file turbotax You generally need to know the following things about the car you intend to depreciate. Free state file turbotax Your basis in the car. Free state file turbotax The date you place the car in service. Free state file turbotax The method of depreciation and recovery period you will use. Free state file turbotax Basis. Free state file turbotax   Your basis in a car for figuring depreciation is generally its cost. Free state file turbotax This includes any amount you borrow or pay in cash, other property, or services. Free state file turbotax   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). Free state file turbotax However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). Free state file turbotax For one of these situations see Exception under Methods of depreciation, later. Free state file turbotax   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Free state file turbotax Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . Free state file turbotax Placed in service. Free state file turbotax   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Free state file turbotax Depreciation begins when the car is placed in service for use in your work or business or for the production of income. Free state file turbotax   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. Free state file turbotax Car placed in service and disposed of in the same year. Free state file turbotax   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. Free state file turbotax Methods of depreciation. Free state file turbotax   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). Free state file turbotax MACRS is discussed later in this chapter. Free state file turbotax Exception. Free state file turbotax   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. Free state file turbotax You must use straight line depreciation over the estimated remaining useful life of the car. Free state file turbotax   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. Free state file turbotax The rate per mile varies depending on the year(s) you used the standard mileage rate. Free state file turbotax For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. Free state file turbotax   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . Free state file turbotax You must use your adjusted basis in your car to figure your depreciation deduction. Free state file turbotax For additional information on the straight line method of depreciation, see Publication 946. Free state file turbotax More-than-50%-use test. Free state file turbotax   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. Free state file turbotax You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. Free state file turbotax   If your business use is 50% or less, you must use the straight line method to depreciate your car. Free state file turbotax This is explained later under Car Used 50% or Less for Business . Free state file turbotax Qualified business use. Free state file turbotax   A qualified business use is any use in your trade or business. Free state file turbotax It does not include use for the production of income (investment use). Free state file turbotax However, you do combine your business and investment use to compute your depreciation deduction for the tax year. Free state file turbotax Use of your car by another person. Free state file turbotax   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. Free state file turbotax It is directly connected with your business. Free state file turbotax It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). Free state file turbotax It results in a payment of fair market rent. Free state file turbotax This includes any payment to you for the use of your car. Free state file turbotax Business use changes. Free state file turbotax   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. Free state file turbotax See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. Free state file turbotax    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. Free state file turbotax Use for more than one purpose. Free state file turbotax   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. Free state file turbotax You do this on the basis of mileage. Free state file turbotax Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. Free state file turbotax Change from personal to business use. Free state file turbotax   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. Free state file turbotax In this case, you figure the percentage of business use for the year as follows. Free state file turbotax Determine the percentage of business use for the period following the change. Free state file turbotax Do this by dividing business miles by total miles driven during that period. Free state file turbotax Multiply the percentage in (1) by a fraction. Free state file turbotax The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. Free state file turbotax Example. Free state file turbotax You use a car only for personal purposes during the first 6 months of the year. Free state file turbotax During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. Free state file turbotax This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Free state file turbotax Your business use for the year is 40% (80% × 6/12). Free state file turbotax Limits. Free state file turbotax   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. Free state file turbotax The maximum amount you can claim depends on the year in which you placed your car in service. Free state file turbotax You have to reduce the maximum amount if you did not use the car exclusively for business. Free state file turbotax See Depreciation Limits , later. Free state file turbotax Unadjusted basis. Free state file turbotax   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Free state file turbotax Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. Free state file turbotax   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. Free state file turbotax Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Free state file turbotax Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Free state file turbotax Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. Free state file turbotax 1, 2006), and alternative motor vehicle credit. Free state file turbotax   See Form 8910 for information on the alternative motor vehicle credit. Free state file turbotax If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. Free state file turbotax See Car Used 50% or Less for Business, later, for more information. Free state file turbotax If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. Free state file turbotax Improvements. Free state file turbotax   A major improvement to a car is treated as a new item of 5-year recovery property. Free state file turbotax It is treated as placed in service in the year the improvement is made. Free state file turbotax It does not matter how old the car is when the improvement is added. Free state file turbotax Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. Free state file turbotax However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Free state file turbotax Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. Free state file turbotax See Depreciation Limits , later. Free state file turbotax Car trade-in. Free state file turbotax   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. Free state file turbotax You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Free state file turbotax If you make this election, you treat the old car as disposed of at the time of the trade-in. Free state file turbotax The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. Free state file turbotax You then figure your depreciation deduction for the new car beginning with the date you placed it in service. Free state file turbotax You make this election by completing Form 2106, Part II, Section D. Free state file turbotax This method is explained later, beginning at Effect of trade-in on basis . Free state file turbotax If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. Free state file turbotax You must apply two depreciation limits (see Depreciation Limits , later). Free state file turbotax The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. Free state file turbotax The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. Free state file turbotax You must use Form 4562 to compute your depreciation deduction. Free state file turbotax You cannot use Form 2106, Part II, Section D. Free state file turbotax This method is explained in Publication 946. Free state file turbotax   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). Free state file turbotax Otherwise, you must use the method described in (2). Free state file turbotax Effect of trade-in on basis. Free state file turbotax   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Free state file turbotax For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. Free state file turbotax 168(i)-6(d)(3). Free state file turbotax Traded car used only for business. Free state file turbotax   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. Free state file turbotax Example. Free state file turbotax Paul trades in a car that has an adjusted basis of $5,000 for a new car. Free state file turbotax In addition, he pays cash of $20,000 for the new car. Free state file turbotax His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). Free state file turbotax Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. Free state file turbotax Traded car used partly in business. Free state file turbotax   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. Free state file turbotax This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. Free state file turbotax (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. Free state file turbotax See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. Free state file turbotax )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Free state file turbotax Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. Free state file turbotax For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. Free state file turbotax Modified Accelerated Cost Recovery System (MACRS). Free state file turbotax   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Free state file turbotax   The maximum amount you can deduct is limited, depending on the year you placed your car in service. Free state file turbotax See Depreciation Limits , later. Free state file turbotax Recovery period. Free state file turbotax   Under MACRS, cars are classified as 5-year property. Free state file turbotax You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. Free state file turbotax This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. Free state file turbotax Depreciation deduction for certain Indian reservation property. Free state file turbotax   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. Free state file turbotax The recovery that applies for a business-use car is 3 years instead of 5 years. Free state file turbotax However, the depreciation limits, discussed later, will still apply. Free state file turbotax   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. Free state file turbotax Depreciation methods. Free state file turbotax   You can use one of the following methods to depreciate your car. Free state file turbotax The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Free state file turbotax The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Free state file turbotax The straight line method (SL) over a 5-year recovery period. Free state file turbotax    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. Free state file turbotax This is because the chart has the switch to the straight line method built into its rates. Free state file turbotax   Before choosing a method, you may wish to consider the following facts. Free state file turbotax Using the straight line method provides equal yearly deductions throughout the recovery period. Free state file turbotax Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. Free state file turbotax MACRS depreciation chart. Free state file turbotax   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Free state file turbotax Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. Free state file turbotax A similar chart appears in the Instructions for Form 2106. Free state file turbotax    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. Free state file turbotax   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. Free state file turbotax You file your return on a fiscal year basis. Free state file turbotax You file your return for a short tax year (less than 12 months). Free state file turbotax During the year, all of the following conditions apply. Free state file turbotax You placed some property in service from January through September. Free state file turbotax You placed some property in service from October through December. Free state file turbotax Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. Free state file turbotax   You placed qualified property in service on an Indian reservation. Free state file turbotax Depreciation in future years. Free state file turbotax   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. Free state file turbotax However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. Free state file turbotax In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. Free state file turbotax See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Free state file turbotax    In future years, do not use the chart in this edition of the publication. Free state file turbotax Instead, use the chart in the publication or the form instructions for those future years. Free state file turbotax Disposition of car during recovery period. Free state file turbotax   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. Free state file turbotax See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. Free state file turbotax How to use the 2013 chart. Free state file turbotax   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Free state file turbotax Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. Free state file turbotax If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. Free state file turbotax    Your deduction cannot be more than the maximum depreciation limit for cars. Free state file turbotax See Depreciation Limits, later. Free state file turbotax Example. Free state file turbotax Phil bought a used truck in February 2012 to use exclusively in his landscape business. Free state file turbotax He paid $9,200 for the truck with no trade-in. Free state file turbotax Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. Free state file turbotax Phil used the MACRS depreciation chart in 2012 to find his percentage. Free state file turbotax The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. Free state file turbotax He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. Free state file turbotax In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. Free state file turbotax His records show that the business use of his truck was 90% in 2013. Free state file turbotax Phil used Table 4-1 to find his percentage. Free state file turbotax Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. Free state file turbotax He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. Free state file turbotax Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. Free state file turbotax The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. Free state file turbotax The maximum amount you can deduct each year depends on the year you place the car in service. Free state file turbotax These limits are shown in the following tables. Free state file turbotax   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free state file turbotax 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free state file turbotax 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free state file turbotax 4$7,660 if you acquired the car before 5/6/2003. Free state file turbotax $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. Free state file turbotax 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. Free state file turbotax Trucks and vans. Free state file turbotax   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. Free state file turbotax A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. Free state file turbotax For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. Free state file turbotax Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. Free state file turbotax 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. Free state file turbotax Car used less than full year. Free state file turbotax   The depreciation limits are not reduced if you use a car for less than a full year. Free state file turbotax This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. Free state file turbotax However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. Free state file turbotax See Reduction for personal use , next. Free state file turbotax Reduction for personal use. Free state file turbotax   The depreciation limits are reduced based on your percentage of personal use. Free state file turbotax If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. Free state file turbotax Section 179 deduction. Free state file turbotax   The section 179 deduction is treated as a depreciation deduction. Free state file turbotax If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. Free state file turbotax Example. Free state file turbotax On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. Free state file turbotax He used it 80% for his business, and he chooses to take a section 179 deduction for the car. Free state file turbotax The car is not qualified property for purposes of the special depreciation allowance. Free state file turbotax Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. Free state file turbotax This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). Free state file turbotax Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). Free state file turbotax He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. Free state file turbotax Jack has reached his maximum depreciation deduction for 2013. Free state file turbotax For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. Free state file turbotax Deductions in years after the recovery period. Free state file turbotax   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. Free state file turbotax If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. Free state file turbotax Unrecovered basis. Free state file turbotax   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. Free state file turbotax The recovery period. Free state file turbotax   For 5-year property, your recovery period is 6 calendar years. Free state file turbotax A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. Free state file turbotax   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. Free state file turbotax You determine your unrecovered basis in the 7th year after you placed the car in service. Free state file turbotax How to treat unrecovered basis. Free state file turbotax   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. Free state file turbotax The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. Free state file turbotax For example, no deduction is allowed for a year you use your car 100% for personal purposes. Free state file turbotax Example. Free state file turbotax In April 2007, Bob bought and placed in service a car he used exclusively in his business. Free state file turbotax The car cost $31,500. Free state file turbotax Bob did not claim a section 179 deduction or the special depreciation allowance for the car. Free state file turbotax He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). Free state file turbotax For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. Free state file turbotax Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. Free state file turbotax      MACRS     Deprec. Free state file turbotax Year % Amount Limit Allowed 2007 20. Free state file turbotax 00 $6,300 $3,060 $ 3,060 2008 32. Free state file turbotax 00 10,080 4,900 4,900 2009 19. Free state file turbotax 20 6,048 2,850 2,850 2010 11. Free state file turbotax 52 3,629 1,775 1,775 2011 11. Free state file turbotax 52 3,629 1,775 1,775 2012 5. Free state file turbotax 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. Free state file turbotax   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). Free state file turbotax If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. Free state file turbotax   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. Free state file turbotax However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. Free state file turbotax For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. Free state file turbotax Table 4-1. Free state file turbotax 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Free state file turbotax ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. Free state file turbotax   First, using the left column, find the date you first placed the car in service in 2013. Free state file turbotax Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. Free state file turbotax For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. Free state file turbotax Refer back to the MACRS Depreciation Chart for the year you placed the car in service. Free state file turbotax (See Car Used 50% or Less for Business . Free state file turbotax )  Multiply the unadjusted basis of your car by your business use percentage. Free state file turbotax Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. Free state file turbotax (Also see Depreciation Limits . Free state file turbotax )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. Free state file turbotax 1—Sept. Free state file turbotax 30 percentage instead of the Oct. Free state file turbotax 1—Dec. Free state file turbotax 31 percentage for your car. Free state file turbotax               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. Free state file turbotax If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. Free state file turbotax 1—Sept. Free state file turbotax 30 for figuring depreciation for your car. Free state file turbotax See Which Convention Applies? in chapter 4 of Publication 946 for more details. Free state file turbotax               Example. Free state file turbotax You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. Free state file turbotax You
Print - Click this link to Print this page

Affordable Care Act Tax Provisions for Other Organizations

The Affordable Care Act contains some tax provisions that are currently in effect and more that will be implemented going forward. 

Information specifically for insurers, including self-insured organizations, certain business types and tax exempt and government organizations is listed below.  More information will be added to this page as it becomes available. For information regarding your role as an employer, visit the Affordable Care Act Tax Provisions for Employers.

Tax Provisions for Insurers             

Tax Provisions for Miscellaneous Business Types

Tax Provisions for Tax Exempt and Government Organizations

e-file for ACA Report Filers

 

Page Last Reviewed or Updated: 14-Mar-2014

The Free State File Turbotax

Free state file turbotax 4. Free state file turbotax   Underpayment Penalty for 2013 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: General RuleFarmers and fishermen. Free state file turbotax Higher income taxpayers. Free state file turbotax Minimum required for higher income taxpayers. Free state file turbotax Estate or trust payments of estimated tax. Free state file turbotax Lowering or eliminating the penalty. Free state file turbotax ExceptionsLess Than $1,000 Due No Tax Liability Last Year Figuring Your Required Annual Payment (Part I) Short Method for Figuring the Penalty (Part III) Regular Method for Figuring the Penalty (Part IV)Figuring Your Underpayment (Part IV, Section A) Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Annualized Income Installment Method (Schedule AI) Farmers and Fishermen Waiver of PenaltyFarmers and fishermen. Free state file turbotax Introduction If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty. Free state file turbotax You may understand this chapter better if you can refer to a copy of your latest federal income tax return. Free state file turbotax No penalty. Free state file turbotax   Generally, you will not have to pay a penalty for 2013 if any of the following apply. Free state file turbotax The total of your withholding and timely estimated tax payments was at least as much as your 2012 tax. Free state file turbotax (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen. Free state file turbotax ) The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Free state file turbotax Your total tax for 2013 (defined later) minus your withholding is less than $1,000. Free state file turbotax You did not have a tax liability for 2012. Free state file turbotax You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000. Free state file turbotax IRS can figure the penalty for you. Free state file turbotax   If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Free state file turbotax Generally, the IRS will figure the penalty for you and send you a bill. Free state file turbotax   You only need to figure your penalty in the following three situations. Free state file turbotax You are requesting a waiver of part, but not all, of the penalty. Free state file turbotax You are using the annualized income installment method to figure the penalty. Free state file turbotax You are treating the federal income tax withheld from your income as paid on the dates actually withheld. Free state file turbotax However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. Free state file turbotax See Form 2210 , later. Free state file turbotax Topics - This chapter discusses: The general rule for the underpayment penalty, Special rules for certain individuals, Exceptions to the underpayment penalty, How to figure your underpayment and the amount of your penalty on Form 2210, and How to ask the IRS to waive the penalty. Free state file turbotax Useful Items - You may want to see: Form (and Instructions) 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 5 for information about getting these forms. Free state file turbotax General Rule In general, you may owe a penalty for 2013 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of: 90% of your 2013 tax, or 100% of your 2012 tax. Free state file turbotax (Your 2012 tax return must cover a 12-month period. Free state file turbotax ) Your 2013 tax, for this purpose, is defined under Total tax for 2013 , later. Free state file turbotax Special rules for certain individuals. Free state file turbotax   There are special rules for farmers and fishermen and certain higher income taxpayers. Free state file turbotax Farmers and fishermen. Free state file turbotax   If at least two-thirds of your gross income for 2012 or 2013 is from farming or fishing, substitute  662/3% for 90% in (1) above. Free state file turbotax   See Farmers and Fishermen , later. Free state file turbotax Higher income taxpayers. Free state file turbotax   If your AGI for 2012 was more than $150,000 ($75,000 if your 2013 filing status is married filing a separate return), substitute 110% for 100% in (2) under General Rule . Free state file turbotax This rule does not apply to farmers or fishermen. Free state file turbotax   For 2012, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Free state file turbotax Penalty figured separately for each period. Free state file turbotax   Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. Free state file turbotax This is true even if you are due a refund when you file your income tax return. Free state file turbotax Example. Free state file turbotax You did not make estimated tax payments for 2013 because you thought you had enough tax withheld from your wages. Free state file turbotax Early in January 2014, you made an estimate of your total 2013 tax. Free state file turbotax Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax. Free state file turbotax On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Free state file turbotax Your final return shows your total tax to be $50 less than your estimate, so you are due a refund. Free state file turbotax You do not owe a penalty for your payment due January 15, 2014. Free state file turbotax However, you may owe a penalty through January 10, 2014, the day you made the $3,000 payment, for your underpayments for the earlier payment periods. Free state file turbotax Minimum required each period. Free state file turbotax   You will owe a penalty for any 2013 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of: 22. Free state file turbotax 5% of your 2013 tax, or 25% of your 2012 tax. Free state file turbotax (Your 2012 tax return must cover a 12-month period. Free state file turbotax ) Minimum required for higher income taxpayers. Free state file turbotax   If you are subject to the rule for higher income taxpayers, discussed above, substitute 27. Free state file turbotax 5% for 25% in (2) under General Rule . Free state file turbotax When penalty is charged. Free state file turbotax   If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. Free state file turbotax If a payment is mailed, the date of the U. Free state file turbotax S. Free state file turbotax postmark is considered the date of payment. Free state file turbotax   If a payment is made electronically, the date the payment is shown on your payment account (checking, savings, etc. Free state file turbotax ) is considered to be the date of payment. Free state file turbotax Estate or trust payments of estimated tax. Free state file turbotax   If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041)), treat the payment as made by you on January 15, 2014. Free state file turbotax Amended returns. Free state file turbotax    If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. Free state file turbotax If you file an amended return after the due date of the original return, use the tax shown on the original return. Free state file turbotax   However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. Free state file turbotax This rule applies only if both original separate returns were filed on time. Free state file turbotax 2012 separate returns and 2013 joint return. Free state file turbotax    If you file a joint return with your spouse for 2013, but you filed separate returns for 2012, your 2012 tax is the total of the tax shown on your separate returns. Free state file turbotax You filed a separate return if you filed as single, head of household, or married filing separately. Free state file turbotax 2012 joint return and 2013 separate returns. Free state file turbotax    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, your 2012 tax is your share of the tax on the joint return. Free state file turbotax You are filing a separate return if you file as single, head of household, or married filing separately. Free state file turbotax   To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2012 using the same filing status as for 2013. Free state file turbotax Then multiply the tax on the joint return by the following fraction. Free state file turbotax   The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Free state file turbotax Lisa and Paul filed a joint return for 2012 showing taxable income of $49,000 and a tax of $6,484. Free state file turbotax Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. Free state file turbotax For 2013, they file married filing separately. Free state file turbotax Lisa figures her share of the tax on the 2012 joint return as follows. Free state file turbotax 2012 tax on $41,000 based on a separate return $ 6,286 2012 tax on $8,000 based on a  separate return 803 Total $ 7,089 Lisa's percentage of total tax  ($6,286 ÷ $ 7,089) 88. Free state file turbotax 67% Lisa's part of tax on joint return ($6,484 × 88. Free state file turbotax 67%) $ 5,749 Form 2210. Free state file turbotax   In most cases, you do not need to file Form 2210. Free state file turbotax The IRS will figure the penalty for you and send you a bill. Free state file turbotax If you want us to figure the penalty for you, leave the penalty line on your return blank. Free state file turbotax Do not file Form 2210. Free state file turbotax   To determine if you should file Form 2210, see Part II of Form 2210. Free state file turbotax If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of the form and the Penalty Worksheet in the Instructions for Form 2210. Free state file turbotax If you use Form 2210, you cannot file Form 1040EZ. Free state file turbotax   On Form 1040, enter the amount of your penalty on line 77. Free state file turbotax If you owe tax on line 76, add the penalty to your tax due and show your total payment on line 76. Free state file turbotax If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73. Free state file turbotax   On Form 1040A, enter the amount of your penalty on line 46. Free state file turbotax If you owe tax on line 45, add the penalty to your tax due and show your total payment on line 45. Free state file turbotax If you are due a refund, subtract the penalty from the overpayment and enter the result on line 42. Free state file turbotax Lowering or eliminating the penalty. Free state file turbotax    You may be able to lower or eliminate your penalty if you file Form 2210. Free state file turbotax You must file Form 2210 with your return if any of the following applies. Free state file turbotax You request a waiver. Free state file turbotax See Waiver of Penalty , later. Free state file turbotax You use the annualized income installment method. Free state file turbotax See the explanation of this method under Annualized Income Installment Method (Schedule AI) . Free state file turbotax You use your actual withholding for each payment period for estimated tax purposes. Free state file turbotax See Actual withholding method under Figuring Your Underpayment (Part IV, Section A). Free state file turbotax You base any of your required installments on the tax shown on your 2012 return and you filed or are filing a joint return for either 2012 or 2013, but not for both years. Free state file turbotax Exceptions Generally, you do not have to pay an underpayment penalty if either: Your total tax is less than $1,000, or You had no tax liability last year. Free state file turbotax Less Than $1,000 Due You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000. Free state file turbotax Total tax for 2013. Free state file turbotax   For 2013, your total tax on Form 1040 is the amount on line 61 reduced by the following. Free state file turbotax    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Free state file turbotax Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Free state file turbotax The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Free state file turbotax Any refundable credit amounts listed on lines 64a, 65, 66, 70, and any credit from Form 8885 included on line 71. Free state file turbotax   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Free state file turbotax   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Free state file turbotax Note. Free state file turbotax When figuring the amount on line 60, include household employment taxes only if you had federal income tax withheld from your income or you would owe the penalty even if you did not include those taxes. Free state file turbotax Paid through withholding. Free state file turbotax    For 2013, the amount you paid through withholding on Form 1040 is the amount on line 62 plus any excess social security or tier 1 RRTA tax withholding on line 69. Free state file turbotax Add to that any write-in amount on line 72 identified as “Form 8689. Free state file turbotax ” On Form 1040A, the amount you paid through withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included on line 41. Free state file turbotax On Form 1040EZ, it is the amount on line 7. Free state file turbotax No Tax Liability Last Year You do not owe a penalty if you had no tax liability last year and you were a U. Free state file turbotax S. Free state file turbotax citizen or resident for the whole year. Free state file turbotax For this rule to apply, your tax year must have included all 12 months of the year. Free state file turbotax You had no tax liability for 2012 if your total tax was zero or you were not required to file an income tax return. Free state file turbotax Example. Free state file turbotax Ray, who is single and 22 years old, was unemployed for a few months during 2012. Free state file turbotax He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. Free state file turbotax He had no other income. Free state file turbotax Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65 ($9,750 for 2012). Free state file turbotax He filed a return only to have his withheld income tax refunded to him. Free state file turbotax In 2013, Ray began regular work as an independent contractor. Free state file turbotax Ray made no estimated tax payments in 2013. Free state file turbotax Even though he did owe tax at the end of the year, Ray does not owe the underpayment penalty for 2013 because he had no tax liability in 2012. Free state file turbotax Total tax for 2012. Free state file turbotax   For 2012, your total tax on Form 1040 is the amount on line 61 reduced by the following. Free state file turbotax    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Free state file turbotax Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Free state file turbotax The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Free state file turbotax Any refundable credit amounts listed on lines 64a, 65, 66, 70, and credits from Forms 8801 (line 27 only), and 8885 included on line 71. Free state file turbotax   If you filed Form 1040A, your 2012 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Free state file turbotax   If you filed Form 1040EZ, your 2012 total tax is the amount on line 11 reduced by the amount on line 8a. Free state file turbotax Figuring Your Required Annual Payment (Part I) Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. Free state file turbotax If you rounded the entries on your tax return to whole dollars, you can round on Form 2210. Free state file turbotax Example. Free state file turbotax The tax on Lori Lane's 2012 return was $12,400. Free state file turbotax Her AGI was not more than $150,000 for either 2012 or 2013. Free state file turbotax The tax on her 2013 return (Form 1040, line 55) is $13,044. Free state file turbotax Line 56 (self-employment tax) is $8,902. Free state file turbotax Her 2013 total tax is $21,946. Free state file turbotax For 2013, Lori had $1,600 income tax withheld and made four equal estimated tax payments ($1,000 each). Free state file turbotax 90% of her 2013 tax is $19,751. Free state file turbotax Because she paid less than her 2012 tax ($12,400) and less than 90% of her 2013 tax ($19,751), and does not meet an exception, Lori knows that she owes a penalty for underpayment of estimated tax. Free state file turbotax The IRS will figure the penalty for Lori, but she decides to figure it herself on Form 2210 and pay it with her taxes when she files her tax return. Free state file turbotax Lori's required annual payment is $12,400 (100% of 2012 tax) because that is smaller than 90% of her 2013 tax. Free state file turbotax Different 2012 filing status. Free state file turbotax    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, see 2012 joint return and 2013 separate returns , earlier, to figure the amount to enter as your 2012 tax on line 8 of Form 2210. Free state file turbotax Short Method for Figuring the Penalty (Part III) You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax. Free state file turbotax If you qualify to use this method, it will result in the same penalty amount as the regular method. Free state file turbotax However, either the annualized income installment method or the actual withholding method, explained later, may result in a smaller penalty. Free state file turbotax You can use the short method only if you meet one of the following requirements. Free state file turbotax You made no estimated tax payments for 2013 (it does not matter whether you had income tax withholding). Free state file turbotax You paid the same amount of estimated tax on each of the four payment due dates. Free state file turbotax If you do not meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the Penalty Worksheet in the instructions. Free state file turbotax Note. Free state file turbotax If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular method. Free state file turbotax However, if the payment was only a few days early, the difference is likely to be small. Free state file turbotax You cannot use the short method if any of the following apply. Free state file turbotax You made any estimated tax payments late. Free state file turbotax You checked box C or D in Part II of Form 2210. Free state file turbotax You are filing Form 1040NR or 1040NR-EZ and you did not receive wages as an employee subject to U. Free state file turbotax S. Free state file turbotax income tax withholding. Free state file turbotax If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each payment period. Free state file turbotax Also, you cannot use your actual withholding during each period to figure your payments for each period. Free state file turbotax These methods, which may give you a smaller penalty amount, are explained under Figuring Your Underpayment (Part IV, Section A). Free state file turbotax Complete Part III of Form 2210 following the line-by-line instructions in the Instructions for Form 2210. Free state file turbotax Regular Method for Figuring the Penalty (Part IV) You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date. Free state file turbotax You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you. Free state file turbotax You paid one or more estimated tax payments on a date after the due date. Free state file turbotax You paid at least one, but less than four, installments of estimated tax. Free state file turbotax You paid estimated tax payments in un- equal amounts. Free state file turbotax You use the annualized income installment method to figure your underpayment for each payment period. Free state file turbotax You use your actual withholding during each payment period to figure your payments. Free state file turbotax Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Free state file turbotax Enter the results on line 27 of Section B. Free state file turbotax Figuring Your Underpayment (Part IV, Section A) Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions in the Instructions for Form 2210. Free state file turbotax Complete lines 20 through 26 of the first column before going to line 20 of the next column. Free state file turbotax Required installments—line 18. Free state file turbotax   Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). Free state file turbotax This method—the regular method—is the one to use if you received your income evenly throughout the year. Free state file turbotax   However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Free state file turbotax First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. Free state file turbotax See Annualized Income Installment Method (Schedule AI), later. Free state file turbotax Payments made—line 19. Free state file turbotax   Enter in each column the total of: Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and One-fourth of your withholding. Free state file turbotax For special rules for figuring your payments, see Form 2210 instructions for line 19. Free state file turbotax   If you file Form 1040, your withholding is the amount on line 62, plus any excess social security or tier 1 RRTA tax withholding on line 69. Free state file turbotax If you file Form 1040A, your withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included in line 41. Free state file turbotax Actual withholding method. Free state file turbotax    Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. Free state file turbotax You can make this choice separately for the tax withheld from your wages and for all other withholding. Free state file turbotax This includes any excess social security and tier 1 RRTA tax withheld. Free state file turbotax   Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year. Free state file turbotax   If you use your actual withholding, you must check box D in Form 2210, Part II. Free state file turbotax Then complete Form 2210 using the regular method (Part IV) and file it with your return. Free state file turbotax Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. Free state file turbotax The penalty is imposed on each underpayment amount shown on Form 2210, Section A, line 25, for the number of days that it remained unpaid. Free state file turbotax For 2013, there are four rate periods—April 16 through June 30, July 1 through September 30, October 1 through December 31, and January 1, 2014 through April 15, 2014. Free state file turbotax A 3% rate applies to all four periods. Free state file turbotax Payments. Free state file turbotax    Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. Free state file turbotax For example, if you had an underpayment for the first payment period, list your payments after April 15, 2013. Free state file turbotax You can use the table in the Form 2210 instructions to make your list. Free state file turbotax Follow those instructions for listing income tax withheld and payments made with your return. Free state file turbotax Use the list to determine when each underpayment was paid. Free state file turbotax   If you mail your estimated tax payments, use the date of the U. Free state file turbotax S. Free state file turbotax postmark as the date of payment. Free state file turbotax Line 1b. Free state file turbotax   Apply the payments listed to underpayment balance in the first column until it is fully paid. Free state file turbotax Apply payments in the order made. Free state file turbotax Figuring the penalty. Free state file turbotax   If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. Free state file turbotax On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. Free state file turbotax On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. Free state file turbotax If no payments are applied, figure the penalty on the amount on line 1a. Free state file turbotax Aid for counting days. Free state file turbotax    Table 4-1 provides a simple method for counting the number of days between a due date and a payment date. Free state file turbotax Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date. Free state file turbotax In the same manner, find the number for the date the payment was made. Free state file turbotax Subtract the due date “number” from the payment date “number. Free state file turbotax ”   For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late. Free state file turbotax Table 4-1. Free state file turbotax Calendar To Determine the Number of Days a Payment Is Late Instructions. Free state file turbotax Use this table with Form 2210 if you are completing Part IV, Section B. Free state file turbotax First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Free state file turbotax Then, in the same manner, find the number for the date the payment was made. Free state file turbotax Finally, subtract the due date number from the payment date number. Free state file turbotax The result is the number of days the payment is late. Free state file turbotax Example. Free state file turbotax The payment due date is June 15 (61). Free state file turbotax The payment was made on November 4 (203). Free state file turbotax The payment is 142 days late (203 – 61). Free state file turbotax Tax Year 2013 Day of 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 Month April May June July Aug. Free state file turbotax Sept. Free state file turbotax Oct. Free state file turbotax Nov. Free state file turbotax Dec. Free state file turbotax Jan. Free state file turbotax Feb. Free state file turbotax Mar. Free state file turbotax Apr. Free state file turbotax 1   16 47 77 108 139 169 200 230 261 292 320 351 2   17 48 78 109 140 170 201 231 262 293 321 352 3   18 49 79 110 141 171 202 232 263 294 322 353 4   19 50 80 111 142 172 203 233 264 295 323 354 5   20 51 81 112 143 173 204 234 265 296 324 355 6   21 52 82 113 144 174 205 235 266 297 325 356 7   22 53 83 114 145 175 206 236 267 298 326 357 8   23 54 84 115 146 176 207 237 268 299 327 358 9   24 55 85 116 147 177 208 238 269 300 328 359 10   25 56 86 117 148 178 209 239 270 301 329 360 11   26 57 87 118 149 179 210 240 271 302 330 361 12   27 58 88 119 150 180 211 241 272 303 331 362 13   28 59 89 120 151 181 212 242 273 304 332 363 14   29 60 90 121 152 182 213 243 274 305 333 364 15 0 30 61 91 122 153 183 214 244 275 306 334 365 16 1 31 62 92 123 154 184 215 245 276 307 335   17 2 32 63 93 124 155 185 216 246 277 308 336   18 3 33 64 94 125 156 186 217 247 278 309 337   19 4 34 65 95 126 157 187 218 248 279 310 338   20 5 35 66 96 127 158 188 219 249 280 311 339   21 6 36 67 97 128 159 189 220 250 281 312 340   22 7 37 68 98 129 160 190 221 251 282 313 341   23 8 38 69 99 130 161 191 222 252 283 314 342   24 9 39 70 100 131 162 192 223 253 284 315 343   25 10 40 71 101 132 163 193 224 254 285 316 344   26 11 41 72 102 133 164 194 225 255 286 317 345   27 12 42 73 103 134 165 195 226 256 287 318 346   28 13 43 74 104 135 166 196 227 257 288 319 347   29 14 44 75 105 136 167 197 228 258 289   348   30 15 45 76 106 137 168 198 229 259 290   349   31   46   107 138   199   260 291   350   Annualized Income Installment Method (Schedule AI) If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Free state file turbotax Under this method, your required installment (Part IV, line 18) for one or more payment periods may be less than one-fourth of your required annual payment. Free state file turbotax To figure your underpayment using this method, complete Form 2210, Schedule AI. Free state file turbotax Schedule AI annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Free state file turbotax If you use the annualized income installment method, you must check box C in Part II of Form 2210. Free state file turbotax Also, you must attach Form 2210 and Schedule AI to your return. Free state file turbotax If you use Schedule AI for any payment due date, you must use it for all payment due dates. Free state file turbotax Completing Schedule AI. Free state file turbotax   Follow the Form 2210 instructions to complete Schedule AI. Free state file turbotax For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. Free state file turbotax If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and all deductions actually paid during the period. Free state file turbotax Note. Free state file turbotax Each period includes amounts from the previous period(s). Free state file turbotax Period (a) includes items for January 1 through March 31. Free state file turbotax Period (b) includes items for January 1 through May 31. Free state file turbotax Period (c) includes items for January 1 through August 31. Free state file turbotax Period (d) includes items for the entire year. Free state file turbotax Farmers and Fishermen If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you. Free state file turbotax The penalty for underpaying your 2013 estimated tax will not apply if you file your return and pay all the tax due by March 3, 2014. Free state file turbotax If you are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the third month after the end of your tax year. Free state file turbotax Any penalty you owe for underpaying your 2013 estimated tax will be figured from one payment due date, January 15, 2014. Free state file turbotax The underpayment penalty for 2013 is figured on the difference between the amount of 2013 withholding plus estimated tax paid by the due date and the smaller of: 662/3% (rather than 90%) of your 2013 tax, or 100% of the tax shown on your 2012 return. Free state file turbotax Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed under Exceptions . Free state file turbotax See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules. Free state file turbotax Form 2210-F. Free state file turbotax   Use Form 2210-F to figure any underpayment penalty. Free state file turbotax Do not attach it to your return unless you check a box in Part I. Free state file turbotax However, if none of the boxes apply to you and you owe a penalty, you do not need to attach Form 2210-F. Free state file turbotax Enter the amount from line 16 on Form 1040, line 77 and add the penalty to any balance due on your return or subtract it from your refund. Free state file turbotax Keep your filled-in Form 2210-F for your records. Free state file turbotax    If none of the boxes on Form 2210-F apply to you and you owe a penalty, the IRS can figure your penalty and send you a bill. Free state file turbotax Waiver of Penalty The IRS can waive the penalty for underpayment if either of the following applies. Free state file turbotax You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. Free state file turbotax You retired (after reaching age 62) or became disabled in 2012 or 2013 and both the following requirements are met. Free state file turbotax You had a reasonable cause for not making the payment. Free state file turbotax Your underpayment was not due to willful neglect. Free state file turbotax How to request a waiver. Free state file turbotax   To request a waiver, see the Instructions for Form 2210. Free state file turbotax Farmers and fishermen. Free state file turbotax   To request a waiver, see the Instructions for Form 2210-F. Free state file turbotax Federally declared disaster. Free state file turbotax   Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. Free state file turbotax During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Free state file turbotax Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. Free state file turbotax If you still owe a penalty after the automatic waiver is applied, we will send you a bill. Free state file turbotax   Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Free state file turbotax Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. Free state file turbotax If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief. Free state file turbotax   Details on the applicable disaster postponement period can be found at IRS. Free state file turbotax gov. Free state file turbotax Enter Tax Relief in Disaster Situations. Free state file turbotax Select the federally declared disaster that affected you. Free state file turbotax    Worksheet 4-1. Free state file turbotax 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Note. Free state file turbotax To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  annualization amount on line 2 of Schedule AI for the same period. Free state file turbotax                   1. Free state file turbotax Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1. Free state file turbotax       2. Free state file turbotax Enter your annualized qualified dividends for the period 2. Free state file turbotax           3. Free state file turbotax Are you filing Schedule D?               □ Yes. Free state file turbotax Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. Free state file turbotax If either line 15 or line 16 is blank or a loss, enter -0-. Free state file turbotax 3. Free state file turbotax             □ No. Free state file turbotax Enter your annualized capital gain distributions from Form 1040, line 13             4. Free state file turbotax Add lines 2 and 3   4. Free state file turbotax           5. Free state file turbotax If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Free state file turbotax Otherwise, enter -0-   5. Free state file turbotax           6. Free state file turbotax Subtract line 5 from line 4. Free state file turbotax If zero or less, enter -0- 6. Free state file turbotax       7. Free state file turbotax Subtract line 6 from line 1. Free state file turbotax If zero or less, enter -0- 7. Free state file turbotax       8. Free state file turbotax Enter: $36,900 if single or married filing separately, $73,800 if married filing jointly or qualifying widow(er), $49,400 if head of household. Free state file turbotax 8. Free state file turbotax       9. Free state file turbotax Enter the smaller of line 1 or line 8 9. Free state file turbotax       10. Free state file turbotax Enter the smaller of line 7 or line 9 10. Free state file turbotax       11. Free state file turbotax Subtract line 10 from line 9. Free state file turbotax This amount is taxed at 0% 11. Free state file turbotax       12. Free state file turbotax Enter the smaller of line 1 or line 6 12. Free state file turbotax       13. Free state file turbotax Enter the amount from line 11 13. Free state file turbotax       14. Free state file turbotax Subtract line 13 from line 12 14. Free state file turbotax       15. Free state file turbotax Multiply line 14 by 15% (. Free state file turbotax 15) 15. Free state file turbotax   16. Free state file turbotax Figure the tax on the amount on line 7. Free state file turbotax If the amount on line 7 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Free state file turbotax If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 16. Free state file turbotax   17. Free state file turbotax Add lines 15 and 16 17. Free state file turbotax   18. Free state file turbotax Figure the tax on the amount on line 1. Free state file turbotax If the amount on line 1 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Free state file turbotax If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 18. Free state file turbotax   19. Free state file turbotax Tax on all taxable income. Free state file turbotax Enter the smaller of line 17 or line 18. Free state file turbotax Also enter this amount on line 12 of Schedule AI in the appropriate column. Free state file turbotax However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19. Free state file turbotax   Worksheet 4-2. Free state file turbotax 2013 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet Before you begin:If Schedule AI, line 11, is zero for the period, do not complete this worksheet. Free state file turbotax             1. Free state file turbotax Enter the amount from line 11 of Schedule AI for the period 1. Free state file turbotax   2. Free state file turbotax Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from  Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1  of Schedule AI 2. Free state file turbotax   3. Free state file turbotax Add lines 1 and 2 3. Free state file turbotax   4. Free state file turbotax Tax on the amount on line 3. Free state file turbotax Use the Tax Table, Tax Computation Worksheet, Form 8615**, Qualified Dividends and Capital Gain Tax Worksheet***, or Schedule D Tax Worksheet***, whichever applies. Free state file turbotax See the 2013 Instructions for Form 1040, line 44, to find out which tax computation method to use. Free state file turbotax (Note. Free state file turbotax You do not have to use the same method for each period on Schedule AI. Free state file turbotax ) 4. Free state file turbotax   5. Free state file turbotax Tax on the amount on line 2. Free state file turbotax If the amount on line 2 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Free state file turbotax If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 5. Free state file turbotax   6. Free state file turbotax Subtract line 5 from line 4. Free state file turbotax Enter the result here and on line 12 of Schedule AI. Free state file turbotax If zero or less,  enter -0- 6. Free state file turbotax             * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period. Free state file turbotax     ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. Free state file turbotax If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Free state file turbotax Complete the rest of Form 8615 according to its instructions. Free state file turbotax Then complete lines 5 and 6 above. Free state file turbotax     *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Free state file turbotax Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Free state file turbotax Next, determine if you have a capital gain excess. Free state file turbotax     Figuring capital gain excess. Free state file turbotax To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). Free state file turbotax If the result is more than zero, that amount is your capital gain excess. Free state file turbotax     No capital gain excess. Free state file turbotax If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Free state file turbotax Then complete lines 5 and 6 above. Free state file turbotax     Capital gain excess. Free state file turbotax If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Free state file turbotax Then complete lines 5 and 6 above. Free state file turbotax     Make the modifications below only for purposes of filling out Worksheet 4-2 above. Free state file turbotax     a. Free state file turbotax Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess. Free state file turbotax     b. Free state file turbotax Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above. Free state file turbotax     c. Free state file turbotax Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess. Free state file turbotax     d. Free state file turbotax Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2013 Instructions for Schedule D (Form 1040). Free state file turbotax   Prev  Up  Next   Home   More Online Publications