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How Can I File My 2011 Tax Return

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How Can I File My 2011 Tax Return

How can i file my 2011 tax return 21. How can i file my 2011 tax return   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. How can i file my 2011 tax return How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. How can i file my 2011 tax return  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. How can i file my 2011 tax return 5% if either you or your spouse is age 65 or older). How can i file my 2011 tax return Standard mileage rate. How can i file my 2011 tax return  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. How can i file my 2011 tax return See Transportation under What Medical Expenses Are Includible. How can i file my 2011 tax return Introduction This chapter will help you determine the following. How can i file my 2011 tax return What medical expenses are. How can i file my 2011 tax return What expenses you can include this year. How can i file my 2011 tax return How much of the expenses you can deduct. How can i file my 2011 tax return Whose medical expenses you can include. How can i file my 2011 tax return What medical expenses are includible. How can i file my 2011 tax return How to treat reimbursements. How can i file my 2011 tax return How to report the deduction on your tax return. How can i file my 2011 tax return How to report impairment-related work expenses. How can i file my 2011 tax return How to report health insurance costs if you are self-employed. How can i file my 2011 tax return Useful Items - You may want to see: Publications 502 Medical and Dental Expenses 969 Health Savings Accounts and Other Tax-Favored Health Plans Form (and Instructions) Schedule A (Form 1040) Itemized Deductions What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. How can i file my 2011 tax return These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. How can i file my 2011 tax return They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. How can i file my 2011 tax return Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. How can i file my 2011 tax return They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. How can i file my 2011 tax return Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. How can i file my 2011 tax return Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. How can i file my 2011 tax return What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. How can i file my 2011 tax return If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. How can i file my 2011 tax return If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. How can i file my 2011 tax return If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. How can i file my 2011 tax return Separate returns. How can i file my 2011 tax return   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. How can i file my 2011 tax return Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. How can i file my 2011 tax return Community property states. How can i file my 2011 tax return   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. How can i file my 2011 tax return Each of you should include half the expenses. How can i file my 2011 tax return If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. How can i file my 2011 tax return If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. How can i file my 2011 tax return How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. How can i file my 2011 tax return 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). How can i file my 2011 tax return Example. How can i file my 2011 tax return You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. How can i file my 2011 tax return You paid medical expenses of $2,500. How can i file my 2011 tax return You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. How can i file my 2011 tax return Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. How can i file my 2011 tax return There are different rules for decedents and for individuals who are the subject of multiple support agreements. How can i file my 2011 tax return See Support claimed under a multiple support agreement , later. How can i file my 2011 tax return Yourself You can include medical expenses you paid for yourself. How can i file my 2011 tax return Spouse You can include medical expenses you paid for your spouse. How can i file my 2011 tax return To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. How can i file my 2011 tax return Example 1. How can i file my 2011 tax return Mary received medical treatment before she married Bill. How can i file my 2011 tax return Bill paid for the treatment after they married. How can i file my 2011 tax return Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. How can i file my 2011 tax return If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. How can i file my 2011 tax return Mary would include the amounts she paid during the year in her separate return. How can i file my 2011 tax return If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. How can i file my 2011 tax return Example 2. How can i file my 2011 tax return This year, John paid medical expenses for his wife Louise, who died last year. How can i file my 2011 tax return John married Belle this year and they file a joint return. How can i file my 2011 tax return Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. How can i file my 2011 tax return Dependent You can include medical expenses you paid for your dependent. How can i file my 2011 tax return For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. How can i file my 2011 tax return A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. How can i file my 2011 tax return The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. How can i file my 2011 tax return S. How can i file my 2011 tax return citizen or national, or a resident of the United States, Canada, or Mexico. How can i file my 2011 tax return If your qualifying child was adopted, see Exception for adopted child , next. How can i file my 2011 tax return You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. How can i file my 2011 tax return Exception for adopted child. How can i file my 2011 tax return   If you are a U. How can i file my 2011 tax return S. How can i file my 2011 tax return citizen or U. How can i file my 2011 tax return S. How can i file my 2011 tax return national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. How can i file my 2011 tax return S. How can i file my 2011 tax return citizen or national or a resident of the United States, Canada, or Mexico. How can i file my 2011 tax return Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. How can i file my 2011 tax return Adopted child. How can i file my 2011 tax return   A legally adopted child is treated as your own child. How can i file my 2011 tax return This includes a child lawfully placed with you for legal adoption. How can i file my 2011 tax return   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. How can i file my 2011 tax return   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. How can i file my 2011 tax return   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. How can i file my 2011 tax return    You may be able to take an adoption credit for other expenses related to an adoption. How can i file my 2011 tax return See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. How can i file my 2011 tax return Child of divorced or separated parents. How can i file my 2011 tax return   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. How can i file my 2011 tax return Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. How can i file my 2011 tax return This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). How can i file my 2011 tax return Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. How can i file my 2011 tax return But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. How can i file my 2011 tax return Support claimed under a multiple support agreement. How can i file my 2011 tax return   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. How can i file my 2011 tax return A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. How can i file my 2011 tax return   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. How can i file my 2011 tax return However, you can include the entire unreimbursed amount you paid for medical expenses. How can i file my 2011 tax return Example. How can i file my 2011 tax return You and your three brothers each provide one-fourth of your mother's total support. How can i file my 2011 tax return Under a multiple support agreement, you treat your mother as your dependent. How can i file my 2011 tax return You paid all of her medical expenses. How can i file my 2011 tax return Your brothers reimbursed you for three-fourths of these expenses. How can i file my 2011 tax return In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. How can i file my 2011 tax return Your brothers cannot include any part of the expenses. How can i file my 2011 tax return However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. How can i file my 2011 tax return Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. How can i file my 2011 tax return This includes expenses for the decedent's spouse and dependents as well as for the decedent. How can i file my 2011 tax return The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. How can i file my 2011 tax return The expenses must be paid within the 1-year period beginning with the day after the date of death. How can i file my 2011 tax return If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. How can i file my 2011 tax return Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. How can i file my 2011 tax return Amended returns and claims for refund are discussed in chapter 1. How can i file my 2011 tax return What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. How can i file my 2011 tax return The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. How can i file my 2011 tax return What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). How can i file my 2011 tax return This table does not include all possible medical expenses. How can i file my 2011 tax return To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. How can i file my 2011 tax return Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. How can i file my 2011 tax return Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). How can i file my 2011 tax return See Qualified Long-Term Care Insurance Contracts in Publication 502. How can i file my 2011 tax return If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. How can i file my 2011 tax return The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. How can i file my 2011 tax return Note. How can i file my 2011 tax return When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. How can i file my 2011 tax return Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. How can i file my 2011 tax return Employer-sponsored health insurance plan. How can i file my 2011 tax return   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. How can i file my 2011 tax return Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. How can i file my 2011 tax return Example. How can i file my 2011 tax return You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. How can i file my 2011 tax return Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. How can i file my 2011 tax return Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. How can i file my 2011 tax return Long-term care services. How can i file my 2011 tax return   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. How can i file my 2011 tax return This amount will be reported as wages in box 1 of your Form W-2. How can i file my 2011 tax return Health reimbursement arrangement (HRA). How can i file my 2011 tax return   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. How can i file my 2011 tax return This is because an HRA is funded solely by the employer. How can i file my 2011 tax return Retired public safety officers. How can i file my 2011 tax return   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. How can i file my 2011 tax return This applies only to distributions that would otherwise be included in income. How can i file my 2011 tax return Medicare A. How can i file my 2011 tax return   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. How can i file my 2011 tax return The payroll tax paid for Medicare A is not a medical expense. How can i file my 2011 tax return   If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. How can i file my 2011 tax return In this situation you can include the premiums you paid for Medicare A as a medical expense. How can i file my 2011 tax return Medicare B. How can i file my 2011 tax return   Medicare B is supplemental medical insurance. How can i file my 2011 tax return Premiums you pay for Medicare B are a medical expense. How can i file my 2011 tax return Check the information you received from the Social Security Administration to find out your premium. How can i file my 2011 tax return Medicare D. How can i file my 2011 tax return    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. How can i file my 2011 tax return You can include as a medical expense premiums you pay for Medicare D. How can i file my 2011 tax return Prepaid insurance premiums. How can i file my 2011 tax return   Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). How can i file my 2011 tax return Unused sick leave used to pay premiums. How can i file my 2011 tax return   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. How can i file my 2011 tax return You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. How can i file my 2011 tax return You can include this cost of continuing participation in the health plan as a medical expense. How can i file my 2011 tax return   If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. How can i file my 2011 tax return You cannot include this cost of continuing participation in that health plan as a medical expense. How can i file my 2011 tax return Table 21-1. How can i file my 2011 tax return Medical and Dental Expenses Checklist. How can i file my 2011 tax return See Publication 502 for more information about these and other expenses. How can i file my 2011 tax return You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. How can i file my 2011 tax return ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. How can i file my 2011 tax return ) Special education for mentally or physically disabled persons Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services Weight-loss, certain expenses for obesity Baby sitting and childcare Bottled water Contributions to Archer MSAs (see Publication 969) Diaper service Expenses for your general health (even if following your doctor's advice) such as— —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pre-tax basis) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. How can i file my 2011 tax return Maternity clothes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. How can i file my 2011 tax return , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. How can i file my 2011 tax return Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. How can i file my 2011 tax return See Nursing home , later. How can i file my 2011 tax return You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. How can i file my 2011 tax return You can include the cost of such lodging while away from home if all of the following requirements are met. How can i file my 2011 tax return The lodging is primarily for and essential to medical care. How can i file my 2011 tax return The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. How can i file my 2011 tax return The lodging is not lavish or extravagant under the circumstances. How can i file my 2011 tax return There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. How can i file my 2011 tax return The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. How can i file my 2011 tax return You can include lodging for a person traveling with the person receiving the medical care. How can i file my 2011 tax return For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. How can i file my 2011 tax return Meals are not included. How can i file my 2011 tax return Nursing home. How can i file my 2011 tax return   You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. How can i file my 2011 tax return This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. How can i file my 2011 tax return   Do not include the cost of meals and lodging if the reason for being in the home is personal. How can i file my 2011 tax return You can, however, include in medical expenses the part of the cost that is for medical or nursing care. How can i file my 2011 tax return Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. How can i file my 2011 tax return You can include: Bus, taxi, train, or plane fares, or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. How can i file my 2011 tax return Car expenses. How can i file my 2011 tax return   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. How can i file my 2011 tax return You cannot include depreciation, insurance, general repair, or maintenance expenses. How can i file my 2011 tax return   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. How can i file my 2011 tax return    You can also include parking fees and tolls. How can i file my 2011 tax return You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. How can i file my 2011 tax return Example. How can i file my 2011 tax return In 2013, Bill Jones drove 2,800 miles for medical reasons. How can i file my 2011 tax return He spent $500 for gas, $30 for oil, and $100 for tolls and parking. How can i file my 2011 tax return He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. How can i file my 2011 tax return He figures the actual expenses first. How can i file my 2011 tax return He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. How can i file my 2011 tax return He then figures the standard mileage amount. How can i file my 2011 tax return He multiplies 2,800 miles by 24 cents a mile for a total of $672. How can i file my 2011 tax return He then adds the $100 tolls and parking for a total of $772. How can i file my 2011 tax return Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. How can i file my 2011 tax return Transportation expenses you cannot include. How can i file my 2011 tax return   You cannot include in medical expenses the cost of transportation in the following situations. How can i file my 2011 tax return Going to and from work, even if your condition requires an unusual means of transportation. How can i file my 2011 tax return Travel for purely personal reasons to another city for an operation or other medical care. How can i file my 2011 tax return Travel that is merely for the general improvement of one's health. How can i file my 2011 tax return The costs of operating a specially equipped car for other than medical reasons. How can i file my 2011 tax return Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. How can i file my 2011 tax return (See chapter 32 and Publication 503, Child and Dependent Care Expenses. How can i file my 2011 tax return ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. How can i file my 2011 tax return How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement. How can i file my 2011 tax return Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. How can i file my 2011 tax return This includes payments from Medicare. How can i file my 2011 tax return Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. How can i file my 2011 tax return Example. How can i file my 2011 tax return You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. How can i file my 2011 tax return The insurance you receive for the hospital and doctors' bills is more than their charges. How can i file my 2011 tax return In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. How can i file my 2011 tax return Health reimbursement arrangement (HRA). How can i file my 2011 tax return   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. How can i file my 2011 tax return An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income. How can i file my 2011 tax return Other reimbursements. How can i file my 2011 tax return   Generally, you do not reduce medical expenses by payments you receive for: Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc. How can i file my 2011 tax return ) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or Loss of earnings. How can i file my 2011 tax return   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. How can i file my 2011 tax return See How Do You Figure and Report the Deduction on Your Tax Return , later. How can i file my 2011 tax return   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. How can i file my 2011 tax return You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. How can i file my 2011 tax return Excess reimbursement. How can i file my 2011 tax return   If you are reimbursed more than your medical expenses, you may have to include the excess in income. How can i file my 2011 tax return You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. How can i file my 2011 tax return Premiums paid by you. How can i file my 2011 tax return   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. How can i file my 2011 tax return Generally, you do not include the excess reimbursement in your gross income. How can i file my 2011 tax return Premiums paid by you and your employer. How can i file my 2011 tax return   If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution. How can i file my 2011 tax return   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. How can i file my 2011 tax return Reimbursement in a later year. How can i file my 2011 tax return   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. How can i file my 2011 tax return   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. How can i file my 2011 tax return For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12. How can i file my 2011 tax return Figure 21-A. How can i file my 2011 tax return Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. How can i file my 2011 tax return Figure 21-A. How can i file my 2011 tax return Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. How can i file my 2011 tax return   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. How can i file my 2011 tax return 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. How can i file my 2011 tax return However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. How can i file my 2011 tax return Example. How can i file my 2011 tax return For 2013, you were unmarried and under age 65 and you had medical expenses of $500. How can i file my 2011 tax return You cannot deduct the $500 because it is less than 10% of your AGI. How can i file my 2011 tax return If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. How can i file my 2011 tax return Damages for Personal Injuries If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. How can i file my 2011 tax return If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. How can i file my 2011 tax return See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. How can i file my 2011 tax return Future medical expenses. How can i file my 2011 tax return   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. How can i file my 2011 tax return If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. How can i file my 2011 tax return How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. How can i file my 2011 tax return What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). How can i file my 2011 tax return You cannot claim medical expenses on Form 1040A or Form 1040EZ. How can i file my 2011 tax return If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. How can i file my 2011 tax return Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). How can i file my 2011 tax return This should be your expenses that were not reimbursed by insurance or any other sources. How can i file my 2011 tax return Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. How can i file my 2011 tax return 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. How can i file my 2011 tax return Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. How can i file my 2011 tax return If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. How can i file my 2011 tax return You have a disability if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. How can i file my 2011 tax return Impairment-related expenses defined. How can i file my 2011 tax return   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. How can i file my 2011 tax return Where to report. How can i file my 2011 tax return   If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. How can i file my 2011 tax return   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. How can i file my 2011 tax return Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. How can i file my 2011 tax return Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). How can i file my 2011 tax return Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. How can i file my 2011 tax return Example. How can i file my 2011 tax return You are blind. How can i file my 2011 tax return You must use a reader to do your work. How can i file my 2011 tax return You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. How can i file my 2011 tax return The reader's services are only for your work. How can i file my 2011 tax return You can deduct your expenses for the reader as business expenses. How can i file my 2011 tax return Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. How can i file my 2011 tax return For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. How can i file my 2011 tax return The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. How can i file my 2011 tax return You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. How can i file my 2011 tax return You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. How can i file my 2011 tax return If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. How can i file my 2011 tax return But if any of the following applies, do not use that worksheet. How can i file my 2011 tax return You had more than one source of income subject to self-employment tax. How can i file my 2011 tax return You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. How can i file my 2011 tax return You are using amounts paid for qualified long-term care insurance to figure the deduction. How can i file my 2011 tax return If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. How can i file my 2011 tax return Note. How can i file my 2011 tax return When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. How can i file my 2011 tax return If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. How can i file my 2011 tax return Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. How can i file my 2011 tax return Where to report. How can i file my 2011 tax return    You take this deduction on Form 1040. How can i file my 2011 tax return If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. How can i file my 2011 tax return 5% if either you or your spouse was age 65 or older). How can i file my 2011 tax return See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. How can i file my 2011 tax return Prev  Up  Next   Home   More Online Publications
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Understanding your CP12R Notice

We made changes to the computation of the Rebate Recovery Credit on your return.

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Page Last Reviewed or Updated: 19-Feb-2014

The How Can I File My 2011 Tax Return

How can i file my 2011 tax return Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. How can i file my 2011 tax return For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. How can i file my 2011 tax return If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. How can i file my 2011 tax return Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. How can i file my 2011 tax return A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. How can i file my 2011 tax return Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. How can i file my 2011 tax return Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). How can i file my 2011 tax return It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. How can i file my 2011 tax return A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. How can i file my 2011 tax return Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. How can i file my 2011 tax return It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. How can i file my 2011 tax return Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. How can i file my 2011 tax return Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. How can i file my 2011 tax return Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. How can i file my 2011 tax return Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. How can i file my 2011 tax return Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. How can i file my 2011 tax return Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. How can i file my 2011 tax return Listed property placed in service before 1987. How can i file my 2011 tax return   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. How can i file my 2011 tax return Listed property placed in service after 1986. How can i file my 2011 tax return   For information on listed property placed in service after 1986, see Publication 946. How can i file my 2011 tax return Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. How can i file my 2011 tax return You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. How can i file my 2011 tax return The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. How can i file my 2011 tax return However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. How can i file my 2011 tax return Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. How can i file my 2011 tax return Example. How can i file my 2011 tax return Sarah Bradley uses a home computer 50% of the time to manage her investments. How can i file my 2011 tax return She also uses the computer 40% of the time in her part-time consumer research business. How can i file my 2011 tax return Sarah's home computer is listed property because it is not used at a regular business establishment. How can i file my 2011 tax return Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. How can i file my 2011 tax return Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. How can i file my 2011 tax return Her combined rate of business/investment use for determining her depreciation deduction is 90%. How can i file my 2011 tax return Qualified Business Use A qualified business use is any use in your trade or business. How can i file my 2011 tax return However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. How can i file my 2011 tax return See Employees, later. How can i file my 2011 tax return 5% owner. How can i file my 2011 tax return   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. How can i file my 2011 tax return   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. How can i file my 2011 tax return Related person. How can i file my 2011 tax return   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. How can i file my 2011 tax return Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. How can i file my 2011 tax return See Publication 463. How can i file my 2011 tax return Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. How can i file my 2011 tax return Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. How can i file my 2011 tax return Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. How can i file my 2011 tax return Any payment to you for the use of the automobile is treated as a rent payment for 3). How can i file my 2011 tax return Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. How can i file my 2011 tax return Use for the employer's convenience. How can i file my 2011 tax return   Whether the use of listed property is for the employer's convenience must be determined from all the facts. How can i file my 2011 tax return The use is for the employer's convenience if it is for a substantial business reason of the employer. How can i file my 2011 tax return The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. How can i file my 2011 tax return Use required as a condition of employment. How can i file my 2011 tax return   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. How can i file my 2011 tax return The use of property must be required for the employee to perform duties properly. How can i file my 2011 tax return The employer need not explicitly require the employee to use the property. How can i file my 2011 tax return A mere statement by the employer that the use of the property is a condition of employment is not sufficient. How can i file my 2011 tax return Example 1. How can i file my 2011 tax return Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. How can i file my 2011 tax return She owns and uses a motorcycle to deliver packages to downtown offices. How can i file my 2011 tax return We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. How can i file my 2011 tax return The company reimburses delivery persons for their costs. How can i file my 2011 tax return Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. How can i file my 2011 tax return Example 2. How can i file my 2011 tax return Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. How can i file my 2011 tax return He must travel to these sites on a regular basis. How can i file my 2011 tax return Uplift does not furnish an automobile or explicitly require him to use his own automobile. How can i file my 2011 tax return However, it reimburses him for any costs he incurs in traveling to the various sites. How can i file my 2011 tax return The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. How can i file my 2011 tax return Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. How can i file my 2011 tax return You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. How can i file my 2011 tax return For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. How can i file my 2011 tax return For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. How can i file my 2011 tax return Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. How can i file my 2011 tax return First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. How can i file my 2011 tax return Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. How can i file my 2011 tax return It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. How can i file my 2011 tax return Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. How can i file my 2011 tax return Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. How can i file my 2011 tax return See Recapture of excess depreciation, next. How can i file my 2011 tax return Recapture of excess depreciation. How can i file my 2011 tax return   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. How can i file my 2011 tax return Any excess depreciation must also be added to the adjusted basis of your property. How can i file my 2011 tax return Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. How can i file my 2011 tax return This means you figure your depreciation using the percentages fromTable 16 or 17. How can i file my 2011 tax return For information on investment credit recapture, see the instructions for Form 4255. How can i file my 2011 tax return Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. How can i file my 2011 tax return In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. How can i file my 2011 tax return To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. How can i file my 2011 tax return See Car Used 50% or Less for Business in Publication 917. How can i file my 2011 tax return Leased Property The limitations on cost recovery deductions apply to the rental of listed property. How can i file my 2011 tax return The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). How can i file my 2011 tax return SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. How can i file my 2011 tax return Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. How can i file my 2011 tax return A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. How can i file my 2011 tax return This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. How can i file my 2011 tax return Occasional or incidental leasing activity is insufficient. How can i file my 2011 tax return For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. How can i file my 2011 tax return An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. How can i file my 2011 tax return Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. How can i file my 2011 tax return Inclusion amount for property leased before 1987. How can i file my 2011 tax return   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. How can i file my 2011 tax return You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. How can i file my 2011 tax return   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. How can i file my 2011 tax return For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. How can i file my 2011 tax return You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. How can i file my 2011 tax return Special rules. How can i file my 2011 tax return   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. How can i file my 2011 tax return The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. How can i file my 2011 tax return   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. How can i file my 2011 tax return Maximum inclusion amount. How can i file my 2011 tax return   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. How can i file my 2011 tax return What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. How can i file my 2011 tax return How long to keep records. How can i file my 2011 tax return   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). How can i file my 2011 tax return Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. How can i file my 2011 tax return It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. How can i file my 2011 tax return However, your records should back up your receipts in an orderly manner. How can i file my 2011 tax return Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. How can i file my 2011 tax return Written documents of your expenditure or use are generally better evidence than oral statements alone. How can i file my 2011 tax return A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. How can i file my 2011 tax return A daily log is not required. How can i file my 2011 tax return However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. How can i file my 2011 tax return Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. How can i file my 2011 tax return An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. How can i file my 2011 tax return For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. How can i file my 2011 tax return Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. How can i file my 2011 tax return However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. How can i file my 2011 tax return A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. How can i file my 2011 tax return For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. How can i file my 2011 tax return Business Use Supported An adequate record contains enough information on each element of every business or investment use. How can i file my 2011 tax return The amount of detail required to support the use depends on the facts and circumstances. How can i file my 2011 tax return For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. How can i file my 2011 tax return Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. How can i file my 2011 tax return Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. How can i file my 2011 tax return However, repeated uses can be combined as a single item. How can i file my 2011 tax return Each expenditure is recorded as a separate item and not combined with other expenditures. How can i file my 2011 tax return If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. How can i file my 2011 tax return If these expenses are combined, you do not need to support the business purpose of each expense. How can i file my 2011 tax return Instead, you can divide the expenses based on the total business use of the listed property. How can i file my 2011 tax return Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. How can i file my 2011 tax return For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. How can i file my 2011 tax return Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. How can i file my 2011 tax return Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. How can i file my 2011 tax return Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. How can i file my 2011 tax return It must be kept elsewhere and made available as support to the district director on request. How can i file my 2011 tax return Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. How can i file my 2011 tax return If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. How can i file my 2011 tax return If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. How can i file my 2011 tax return If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. How can i file my 2011 tax return Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. How can i file my 2011 tax return Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. How can i file my 2011 tax return Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. How can i file my 2011 tax return If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. How can i file my 2011 tax return Employees. How can i file my 2011 tax return   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. How can i file my 2011 tax return Employees claiming the standard mileage rate may be able to use Form 2106–EZ. How can i file my 2011 tax return Employer who provides vehicles to employees. How can i file my 2011 tax return   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. How can i file my 2011 tax return   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. How can i file my 2011 tax return Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. How can i file my 2011 tax return   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. How can i file my 2011 tax return See the instructions for Form 4562. How can i file my 2011 tax return Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. How can i file my 2011 tax return In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. How can i file my 2011 tax return In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. How can i file my 2011 tax return For more information about deductions after the recovery period for automobiles, see Publication 917. How can i file my 2011 tax return Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. How can i file my 2011 tax return Table 1. How can i file my 2011 tax return 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. How can i file my 2011 tax return Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications