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Irs Gov 1040ez

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Irs Gov 1040ez

Irs gov 1040ez Publication 521 - Main Content Table of Contents Who Can Deduct Moving ExpensesMove Related to Start of Work Distance Test Time Test Retirees or Survivors Who Move to the United States Deductible Moving ExpensesMoves to Locations in the United States Moves to Locations Outside the United States Nondeductible Expenses ReimbursementsTypes of Reimbursement Plans Tax Withholding and Estimated Tax How and When To ReportForm 3903 When To Deduct Expenses Illustrated Example Members of the Armed Forces How To Get Tax Help Who Can Deduct Moving Expenses You can deduct your moving expenses if you meet all three of the following requirements. Irs gov 1040ez Your move is closely related to the start of work. Irs gov 1040ez You meet the distance test. Irs gov 1040ez You meet the time test. Irs gov 1040ez After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses. Irs gov 1040ez Retirees, survivors, and Armed Forces members. Irs gov 1040ez   Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. Irs gov 1040ez These rules are discussed later in this publication. Irs gov 1040ez Move Related to Start of Work Your move must be closely related, both in time and in place, to the start of work at your new job location. Irs gov 1040ez Closely related in time. Irs gov 1040ez   In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. Irs gov 1040ez It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. Irs gov 1040ez    Figure A. Irs gov 1040ez Illustration of Distance Test Please click here for the text description of the image. Irs gov 1040ez Figure A   If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that circumstances existed that prevented the move within that time. Irs gov 1040ez Example. Irs gov 1040ez Your family moved more than a year after you started work at a new location. Irs gov 1040ez You delayed the move for 18 months to allow your child to complete high school. Irs gov 1040ez You can deduct your moving expenses. Irs gov 1040ez Closely related in place. Irs gov 1040ez   You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. Irs gov 1040ez If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that: You are required to live at your new home as a condition of your employment, or You will spend less time or money commuting from your new home to your new job location. Irs gov 1040ez Home defined. Irs gov 1040ez   Your home means your main home (residence). Irs gov 1040ez It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. Irs gov 1040ez It does not include other homes owned or kept up by you or members of your family. Irs gov 1040ez It also does not include a seasonal home, such as a summer beach cottage. Irs gov 1040ez Your former home means your home before you left for your new job location. Irs gov 1040ez Your new home means your home within the area of your new job location. Irs gov 1040ez Retirees or survivors. Irs gov 1040ez   You may be able to deduct the expenses of moving to the United States or its possessions even though the move is not related to the start of work at a new job location. Irs gov 1040ez You must have worked outside the United States or be a survivor of someone who did. Irs gov 1040ez See Retirees or Survivors Who Move to the United States, later. Irs gov 1040ez Distance Test Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. Irs gov 1040ez For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. Irs gov 1040ez You can use Worksheet 1 to see if you meet this test. Irs gov 1040ez Worksheet 1. Irs gov 1040ez Distance Test   Note. Irs gov 1040ez Members of the Armed Forces may not have to meet this test. Irs gov 1040ez See Members of the Armed Forces. Irs gov 1040ez     1. Irs gov 1040ez Enter the number of miles from your old home to your new workplace 1. Irs gov 1040ez miles 2. Irs gov 1040ez Enter the number of miles from your old home to your old workplace 2. Irs gov 1040ez miles 3. Irs gov 1040ez Subtract line 2 from line 1. Irs gov 1040ez If zero or less, enter -0- 3. Irs gov 1040ez miles 4. Irs gov 1040ez Is line 3 at least 50 miles? □ Yes. Irs gov 1040ez You meet this test. Irs gov 1040ez  □ No. Irs gov 1040ez You do not meet this test. Irs gov 1040ez You cannot deduct your moving expenses. Irs gov 1040ez The distance between a job location and your home is the shortest of the more commonly traveled routes between them. Irs gov 1040ez The distance test considers only the location of your former home. Irs gov 1040ez It does not take into account the location of your new home. Irs gov 1040ez See Figure A, earlier. Irs gov 1040ez Example. Irs gov 1040ez You moved to a new home less than 50 miles from your former home because you changed main job locations. Irs gov 1040ez Your old main job location was 3 miles from your former home. Irs gov 1040ez Your new main job location is 60 miles from that home. Irs gov 1040ez Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test. Irs gov 1040ez First job or return to full-time work. Irs gov 1040ez   If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. Irs gov 1040ez   If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home. Irs gov 1040ez Armed Forces. Irs gov 1040ez   If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test. Irs gov 1040ez See Members of the Armed Forces, later. Irs gov 1040ez Main job location. Irs gov 1040ez   Your main job location is usually the place where you spend most of your working time. Irs gov 1040ez This could be your office, plant, store, shop, or other location. Irs gov 1040ez If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Irs gov 1040ez Union members. Irs gov 1040ez   If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall. Irs gov 1040ez More than one job. Irs gov 1040ez   If you have more than one job at any time, your main job location depends on the facts in each case. Irs gov 1040ez The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Irs gov 1040ez    Table 1. Irs gov 1040ez Satisfying the Time Test for Employees and Self-Employed Persons IF you are. Irs gov 1040ez . Irs gov 1040ez . Irs gov 1040ez THEN you satisfy the time test by meeting the. Irs gov 1040ez . Irs gov 1040ez . Irs gov 1040ez an employee 39-week test for employees. Irs gov 1040ez self-employed 78-week test for self-employed persons. Irs gov 1040ez both self-employed and an employee at the same time 78-week test for a self-employed person or the 39-week  test for an employee. Irs gov 1040ez Your principal place of work  determines which test applies. Irs gov 1040ez both self-employed and an employee, but unable to satisfy the 39-week test for employees 78-week test for self-employed persons. Irs gov 1040ez Time Test To deduct your moving expenses, you also must meet one of the following two time tests. Irs gov 1040ez The time test for employees. Irs gov 1040ez The time test for self-employed persons. Irs gov 1040ez Both of these tests are explained below. Irs gov 1040ez See Table 1, below, for a summary of these tests. Irs gov 1040ez You can deduct your moving expenses before you meet either of the time tests. Irs gov 1040ez See Time Test Not Yet Met, later. Irs gov 1040ez Time Test for Employees If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). Irs gov 1040ez Full-time employment depends on what is usual for your type of work in your area. Irs gov 1040ez For purposes of this test, the following four rules apply. Irs gov 1040ez You count only your full-time work as an employee, not any work you do as a self-employed person. Irs gov 1040ez You do not have to work for the same employer for all 39 weeks. Irs gov 1040ez You do not have to work 39 weeks in a row. Irs gov 1040ez You must work full time within the same general commuting area for all 39 weeks. Irs gov 1040ez Temporary absence from work. Irs gov 1040ez   You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. Irs gov 1040ez You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement. Irs gov 1040ez Seasonal work. Irs gov 1040ez   If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. Irs gov 1040ez For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months. Irs gov 1040ez    Figure B. Irs gov 1040ez Can You Deduct Expenses for a Non-Military Move Within the United States? Please click here for the text description of the image. Irs gov 1040ez Figure B Time Test for Self-Employed Persons If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test). Irs gov 1040ez For purposes of the time test for self-employed persons, the following three rules apply. Irs gov 1040ez You count any full-time work you do either as an employee or as a self-employed person. Irs gov 1040ez You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks. Irs gov 1040ez You must work within the same general commuting area for all 78 weeks. Irs gov 1040ez Example. Irs gov 1040ez You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2013. Irs gov 1040ez You pay moving expenses in 2013 and 2014 in connection with this move. Irs gov 1040ez On April 15, 2014, when you file your income tax return for the year 2013, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Irs gov 1040ez Although you have not satisfied the 78-week employment condition at this time, you can deduct your 2013 moving expenses on your 2013 income tax return as there is still sufficient time remaining before December 1, 2015, to satisfy such condition. Irs gov 1040ez You can deduct any moving expenses you pay in 2014 on your 2014 income tax return even if you have not met the 78-week test. Irs gov 1040ez You have until December 1, 2015, to satisfy this requirement. Irs gov 1040ez Self-employment. Irs gov 1040ez   You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. Irs gov 1040ez You are not considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week. Irs gov 1040ez Full-time work. Irs gov 1040ez   You can count only those weeks during which you work full time as a week of work. Irs gov 1040ez Whether you work full time during any week depends on what is usual for your type of work in your area. Irs gov 1040ez For example, you are a self-employed dentist and maintain office hours 4 days a week. Irs gov 1040ez You are considered to perform services full time if maintaining office hours 4 days a week is not unusual for other self-employed dentists in your area. Irs gov 1040ez Temporary absence from work. Irs gov 1040ez   You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes. Irs gov 1040ez Seasonal trade or business. Irs gov 1040ez   If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. Irs gov 1040ez The off-season must be less than 6 months and you must work full time before and after the off-season. Irs gov 1040ez Example. Irs gov 1040ez You own and operate a motel at a beach resort. Irs gov 1040ez The motel is closed for 5 months during the off-season. Irs gov 1040ez You work full time as the operator of the motel before and after the off-season. Irs gov 1040ez You are considered self-employed on a full-time basis during the weeks of the off-season. Irs gov 1040ez   If you were both an employee and self-employed, see Table 1 earlier, for the requirements. Irs gov 1040ez Example. Irs gov 1040ez Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for C and L Cabinet Shop. Irs gov 1040ez He generally worked at the shop about 40 hours each week. Irs gov 1040ez Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. Irs gov 1040ez Because Justin's principal place of business is the cabinet shop, he can satisfy the time test by meeting the 39-week test. Irs gov 1040ez    If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test. Irs gov 1040ez Joint Return If you are married, file a joint return, and both you and your spouse work full-time, either of you can satisfy the full-time work test. Irs gov 1040ez However, you cannot add the weeks your spouse worked to the weeks you worked to satisfy that test. Irs gov 1040ez Time Test Not Yet Met You can deduct your moving expenses on your 2013 tax return even though you have not met the time test by the date your 2013 return is due. Irs gov 1040ez You can do this if you expect to meet the 39-week test in 2014 or the 78-week test in 2014 or 2015. Irs gov 1040ez If you do not deduct your moving expenses on your 2013 return, and you later meet the time test, you can file an amended return for 2013 to take the deduction. Irs gov 1040ez See When To Deduct Expenses later, for more details. Irs gov 1040ez Failure to meet the time test. Irs gov 1040ez    If you deduct moving expenses but do not meet the time test in 2014 or 2015, you must either: Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Irs gov 1040ez Example. Irs gov 1040ez You arrive in the general area of your new job location, as an employee, on September 15, 2013. Irs gov 1040ez You deduct your moving expenses on your 2013 return, the year of the move, even though you have not yet met the time test by the date your return is due. Irs gov 1040ez If you do not meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either: Report your moving expense deduction as other income on your Form 1040 for 2014, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Irs gov 1040ez Exceptions to the Time Test You do not have to meet the time test if one of the following applies. Irs gov 1040ez You are in the Armed Forces and you moved because of a permanent change of station. Irs gov 1040ez See Members of the Armed Forces , later. Irs gov 1040ez Your main job location was outside the United States and you moved to the United States because you retired. Irs gov 1040ez See Retirees or Survivors Who Move to the United States, later. Irs gov 1040ez You are the survivor of a person whose main job location at the time of death was outside the United States. Irs gov 1040ez See Retirees or Survivors Who Move to the United States, later. Irs gov 1040ez Your job at the new location ends because of death or disability. Irs gov 1040ez You are transferred for your employer's benefit or laid off for a reason other than willful misconduct. Irs gov 1040ez For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job. Irs gov 1040ez Retirees or Survivors Who Move to the United States If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you do not have to meet the time test, discussed earlier. Irs gov 1040ez However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad. Irs gov 1040ez If you are living in the United States, retire, and then move and remain retired, you cannot claim a moving expense deduction for that move. Irs gov 1040ez United States defined. Irs gov 1040ez   For this section of this publication, the term “United States” includes the possessions of the United States. Irs gov 1040ez Retirees who were working abroad. Irs gov 1040ez   You can deduct moving expenses for a move to a new home in the United States when you permanently retire. Irs gov 1040ez However, both your former main job location and your former home must have been outside the United States. Irs gov 1040ez Permanently retired. Irs gov 1040ez   You are considered permanently retired when you cease gainful full-time employment or self-employment. Irs gov 1040ez If, at the time you retire, you intend your retirement to be permanent, you will be considered retired even though you later return to work. Irs gov 1040ez Your intention to retire permanently may be determined by: Your age and health, The customary retirement age for people who do similar work, Whether you receive retirement payments from a pension or retirement fund, and The length of time before you return to full-time work. Irs gov 1040ez Decedents. Irs gov 1040ez   Qualified deductible moving expenses are allowed on a final return (Form 1040 or 1040NR) when a taxpayer has moved and dies within the same calendar year. Irs gov 1040ez The personal representative filing on behalf of that taxpayer should complete and attach Form 3903 to the final return. Irs gov 1040ez   A personal representative can be an executor, administrator, or anyone who is in charge of the deceased person's property. Irs gov 1040ez For more information, see Publication 559, Survivors, Executors, and Administrators. Irs gov 1040ez Survivors of decedents who were working abroad. Irs gov 1040ez   If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met. Irs gov 1040ez The move is to a home in the United States. Irs gov 1040ez The move begins within 6 months after the decedent's death. Irs gov 1040ez (When a move begins is described below. Irs gov 1040ez ) The move is from the decedent's former home. Irs gov 1040ez The decedent's former home was outside the United States. Irs gov 1040ez The decedent's former home was also your home. Irs gov 1040ez When a move begins. Irs gov 1040ez   A move begins when one of the following events occurs. Irs gov 1040ez You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time. Irs gov 1040ez Your household goods and personal effects are packed and on the way to your home in the United States. Irs gov 1040ez You leave your former home to travel to your new home in the United States. Irs gov 1040ez Deductible Moving Expenses If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses, you can deduct the reasonable expenses of: Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and Traveling (including lodging but not meals) to your new home. Irs gov 1040ez You cannot deduct any expenses for meals. Irs gov 1040ez Reasonable expenses. Irs gov 1040ez   You can deduct only those expenses that are reasonable for the circumstances of your move. Irs gov 1040ez For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. Irs gov 1040ez If during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips are not deductible as moving expenses. Irs gov 1040ez Example. Irs gov 1040ez Beth's employer transferred her from Boston, Massachusetts, to Buffalo, New York. Irs gov 1040ez On her way to Buffalo, Beth drove into Canada to visit the Toronto Zoo. Irs gov 1040ez Since Beth's excursion into Canada was away from the usual Boston-Buffalo route, the expenses paid or incurred for the excursion are not deductible. Irs gov 1040ez Beth can only deduct what it would have cost to drive directly from Boston to Buffalo. Irs gov 1040ez Likewise, Beth cannot deduct any expenses, such as the cost of a hotel room, caused by the delay for sightseeing. Irs gov 1040ez Travel by car. Irs gov 1040ez   If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either: Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or The standard mileage rate of 24 cents per mile. Irs gov 1040ez Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. Irs gov 1040ez You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car. Irs gov 1040ez Member of your household. Irs gov 1040ez   You can deduct moving expenses you pay for yourself and members of your household. Irs gov 1040ez A member of your household is anyone who has both your former and new home as his or her home. Irs gov 1040ez It does not include a tenant or employee, unless that person is your dependent. Irs gov 1040ez Moves to Locations in the United States If you meet the requirements under Who Can Deduct Moving Expenses, earlier, you can deduct expenses for a move to the area of a new main job location within the United States or its possessions. Irs gov 1040ez Your move may be from one U. Irs gov 1040ez S. Irs gov 1040ez location to another or from a foreign country to the United States. Irs gov 1040ez Household goods and personal effects. Irs gov 1040ez   You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. Irs gov 1040ez For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses. Irs gov 1040ez   If you use your own car to move your things, see Travel by car, earlier. Irs gov 1040ez   You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects. Irs gov 1040ez   You can deduct the cost of shipping your car and your household pets to your new home. Irs gov 1040ez   You can deduct the cost of moving your household goods and personal effects from a place other than your former home. Irs gov 1040ez Your deduction is limited to the amount it would have cost to move them from your former home. Irs gov 1040ez Example. Irs gov 1040ez Paul Brown has been living and working in North Carolina for the last 4 years. Irs gov 1040ez Because he has been renting a small apartment, he stored some furniture at his parents' home in Georgia. Irs gov 1040ez Paul got a job in Washington, DC. Irs gov 1040ez It cost him $900 to move the furniture from his North Carolina apartment to Washington and $3,000 to move the stored furniture from Georgia to Washington. Irs gov 1040ez It would have cost $1,800 to ship the stored furniture from North Carolina to Washington. Irs gov 1040ez He can deduct only $1,800 of the $3,000 he paid. Irs gov 1040ez The amount he can deduct for moving his furniture is $2,700 ($900 + $1,800). Irs gov 1040ez You cannot deduct the cost of moving furniture you buy on the way to your new home. Irs gov 1040ez   Storage expenses. Irs gov 1040ez   You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. Irs gov 1040ez Travel expenses. Irs gov 1040ez   You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. Irs gov 1040ez This includes expenses for the day you arrive. Irs gov 1040ez    The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis. Irs gov 1040ez   You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved. Irs gov 1040ez   The members of your household do not have to travel together or at the same time. Irs gov 1040ez However, you can only deduct expenses for one trip per person. Irs gov 1040ez If you use your own car, see Travel by car, earlier. Irs gov 1040ez Example. Irs gov 1040ez   In February 2013, Josh and Robyn Black moved from Minneapolis to Washington, DC, where Josh was starting a new job. Irs gov 1040ez Josh drove the family car to Washington, DC, a trip of 1,100 miles. Irs gov 1040ez His expenses were $264. Irs gov 1040ez 00 for mileage (1,100 miles x 24 cents per mile) plus $40 for tolls and $150 for lodging, for a total of $454. Irs gov 1040ez 00. Irs gov 1040ez One week later, Robyn flew from Minneapolis to Washington, DC. Irs gov 1040ez Her only expense was her $400 plane ticket. Irs gov 1040ez The Blacks' deduction is $854. Irs gov 1040ez 00 (Josh's $454. Irs gov 1040ez 00 + Robyn's $400). Irs gov 1040ez Moves to Locations Outside the United States To deduct expenses for a move outside the United States, you must move to the area of a new place of work outside the United States and its possessions. Irs gov 1040ez You must meet the requirements under Who Can Deduct Moving Expenses , earlier. Irs gov 1040ez Deductible expenses. Irs gov 1040ez   If your move is to a location outside the United States and its possessions, you can deduct the following expenses. Irs gov 1040ez The cost of moving household goods and personal effects from your former home to your new home. Irs gov 1040ez The cost of traveling (including lodging) from your former home to your new home. Irs gov 1040ez The cost of moving household goods and personal effects to and from storage. Irs gov 1040ez The cost of storing household goods and personal effects while you are at the new job location. Irs gov 1040ez The first two items were explained earlier under Moves to Locations in the United States . Irs gov 1040ez The last two items are discussed, later. Irs gov 1040ez Moving goods and effects to and from storage. Irs gov 1040ez   You can deduct the reasonable expenses of moving your personal effects to and from storage. Irs gov 1040ez Storage expenses. Irs gov 1040ez   You can deduct the reasonable expenses of storing your household goods and personal effects for all or part of the time the new job location remains your main job location. Irs gov 1040ez Moving expenses allocable to excluded foreign income. Irs gov 1040ez   If you live and work outside the United States, you may be able to exclude from income part or all of the income you earn in the foreign country. Irs gov 1040ez You may also be able to claim a foreign housing exclusion or deduction. Irs gov 1040ez If you claim the foreign earned income or foreign housing exclusion, you cannot deduct the part of your moving expenses that relates to the excluded income. Irs gov 1040ez    Publication 54, Tax Guide for U. Irs gov 1040ez S. Irs gov 1040ez Citizens and Resident Aliens Abroad, explains how to figure the part of your moving expenses that relates to excluded income. Irs gov 1040ez You can get the publication from most U. Irs gov 1040ez S. Irs gov 1040ez embassies and consulates, or see How To Get Tax Help at the end of this publication. Irs gov 1040ez Nondeductible Expenses You cannot deduct the following items as moving expenses. Irs gov 1040ez Any part of the purchase price of your new home. Irs gov 1040ez Car tags. Irs gov 1040ez Driver's license. Irs gov 1040ez Expenses of buying or selling a home (including closing costs, mortgage fees, and points). Irs gov 1040ez Expenses of entering into or breaking a lease. Irs gov 1040ez Home improvements to help sell your home. Irs gov 1040ez Loss on the sale of your home. Irs gov 1040ez Losses from disposing of memberships in clubs. Irs gov 1040ez Mortgage penalties. Irs gov 1040ez Pre-move househunting expenses. Irs gov 1040ez Real estate taxes. Irs gov 1040ez Refitting of carpet and draperies. Irs gov 1040ez Return trips to your former residence. Irs gov 1040ez Security deposits (including any given up due to the move). Irs gov 1040ez Storage charges except those incurred in transit and for foreign moves. Irs gov 1040ez No double deduction. Irs gov 1040ez   You cannot take a moving expense deduction and a business expense deduction for the same expenses. Irs gov 1040ez You must decide if your expenses are deductible as moving expenses or as business expenses. Irs gov 1040ez For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. Irs gov 1040ez In most cases, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for one year or less. Irs gov 1040ez   See Publication 463, Travel, Entertainment, Gift, and Car Expenses, for information on deducting your business expenses. Irs gov 1040ez Reimbursements This section explains how to report a reimbursement (including advances and allowances) on your tax return. Irs gov 1040ez It covers reimbursements for any of your moving expenses discussed in this publication. Irs gov 1040ez It also explains the types of reimbursements on which your employer must withhold income, social security, and Medicare taxes. Irs gov 1040ez Types of Reimbursement Plans If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. Irs gov 1040ez For a quick overview of how to report your reimbursement and moving expenses, see Table 2 in the section on How and When To Report, later. Irs gov 1040ez Your employer should tell you what method of reimbursement is used and what records are required. Irs gov 1040ez Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Irs gov 1040ez Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Irs gov 1040ez Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. Irs gov 1040ez You must adequately account to your employer for these expenses within a reasonable period of time. Irs gov 1040ez You must return any excess reimbursement or allowance within a reasonable period of time. Irs gov 1040ez Adequate accounting. Irs gov 1040ez   You adequately account for your moving expenses by giving your employer documentation of those expenses, such as a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it. Irs gov 1040ez Documentation includes receipts, canceled checks, and bills. Irs gov 1040ez Reasonable period of time. Irs gov 1040ez   What constitutes a “reasonable period of time” depends on the facts and circumstances of your situation. Irs gov 1040ez However, regardless of the facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Irs gov 1040ez You receive an advance within 30 days of the time you have an expense. Irs gov 1040ez You adequately account for your expenses within 60 days after they were paid or incurred. Irs gov 1040ez You return any excess reimbursement within 120 days after the expense was paid or incurred. Irs gov 1040ez You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Irs gov 1040ez Excess reimbursement. Irs gov 1040ez   This includes any amount you are paid (including advances and allowances) that is more than the moving expenses that you adequately accounted for to your employer within a reasonable period of time. Irs gov 1040ez Returning excess reimbursements. Irs gov 1040ez   You must be required to return any excess reimbursement for your moving expenses to the person paying the reimbursement. Irs gov 1040ez Excess reimbursement includes any amount for which you did not adequately account within a reasonable period of time. Irs gov 1040ez For example, if you received an advance and you did not spend all the money on deductible moving expenses, or you do not have proof of all your expenses, you have an excess reimbursement. Irs gov 1040ez You meet accountable plan rules. Irs gov 1040ez   If for all reimbursements you meet the three rules for an accountable plan (listed earlier), your employer should not include any reimbursements of expenses in your income in box 1 of your Form W-2, Wage and Tax Statement. Irs gov 1040ez Instead, your employer should include the reimbursements in box 12 of your Form W-2. Irs gov 1040ez Example. Irs gov 1040ez You lived in Boston and accepted a job in Atlanta. Irs gov 1040ez Under an accountable plan, your employer reimbursed you for your actual traveling expenses from Boston to Atlanta and the cost of moving your furniture to Atlanta. Irs gov 1040ez Your employer will include the reimbursement on your Form W-2, box 12, with Code P. Irs gov 1040ez If your moving expenses are more than your reimbursement, you may be able to deduct your additional expenses (see How and When To Report, later). Irs gov 1040ez You do not meet accountable plan rules. Irs gov 1040ez   You may be reimbursed by your employer, but you may not meet all three rules for part of your expenses. Irs gov 1040ez   If your deductible expenses are reimbursed under an otherwise accountable plan but you do not return, within a reasonable period, any reimbursement of expenses for which you did not adequately account, then only the amount for which you did adequately account is considered as paid under an accountable plan. Irs gov 1040ez The remaining expenses are treated as having been reimbursed under a nonaccountable plan (discussed below). Irs gov 1040ez Reimbursement of nondeductible expenses. Irs gov 1040ez   You may be reimbursed by your employer for moving expenses, some of which are deductible expenses and some of which are not deductible. Irs gov 1040ez The reimbursements you receive for the nondeductible expenses and any allowances for miscellaneous or unspecified expenses are treated as paid under a nonaccountable plan (see below) and are included in your income. Irs gov 1040ez If you are reimbursed by your employer for the taxes you must pay (including social security and Medicare taxes) because you have received taxable moving expense reimbursements, you must pay tax on this reimbursement as well, and it is treated as paid under a nonaccountable plan. Irs gov 1040ez Nonaccountable Plans A nonaccountable plan is a reimbursement arrangement that does not meet the three rules listed earlier under Accountable Plans. Irs gov 1040ez In addition, the following payments will be treated as paid under a nonaccountable plan. Irs gov 1040ez Excess reimbursements you fail to return to your employer. Irs gov 1040ez Reimbursements of nondeductible expenses. Irs gov 1040ez See Reimbursement of nondeductible expenses, earlier. Irs gov 1040ez If an arrangement pays for your moving expenses by reducing your wages, salary, or other pay, the amount of the reduction will be treated as a payment made under a nonaccountable plan. Irs gov 1040ez This is because you are entitled to receive the full amount of your pay regardless of whether you had any moving expenses. Irs gov 1040ez If you are not sure if the moving expense reimbursement arrangement is an accountable or nonaccountable plan, ask your employer. Irs gov 1040ez Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. Irs gov 1040ez Your employer will report the total in box 1 of your Form W-2. Irs gov 1040ez Example. Irs gov 1040ez To get you to work in another city, your new employer reimburses you under an accountable plan for the $7,500 loss on the sale of your home. Irs gov 1040ez Because this is a reimbursement of a nondeductible expense, it is treated as paid under a nonaccountable plan and must be included as income in box 1 of your Form W-2. Irs gov 1040ez Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Do not include in income any moving expense payment you received under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Irs gov 1040ez These payments are made to persons displaced from their homes, businesses, or farms by federal projects. Irs gov 1040ez Tax Withholding and Estimated Tax Your employer must withhold income, social security, and Medicare taxes from reimbursements and allowances paid to you that are included in your income. Irs gov 1040ez See Reimbursements included in income, later. Irs gov 1040ez Reimbursements excluded from income. Irs gov 1040ez   Your employer should not include in your wages reimbursements paid under an accountable plan (explained earlier) for moving expenses that you: Could deduct if you had paid or incurred them, and Did not deduct in an earlier year. Irs gov 1040ez These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. Irs gov 1040ez Your employer should report these reimbursements on your Form W-2, box 12, with Code P. Irs gov 1040ez    You cannot claim a moving expense deduction for expenses covered by reimbursements excluded from income (see Accountable Plans under Types of Reimbursement Plans, earlier). Irs gov 1040ez Expenses deducted in earlier year. Irs gov 1040ez   If you receive a reimbursement this year for moving expenses deducted in an earlier year, and the reimbursement is not included as wages in box 1 of your Form W-2, you must include the reimbursement in income on Form 1040, line 21. Irs gov 1040ez Your employer should show the amount of your reimbursement in box 12 of your Form W-2. Irs gov 1040ez Reimbursements included in income. Irs gov 1040ez   Your employer must include in your income any reimbursements made (or treated as made) under a nonaccountable plan, even though they are for deductible moving expenses. Irs gov 1040ez See Nonaccountable Plans under Types of Reimbursement Plans, earlier. Irs gov 1040ez Your employer also must include in your gross income as wages any reimbursements of, or payments for, nondeductible moving expenses. Irs gov 1040ez This includes amounts your employer reimbursed you under an accountable plan (explained earlier) for meals, househunting trips, and real estate expenses. Irs gov 1040ez It also includes reimbursements that exceed your deductible expenses and that you do not return to your employer. Irs gov 1040ez Reimbursement for deductible and nondeductible expenses. Irs gov 1040ez    If your employer reimburses you for both deductible and nondeductible moving expenses, your employer must determine the amount of the reimbursement that is not taxable and not subject to withholding. Irs gov 1040ez Your employer must treat any remaining amount as taxable wages and withhold income, social security, and Medicare taxes. Irs gov 1040ez Amount of income tax withheld. Irs gov 1040ez   If the reimbursements or allowances you receive are taxable, the amount of income tax your employer will withhold depends on several factors. Irs gov 1040ez It depends in part on whether income tax is withheld from your regular wages, on whether the reimbursements and allowances are added to your regular wages, and on any information you have given to your employer on Form W-4, Employee's Withholding Allowance Certificate. Irs gov 1040ez   Your employer can treat your reimbursements as supplemental wages and not include the reimbursements and allowances in your regular wages. Irs gov 1040ez The employer can withhold income tax on supplemental wages at a flat rate which may be different from your regular tax rate. Irs gov 1040ez Estimated tax. Irs gov 1040ez    If you must make estimated tax payments, you need to take into account any taxable reimbursements and deductible moving expenses in figuring your estimated tax. Irs gov 1040ez For details about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Irs gov 1040ez How and When To Report This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move. Irs gov 1040ez For a quick overview, see Table 2, later. Irs gov 1040ez Form 3903 Use Form 3903 to figure your moving expense deduction. Irs gov 1040ez Use a separate Form 3903 for each move for which you are deducting expenses. Irs gov 1040ez Do not file Form 3903 if all of the following apply. Irs gov 1040ez You moved to a location outside the United States in an earlier year. Irs gov 1040ez You are claiming only storage fees while you were away from the United States. Irs gov 1040ez Any amount your employer paid for the storage fees is included as wages in box 1 of your Form W-2. Irs gov 1040ez Instead, enter the storage fees (after the reduction for the part that is allocable to excluded income) on Form 1040, line 26, and enter “Storage” on the dotted line next to the amount. Irs gov 1040ez If you meet the special rules for members of the Armed Forces, see How to complete Form 3903 for members of the Armed Forces under Members of the Armed Forces, later. Irs gov 1040ez Completing Form 3903. Irs gov 1040ez   Complete Worksheet 1, earlier, or the Distance Test Worksheet in the instructions for Form 3903 to see whether you meet the distance test. Irs gov 1040ez If so, complete lines 1 through 3 of the form using your actual expenses (except, if you use your own car, you can figure expenses based on the standard mileage rate, instead of actual amounts for gas and oil). Irs gov 1040ez Enter on line 4 the total amount of your moving expense reimbursement that was excluded from your wages. Irs gov 1040ez This excluded amount should be identified on Form W-2, box 12, with code P. Irs gov 1040ez Expenses greater than reimbursement. Irs gov 1040ez   If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Irs gov 1040ez This is your moving expense deduction. Irs gov 1040ez Expenses equal to or less than reimbursement. Irs gov 1040ez    If line 3 is equal to or less than line 4, you have no moving expense deduction. Irs gov 1040ez Subtract line 3 from line 4 and, if the result is more than zero, include it as income on Form 1040, line 7. Irs gov 1040ez Table 2. Irs gov 1040ez Reporting Your Moving Expenses and Reimbursements IF your Form W-2 shows. Irs gov 1040ez . Irs gov 1040ez . Irs gov 1040ez AND you have. Irs gov 1040ez . Irs gov 1040ez . Irs gov 1040ez THEN. Irs gov 1040ez . Irs gov 1040ez . Irs gov 1040ez your reimbursement reported only  in box 12 with code P moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses* and reimbursements. Irs gov 1040ez your reimbursement reported only  in box 12 with code P moving expenses equal to the amount  in box 12 do not file Form 3903. Irs gov 1040ez your reimbursement divided  between box 12 and box 1 moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses,* but only the  reimbursements reported in box 12 of  Form W-2. Irs gov 1040ez your entire reimbursement reported  as wages in box 1 moving expenses file Form 3903 showing all allowable  expenses,* but do not show any  reimbursements. Irs gov 1040ez no reimbursement moving expenses file Form 3903 showing all allowable  expenses. Irs gov 1040ez * * See Deductible Moving Expenses, earlier, for allowable expenses. Irs gov 1040ez    Where to deduct. Irs gov 1040ez   Deduct your moving expenses on Form 1040, line 26. Irs gov 1040ez The amount of moving expenses you can deduct is shown on Form 3903, line 5. Irs gov 1040ez    You cannot deduct moving expenses on Form 1040EZ or Form 1040A. Irs gov 1040ez   When To Deduct Expenses You may have a choice of when to deduct your moving expenses. Irs gov 1040ez Expenses not reimbursed. Irs gov 1040ez   If you were not reimbursed, deduct your moving expenses in the year you paid or incurred the expenses. Irs gov 1040ez Example. Irs gov 1040ez In December 2012, your employer transferred you to another city in the United States, where you still work. Irs gov 1040ez You are single and were not reimbursed for your moving expenses. Irs gov 1040ez In 2012, you paid for moving your furniture and deducted these expenses on your 2012 tax return. Irs gov 1040ez In January 2013, you paid for travel to the new city. Irs gov 1040ez You can deduct these additional expenses on your 2013 tax return. Irs gov 1040ez Expenses reimbursed. Irs gov 1040ez   If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. Irs gov 1040ez If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. Irs gov 1040ez See Choosing when to deduct, next. Irs gov 1040ez   If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21. Irs gov 1040ez Choosing when to deduct. Irs gov 1040ez   If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if: You paid the expenses in a year before the year of reimbursement, or You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year. Irs gov 1040ez How to make the choice. Irs gov 1040ez   You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year. Irs gov 1040ez    You cannot deduct any moving expenses for which you received a reimbursement that was not included in your income. Irs gov 1040ez Illustrated Example Tom and Peggy Smith are married and have two children. Irs gov 1040ez They owned a home in Detroit where Tom worked. Irs gov 1040ez On February 8, 2013, Tom's employer told him that he would be transferred to San Diego as of April 10 that year. Irs gov 1040ez Peggy flew to San Diego on March 1 to look for a new home. Irs gov 1040ez She put a down payment of $25,000 on a house being built and returned to Detroit on March 4. Irs gov 1040ez The Smiths sold their Detroit home for $1,500 less than they paid for it. Irs gov 1040ez They contracted to have their personal effects moved to San Diego on April 3. Irs gov 1040ez The family drove to San Diego where they found that their new home was not finished. Irs gov 1040ez They stayed in a nearby motel until the house was ready on May 1. Irs gov 1040ez On April 10, Tom went to work in the San Diego plant where he still works. Irs gov 1040ez Their records for the move show: 1) Peggy's pre-move househunting  trip:       Travel and lodging   $ 449       Meals   75   $ 524 2) Down payment on San Diego  home 25,000 3) Real estate commission paid on  sale of Detroit home 3,500 4) Loss on sale of Detroit home (not  including real estate commission) 1,500 5) Amount paid for moving personal  effects (furniture, other household  goods, etc. Irs gov 1040ez ) 8,000 6) Expenses of driving to San Diego:       Mileage (Start 14,278;  End 16,478) 2,200 miles at 24 cents a mile   $ 528       Lodging   180       Meals   320   1,028 7) Cost of temporary living  expenses in San Diego:       Motel rooms   $1,450       Meals   2,280   3,730 Total $43,282   Tom was reimbursed $10,907 under an accountable plan. Irs gov 1040ez His employer gave him the following breakdown of the reimbursement that was allowed under the employer's plan. Irs gov 1040ez Moving personal effects   $6,800 Travel (and lodging) to San Diego   708 Travel (and lodging) for househunting trip   449 Lodging for temporary quarters   1,450 Loss on sale of home   1,500 Total reimbursement   $10,907 The employer included this reimbursement on Tom's Form W-2 for the year. Irs gov 1040ez The reimbursement of allowable expenses, $7,508 for moving household goods and travel to San Diego, was included in box 12 of Form W-2. Irs gov 1040ez His employer identified this amount with code P. Irs gov 1040ez The employer included the balance, $3,399 reimbursement of nonallowable expenses, in box 1 of Form W-2 with Tom's other wages. Irs gov 1040ez Tom must include this amount on Form 1040, line 7. Irs gov 1040ez The employer withholds taxes from the $3,399, as discussed under Reimbursement for deductible and nondeductible expenses under Tax Withholding and Estimated Tax, earlier. Irs gov 1040ez Also, Tom's employer could have given him a separate Form W-2 for his moving expense reimbursement. Irs gov 1040ez To figure his tax deduction for moving expenses, Tom enters the following amounts on Form 3903. Irs gov 1040ez Item 5 — moving personal effects (line 1)   $8,000 Item 6 — driving to San Diego ($528 + $180)  (line 2)   708 Total tax deductible moving expenses (line 3)   $8,708 Minus: Reimbursement included in box 12  of Form W-2 (line 4)   7,508 Tax deduction for moving expenses (line 5)   $1,200   Tom's Form 3903 is shown, later. Irs gov 1040ez He also enters his deduction, $1,200, on Form 1040, line 26. Irs gov 1040ez Nondeductible expenses. Irs gov 1040ez   Of the $43,282 expenses that Tom and Peggy incurred, the following items totaling $34,574 ($43,282 – $8,708) cannot be deducted. Irs gov 1040ez Item 1 — pre-move househunting expenses of $524. Irs gov 1040ez Item 2 — the $25,000 down payment on the San Diego home. Irs gov 1040ez If any part of it were for payment of deductible taxes or interest on the mortgage on the house, that part would be deductible as an itemized deduction. Irs gov 1040ez Item 3 — the $3,500 real estate commission paid on the sale of the Detroit home. Irs gov 1040ez The commission is used to figure the gain or loss on the sale. Irs gov 1040ez Item 4 — the $1,500 loss on the sale of the Detroit home. Irs gov 1040ez Item 6 — the $320 expense for meals while driving to San Diego. Irs gov 1040ez (However, the lodging and car expenses are deductible. Irs gov 1040ez ) Item 7 — temporary living expenses of $3,730. Irs gov 1040ez    This image is too large to be displayed in the current screen. Irs gov 1040ez Please click the link to view the image. Irs gov 1040ez 2012 Form 3903 Moving Expenses Members of the Armed Forces If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet the distance and time tests, discussed earlier. Irs gov 1040ez You can deduct your unreimbursed moving expenses. Irs gov 1040ez A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. Irs gov 1040ez The move must occur within one year of ending your active duty or within the period allowed under the Joint Travel Regulations. Irs gov 1040ez Spouse and dependents. Irs gov 1040ez   If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to: The place of enlistment, The member's, spouse's, or dependent's home of record, or A nearer point in the United States. Irs gov 1040ez   If the military moves you, your spouse, and dependents, to or from separate locations, the moves are treated as a single move to your new main job location. Irs gov 1040ez Services or reimbursements provided by government. Irs gov 1040ez   Do not include in income the value of moving and storage services provided by the government because of a permanent change of station. Irs gov 1040ez In general, if the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government must include the excess in your wages on Form W-2. Irs gov 1040ez However, the excess portion of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance is not included in income and should not be included in box 1 of Form W-2. Irs gov 1040ez   If your reimbursements or allowances are less than your actual moving expenses, do not include the reimbursements or allowances in income. Irs gov 1040ez You can deduct the expenses that are more than your reimbursements. Irs gov 1040ez See Deductible Moving Expenses, earlier. Irs gov 1040ez How to complete Form 3903 for members of the Armed Forces. Irs gov 1040ez    Take the following steps. Irs gov 1040ez Complete lines 1 through 3 of the form, using your actual expenses. Irs gov 1040ez Do not include any expenses for moving services provided by the government. Irs gov 1040ez Also, do not include any expenses that were reimbursed by an allowance you do not have to include in your income. Irs gov 1040ez Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. Irs gov 1040ez Do not include the value of moving or storage services provided by the government. Irs gov 1040ez Also, do not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance. Irs gov 1040ez Complete line 5. Irs gov 1040ez If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Irs gov 1040ez This is your moving expense deduction. Irs gov 1040ez If line 3 is equal to or less than line 4, you do not have a moving expense deduction. Irs gov 1040ez Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7. Irs gov 1040ez If the military moves you, your spouse and dependents, to or from different locations, treat these moves as a single move. Irs gov 1040ez    Do not deduct any expenses for moving or storage services provided by the government. Irs gov 1040ez How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Irs gov 1040ez Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Irs gov 1040ez Free help with your tax return. Irs gov 1040ez   Free help in preparing your return is available nationwide from IRS-certified volunteers. Irs gov 1040ez The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Irs gov 1040ez The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Irs gov 1040ez Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Irs gov 1040ez Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Irs gov 1040ez To find the nearest VITA or TCE site, visit IRS. Irs gov 1040ez gov or call 1-800-906-9887. Irs gov 1040ez   As part of the TCE program, AARP offers the Tax-Aide counseling program. Irs gov 1040ez To find the nearest AARP Tax-Aide site, visit AARP's website at www. Irs gov 1040ez aarp. Irs gov 1040ez org/money/taxaide or call 1-888-227-7669. Irs gov 1040ez   For more information on these programs, go to IRS. Irs gov 1040ez gov and enter “VITA” in the search box. Irs gov 1040ez Internet. Irs gov 1040ez IRS. Irs gov 1040ez gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Irs gov 1040ez Apply for an Employer Identification Number (EIN). Irs gov 1040ez Go to IRS. Irs gov 1040ez gov and enter Apply for an EIN in the search box. Irs gov 1040ez Request an Electronic Filing PIN by going to IRS. Irs gov 1040ez gov and entering Electronic Filing PIN in the search box. Irs gov 1040ez Check the status of your 2013 refund with Where's My Refund? Go to IRS. Irs gov 1040ez gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs gov 1040ez If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs gov 1040ez Check the status of your amended return. Irs gov 1040ez Go to IRS. Irs gov 1040ez gov and enter Where's My Amended Return in the search box. Irs gov 1040ez Download forms, instructions, and publications, including some accessible versions. Irs gov 1040ez Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Irs gov 1040ez gov or IRS2Go. Irs gov 1040ez Tax return and tax account transcripts are generally available for the current year and past three years. Irs gov 1040ez Figure your income tax withholding with the IRS Withholding Calculator on IRS. Irs gov 1040ez gov. Irs gov 1040ez Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Irs gov 1040ez Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Irs gov 1040ez gov. Irs gov 1040ez Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Irs gov 1040ez gov or IRS2Go. Irs gov 1040ez Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Irs gov 1040ez An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Irs gov 1040ez Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Irs gov 1040ez If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Irs gov 1040ez Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Irs gov 1040ez Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Irs gov 1040ez gov. Irs gov 1040ez Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs gov 1040ez The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs gov 1040ez Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Irs gov 1040ez AARP offers the Tax-Aide counseling program as part of the TCE program. Irs gov 1040ez Visit AARP's website to find the nearest Tax-Aide location. Irs gov 1040ez Research your tax questions. Irs gov 1040ez Search publications and instructions by topic or keyword. Irs gov 1040ez Read the Internal Revenue Code, regulations, or other official guidance. Irs gov 1040ez Read Internal Revenue Bulletins. Irs gov 1040ez Sign up to receive local and national tax news by email. Irs gov 1040ez Phone. Irs gov 1040ez You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Irs gov 1040ez Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Irs gov 1040ez Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Irs gov 1040ez Call to locate the nearest volunteer help site, 1-800-906-9887. Irs gov 1040ez Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs gov 1040ez The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Irs gov 1040ez Most VITA and TCE sites offer free electronic filing. Irs gov 1040ez Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Irs gov 1040ez Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Irs gov 1040ez Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Irs gov 1040ez The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Irs gov 1040ez If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs gov 1040ez Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Irs gov 1040ez Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs gov 1040ez Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Irs gov 1040ez Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Irs gov 1040ez Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Irs gov 1040ez You should receive your order within 10 business days. Irs gov 1040ez Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Irs gov 1040ez Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Irs gov 1040ez Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Irs gov 1040ez Call to ask tax questions, 1-800-829-1040. Irs gov 1040ez Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Irs gov 1040ez The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Irs gov 1040ez These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Irs gov 1040ez gsa. Irs gov 1040ez gov/fedrelay. Irs gov 1040ez Walk-in. Irs gov 1040ez You can find a selection of forms, publications and services — in-person, face-to-face. Irs gov 1040ez Products. Irs gov 1040ez You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Irs gov 1040ez Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Irs gov 1040ez Services. Irs gov 1040ez You can walk in to your local TAC most business days for personal, face-to-face tax help. Irs gov 1040ez An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Irs gov 1040ez If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Irs gov 1040ez No appointment is necessary—just walk in. Irs gov 1040ez Before visiting, check www. Irs gov 1040ez irs. Irs gov 1040ez gov/localcontacts for hours of operation and services provided. Irs gov 1040ez Mail. Irs gov 1040ez You can send your order for forms, instructions, and publications to the address below. Irs gov 1040ez You should receive a response within 10 business days after your request is received. Irs gov 1040ez  Internal Revenue Service 1201 N. Irs gov 1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Irs gov 1040ez   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Irs gov 1040ez Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Irs gov 1040ez What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Irs gov 1040ez We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Irs gov 1040ez You face (or your business is facing) an immediate threat of adverse action. Irs gov 1040ez You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Irs gov 1040ez   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Irs gov 1040ez Here's why we can help: TAS is an independent organization within the IRS. Irs gov 1040ez Our advocates know how to work with the IRS. Irs gov 1040ez Our services are free and tailored to meet your needs. Irs gov 1040ez We have offices in every state, the District of Columbia, and Puerto Rico. Irs gov 1040ez How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Irs gov 1040ez irs. Irs gov 1040ez gov/advocate, or call us toll-free at 1-877-777-4778. Irs gov 1040ez How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Irs gov 1040ez If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Irs gov 1040ez irs. Irs gov 1040ez gov/sams. Irs gov 1040ez Low Income Taxpayer Clinics. Irs gov 1040ez   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Irs gov 1040ez Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Irs gov 1040ez Visit www. Irs gov 1040ez TaxpayerAdvocate. Irs gov 1040ez irs. Irs gov 1040ez gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Irs gov 1040ez Prev  Up  Next   Home   More Online Publications
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Memorial Day

Memorial Day is a federal holiday observed the last Monday in May.


Memorial Day

  • History of Memorial Day  – The Department of Veterans Affairs takes us back to the 1860s, when it all began.
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The Irs Gov 1040ez

Irs gov 1040ez 4. Irs gov 1040ez   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Irs gov 1040ez Rent-to-own contract. Irs gov 1040ez What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? Introduction The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Irs gov 1040ez MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Irs gov 1040ez Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Irs gov 1040ez To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Irs gov 1040ez This chapter explains how to determine which MACRS depreciation system applies to your property. Irs gov 1040ez It also discusses other information you need to know before you can figure depreciation under MACRS. Irs gov 1040ez This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Irs gov 1040ez It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Irs gov 1040ez Finally, it explains when and how to recapture MACRS depreciation. Irs gov 1040ez Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Irs gov 1040ez Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Irs gov 1040ez You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Irs gov 1040ez If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Irs gov 1040ez Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Irs gov 1040ez If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Irs gov 1040ez Required use of ADS. Irs gov 1040ez   You must use ADS for the following property. Irs gov 1040ez Listed property used 50% or less in a qualified business use. Irs gov 1040ez See chapter 5 for information on listed property. Irs gov 1040ez Any tangible property used predominantly outside the United States during the year. Irs gov 1040ez Any tax-exempt use property. Irs gov 1040ez Any tax-exempt bond-financed property. Irs gov 1040ez All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Irs gov 1040ez Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Irs gov 1040ez If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Irs gov 1040ez Electing ADS. Irs gov 1040ez   Although your property may qualify for GDS, you can elect to use ADS. Irs gov 1040ez The election generally must cover all property in the same property class that you placed in service during the year. Irs gov 1040ez However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Irs gov 1040ez Once you make this election, you can never revoke it. Irs gov 1040ez   You make the election by completing line 20 in Part III of Form 4562. Irs gov 1040ez Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Irs gov 1040ez These property classes are also listed under column (a) in section B, Part III, of Form 4562. Irs gov 1040ez For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Irs gov 1040ez 3-year property. Irs gov 1040ez Tractor units for over-the-road use. Irs gov 1040ez Any race horse over 2 years old when placed in service. Irs gov 1040ez (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Irs gov 1040ez ) Any other horse (other than a race horse) over 12 years old when placed in service. Irs gov 1040ez Qualified rent-to-own property (defined later). Irs gov 1040ez 5-year property. Irs gov 1040ez Automobiles, taxis, buses, and trucks. Irs gov 1040ez Computers and peripheral equipment. Irs gov 1040ez Office machinery (such as typewriters, calculators, and copiers). Irs gov 1040ez Any property used in research and experimentation. Irs gov 1040ez Breeding cattle and dairy cattle. Irs gov 1040ez Appliances, carpets, furniture, etc. Irs gov 1040ez , used in a residential rental real estate activity. Irs gov 1040ez Certain geothermal, solar, and wind energy property. Irs gov 1040ez 7-year property. Irs gov 1040ez Office furniture and fixtures (such as desks, files, and safes). Irs gov 1040ez Agricultural machinery and equipment. Irs gov 1040ez Any property that does not have a class life and has not been designated by law as being in any other class. Irs gov 1040ez Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Irs gov 1040ez Any natural gas gathering line placed in service after April 11, 2005. Irs gov 1040ez See Natural gas gathering line and electric transmission property , later. Irs gov 1040ez 10-year property. Irs gov 1040ez Vessels, barges, tugs, and similar water transportation equipment. Irs gov 1040ez Any single purpose agricultural or horticultural structure. Irs gov 1040ez Any tree or vine bearing fruits or nuts. Irs gov 1040ez Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Irs gov 1040ez 15-year property. Irs gov 1040ez Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Irs gov 1040ez Any retail motor fuels outlet (defined later), such as a convenience store. Irs gov 1040ez Any municipal wastewater treatment plant. Irs gov 1040ez Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Irs gov 1040ez Any qualified restaurant property (defined later) placed in service before January 1, 2014. Irs gov 1040ez Initial clearing and grading land improvements for gas utility property. Irs gov 1040ez Electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity placed in service after April 11, 2005. Irs gov 1040ez See Natural gas gathering line and electric transmission property , later. Irs gov 1040ez Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Irs gov 1040ez Any qualified retail improvement property placed in service before January 1, 2014. Irs gov 1040ez 20-year property. Irs gov 1040ez Farm buildings (other than single purpose agricultural or horticultural structures). Irs gov 1040ez Municipal sewers not classified as 25-year property. Irs gov 1040ez Initial clearing and grading land improvements for electric utility transmission and distribution plants. Irs gov 1040ez 25-year property. Irs gov 1040ez This class is water utility property, which is either of the following. Irs gov 1040ez Property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20-year property. Irs gov 1040ez Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Irs gov 1040ez Residential rental property. Irs gov 1040ez This is any building or structure, such as a rental home (including a mobile home), if 80% or more of its gross rental income for the tax year is from dwelling units. Irs gov 1040ez A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Irs gov 1040ez It does not include a unit in a hotel, motel, or other establishment where more than half the units are used on a transient basis. Irs gov 1040ez If you occupy any part of the building or structure for personal use, its gross rental income includes the fair rental value of the part you occupy. Irs gov 1040ez Nonresidential real property. Irs gov 1040ez This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Irs gov 1040ez 5 years. Irs gov 1040ez Qualified rent-to-own property. Irs gov 1040ez   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Irs gov 1040ez It is tangible personal property generally used in the home for personal use. Irs gov 1040ez It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Irs gov 1040ez Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Irs gov 1040ez   If some of the property you rent to others under a rent-to-own agreement is of a type that may be used by the renters for either personal or business purposes, you still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Irs gov 1040ez However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Irs gov 1040ez Rent-to-own dealer. Irs gov 1040ez   You are a rent-to-own dealer if you meet all the following requirements. Irs gov 1040ez You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Irs gov 1040ez A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Irs gov 1040ez The property is tangible personal property of a type generally used within the home for personal use. Irs gov 1040ez Rent-to-own contract. Irs gov 1040ez   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Irs gov 1040ez Provides a beginning date and a maximum period of time, not to exceed 156 weeks or 36 months from the beginning date, for which the contract can be in effect (including renewals or options to extend). Irs gov 1040ez Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Irs gov 1040ez If the payments are decreasing, no payment can be less than 40% of the largest payment. Irs gov 1040ez Provides for total payments that generally exceed the normal retail price of the property plus interest. Irs gov 1040ez Provides for total payments that do not exceed $10,000 for each item of property. Irs gov 1040ez Provides that the customer has no legal obligation to make all payments outlined in the contract and that, at the end of each weekly or monthly payment period, the customer can either continue to use the property by making the next payment or return the property in good working order with no further obligations and no entitlement to a return of any prior payments. Irs gov 1040ez Provides that legal title to the property remains with the rent-to-own dealer until the customer makes either all the required payments or the early purchase payments required under the contract to acquire legal title. Irs gov 1040ez Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Irs gov 1040ez Motorsports entertainment complex. Irs gov 1040ez   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Irs gov 1040ez The events must be open to the public for the price of admission. Irs gov 1040ez Qualified smart electric grid system. Irs gov 1040ez   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service after October 3, 2008, by a taxpayer who is a supplier of electrical energy or a provider of electrical energy services. Irs gov 1040ez Smart grid property includes electronics and related equipment that is capable of: Sensing, collecting, and monitoring data of or from all portions of a utility's electric distribution grid, Providing real-time, two-way communications to monitor or to manage the grid, and Providing real-time analysis of an event prediction based on collected data that can be used to provide electric distribution system reliability, quality, and performance. Irs gov 1040ez Retail motor fuels outlet. Irs gov 1040ez   Real property is a retail motor fuels outlet if it is used to a substantial extent in the retail marketing of petroleum or petroleum products (whether or not it is also used to sell food or other convenience items) and meets any one of the following three tests. Irs gov 1040ez It is not larger than 1,400 square feet. Irs gov 1040ez 50% or more of the gross revenues generated from the property are derived from petroleum sales. Irs gov 1040ez 50% or more of the floor space in the property is devoted to petroleum marketing sales. Irs gov 1040ez A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Irs gov 1040ez Qualified leasehold improvement property. Irs gov 1040ez    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Irs gov 1040ez   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Irs gov 1040ez A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Irs gov 1040ez Examples include the following. Irs gov 1040ez A complete liquidation of a subsidiary. Irs gov 1040ez A transfer to a corporation controlled by the transferor. Irs gov 1040ez An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Irs gov 1040ez Qualified restaurant property. Irs gov 1040ez   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Irs gov 1040ez Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Irs gov 1040ez Qualified smart electric meter. Irs gov 1040ez   A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier of electric energy or a provider of electric energy services and which is capable of being used by you as part of a system that: Measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day; Provides for the exchange of information between the supplier or provider and the customer's smart electric meter in support of time-based rates or other forms of demand response; Provides data to the supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Irs gov 1040ez Net metering means allowing a customer a credit, if any, as complies with applicable federal and state laws and regulations for providing electricity to the supplier or provider. Irs gov 1040ez Natural gas gathering line and electric transmission property. Irs gov 1040ez   Any natural gas gathering line placed in service after April 11, 2005, is treated as 7-year property, and electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Irs gov 1040ez The original use of the property must have begun with you after April 11, 2005. Irs gov 1040ez Original use means the first use to which the property is put, whether or not by you. Irs gov 1040ez Therefore, property used by any person before April 12, 2005, is not original use. Irs gov 1040ez Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Irs gov 1040ez However, original use does not include the cost of reconditioned or rebuilt property you acquired. Irs gov 1040ez Property containing used parts will not be treated as reconditioned or rebuilt if the cost of the used parts is not more than 20% of the total cost of the property. Irs gov 1040ez The property must not be placed in service under a binding contract in effect before April 12, 2005. Irs gov 1040ez The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Irs gov 1040ez Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Irs gov 1040ez What Is the Placed in Service Date? You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. Irs gov 1040ez The placed in service date for your property is the date the property is ready and available for a specific use. Irs gov 1040ez It is therefore not necessarily the date it is first used. Irs gov 1040ez If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Irs gov 1040ez See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Irs gov 1040ez What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Irs gov 1040ez For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Irs gov 1040ez Reduce that amount by any credits and deductions allocable to the property. Irs gov 1040ez The following are examples of some credits and deductions that reduce basis. Irs gov 1040ez Any deduction for section 179 property. Irs gov 1040ez Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Irs gov 1040ez Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Irs gov 1040ez Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Irs gov 1040ez Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Irs gov 1040ez Any deduction for removal of barriers to the disabled and the elderly. Irs gov 1040ez Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Irs gov 1040ez Any special depreciation allowance. Irs gov 1040ez Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Irs gov 1040ez For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Irs gov 1040ez Enter the basis for depreciation under column (c) in Part III of Form 4562. Irs gov 1040ez For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Irs gov 1040ez Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Irs gov 1040ez It is determined based on the depreciation system (GDS or ADS) used. Irs gov 1040ez Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Irs gov 1040ez Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Irs gov 1040ez 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Irs gov 1040ez 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Irs gov 1040ez 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Irs gov 1040ez 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Irs gov 1040ez 431. Irs gov 1040ez 5 years for property placed in service before May 13, 1993 (or before January 1, 1994, if the purchase or construction of the property is under a binding contract in effect before May 13, 1993, or if construction began before May 13, 1993). Irs gov 1040ez The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Irs gov 1040ez Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Irs gov 1040ez Enter the appropriate recovery period on Form 4562 under column (d) in section B of Part III, unless already shown (for 25-year property, residential rental property, and nonresidential real property). Irs gov 1040ez Office in the home. Irs gov 1040ez   If your home is a personal-use single family residence and you begin to use part of your home as an office, depreciate that part of your home as nonresidential real property over 39 years (31. Irs gov 1040ez 5 years if you began using it for business before May 13, 1993). Irs gov 1040ez However, if your home is an apartment in an apartment building that you own and the building is residential rental property as defined earlier under Which Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Irs gov 1040ez 5 years. Irs gov 1040ez See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Irs gov 1040ez Home changed to rental use. Irs gov 1040ez   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Irs gov 1040ez 5 years. Irs gov 1040ez Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Irs gov 1040ez The following table shows these shorter recovery periods. Irs gov 1040ez Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Irs gov 1040ez Use this chart to find the correct percentage table to use for qualified Indian reservation property. Irs gov 1040ez IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Irs gov 1040ez   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Irs gov 1040ez You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Irs gov 1040ez The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Irs gov 1040ez   The following property is not qualified property. Irs gov 1040ez Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Irs gov 1040ez Property acquired directly or indirectly from a related person. Irs gov 1040ez Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Irs gov 1040ez These activities are defined in section 4 of the Indian Regulatory Act (25 U. Irs gov 1040ez S. Irs gov 1040ez C. Irs gov 1040ez 2703). Irs gov 1040ez Any property you must depreciate under ADS. Irs gov 1040ez Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Irs gov 1040ez Qualified infrastructure property. Irs gov 1040ez   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Irs gov 1040ez Qualified infrastructure property is property that meets all the following rules. Irs gov 1040ez It is qualified property, as defined earlier, except that it is outside the reservation. Irs gov 1040ez It benefits the tribal infrastructure. Irs gov 1040ez It is available to the general public. Irs gov 1040ez It is placed in service in connection with the active conduct of a trade or business within a reservation. Irs gov 1040ez Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Irs gov 1040ez Related person. Irs gov 1040ez   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Irs gov 1040ez Indian reservation. Irs gov 1040ez   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Irs gov 1040ez S. Irs gov 1040ez C. Irs gov 1040ez 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Irs gov 1040ez S. Irs gov 1040ez C. Irs gov 1040ez 1903(10)). Irs gov 1040ez Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Irs gov 1040ez For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Irs gov 1040ez Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Irs gov 1040ez The following table shows some of the ADS recovery periods. Irs gov 1040ez Property Recovery  Period Rent-to-own property 4 years Automobiles and light duty trucks 5 years Computers and peripheral equipment 5 years High technology telephone station equipment installed on customer premises 5 years High technology medical equipment 5 years Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit or nuts 20 years Initial clearing and grading land  improvements for gas utility property 20 years Initial clearing and grading land  improvements for electric utility  transmission and distribution plants 25 years Electric transmission property used in the transmission at 69 or more kilovolts of electricity 30 years Natural gas distribution lines 35 years Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Irs gov 1040ez Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Irs gov 1040ez Tax-exempt use property subject to a lease. Irs gov 1040ez   The ADS recovery period for any property leased under a lease agreement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership) cannot be less than 125% of the lease term. Irs gov 1040ez Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Irs gov 1040ez See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Irs gov 1040ez Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Irs gov 1040ez The recovery period begins on the later of the following dates. Irs gov 1040ez The date you place the addition or improvement in service. Irs gov 1040ez The date you place in service the property to which you made the addition or improvement. Irs gov 1040ez If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Irs gov 1040ez Example. Irs gov 1040ez You own a rental home that you have been renting out since 1981. Irs gov 1040ez If you put an addition on the home and place the addition in service this year, you would use MACRS to figure your depreciation deduction for the addition. Irs gov 1040ez Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Irs gov 1040ez 5 years because the home to which the addition is made would be residential rental property if you had placed it in service this year. Irs gov 1040ez Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Irs gov 1040ez The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Irs gov 1040ez The mid-month convention. Irs gov 1040ez   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Irs gov 1040ez   Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. Irs gov 1040ez This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Irs gov 1040ez   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Irs gov 1040ez The mid-quarter convention. Irs gov 1040ez   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year. Irs gov 1040ez   Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. Irs gov 1040ez This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Irs gov 1040ez   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Irs gov 1040ez    For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. Irs gov 1040ez However, it does not reflect any reduction in basis for any special depreciation allowance. Irs gov 1040ez The half-year convention. Irs gov 1040ez   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Irs gov 1040ez   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Irs gov 1040ez This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Irs gov 1040ez   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Irs gov 1040ez Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Irs gov 1040ez The 200% declining balance method over a GDS recovery period. Irs gov 1040ez The 150% declining balance method over a GDS recovery period. Irs gov 1040ez The straight line method over a GDS recovery period. Irs gov 1040ez The straight line method over an ADS recovery period. Irs gov 1040ez For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Irs gov 1040ez If you made this election, continue to use the same method and recovery period for that property. Irs gov 1040ez Table 4–1 lists the types of property you can depreciate under each method. Irs gov 1040ez It also gives a brief explanation of the method, including any benefits that may apply. Irs gov 1040ez Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate it under GDS using the 150% declining balance method unless you are a farmer who must depreciate the property under ADS using the straight line method or you elect to depreciate the property under GDS or ADS using the straight line method. Irs gov 1040ez You can depreciate real property using the straight line method under either GDS or ADS. Irs gov 1040ez Fruit or nut trees and vines. Irs gov 1040ez   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Irs gov 1040ez ADS required for some farmers. Irs gov 1040ez   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Irs gov 1040ez You must use ADS for all property you place in service in any year the election is in effect. Irs gov 1040ez See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Irs gov 1040ez Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Irs gov 1040ez You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Irs gov 1040ez However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs gov 1040ez Attach the election to the amended return and write “Filed pursuant to section 301. Irs gov 1040ez 9100-2” on the election statement. Irs gov 1040ez File the amended return at the same address you filed the original return. Irs gov 1040ez Once you make the election, you cannot change it. Irs gov 1040ez If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Irs gov 1040ez However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Irs gov 1040ez 150% election. Irs gov 1040ez   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Irs gov 1040ez Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Irs gov 1040ez Straight line election. Irs gov 1040ez   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Irs gov 1040ez Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Irs gov 1040ez Election of ADS. Irs gov 1040ez   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Irs gov 1040ez ADS uses the straight line method of depreciation over fixed ADS recovery periods. Irs gov 1040ez Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Irs gov 1040ez   Make the election by completing line 20 in Part III of Form 4562. Irs gov 1040ez Farm property. Irs gov 1040ez   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Irs gov 1040ez The straight line method over a GDS recovery period. Irs gov 1040ez The straight line method over an ADS recovery period. Irs gov 1040ez Table 4-1. Irs gov 1040ez Depreciation Methods Note. Irs gov 1040ez The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Irs gov 1040ez Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction GDS using 150% DB • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1 GDS using SL • Nonresidential real property • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • Provides for equal yearly deductions (except for the first and last years) ADS using SL • Listed property used 50% or less for business • Property used predominantly outside the U. Irs gov 1040ez S. Irs gov 1040ez  • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Irs gov 1040ez 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Irs gov 1040ez Then, you are ready to figure your depreciation deduction. Irs gov 1040ez You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Irs gov 1040ez Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Irs gov 1040ez These percentage tables are in Appendix A near the end of this publication. Irs gov 1040ez Which table to use. Irs gov 1040ez    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Irs gov 1040ez The percentage tables immediately follow the guide. Irs gov 1040ez Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Irs gov 1040ez You must apply the rates in the percentage tables to your property's unadjusted basis. Irs gov 1040ez You cannot use the percentage tables for a short tax year. Irs gov 1040ez See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Irs gov 1040ez Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Irs gov 1040ez You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Irs gov 1040ez Basis adjustments other than those made due to the items listed in (4) include an increase in basis for the recapture of a clean-fuel deduction or credit and a reduction in basis for a casualty loss. Irs gov 1040ez Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Irs gov 1040ez   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Irs gov 1040ez For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Irs gov 1040ez See Figuring the Deduction Without Using the Tables, later. Irs gov 1040ez Basis adjustment due to casualty loss. Irs gov 1040ez   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Irs gov 1040ez For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Irs gov 1040ez See Figuring the Deduction Without Using the Tables, later. Irs gov 1040ez Example. Irs gov 1040ez On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Irs gov 1040ez It cost $39,000 and she elected a section 179 deduction of $24,000. Irs gov 1040ez She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Irs gov 1040ez Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Irs gov 1040ez She figured her MACRS depreciation deduction using the percentage tables. Irs gov 1040ez For 2012, her MACRS depreciation deduction was $268. Irs gov 1040ez In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Irs gov 1040ez She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Irs gov 1040ez Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Irs gov 1040ez She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Irs gov 1040ez She must now figure her depreciation for 2013 without using the percentage tables. Irs gov 1040ez Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Irs gov 1040ez Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Irs gov 1040ez However, you do reduce your original basis by other amounts, including the following. Irs gov 1040ez Any amortization taken on the property. Irs gov 1040ez Any section 179 deduction claimed. Irs gov 1040ez Any special depreciation allowance taken on the property. Irs gov 1040ez For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Irs gov 1040ez If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Irs gov 1040ez MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Irs gov 1040ez Use a separate worksheet for each item of property. Irs gov 1040ez Then, use the information from this worksheet to prepare Form 4562. Irs gov 1040ez Do not use this worksheet for automobiles. Irs gov 1040ez Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Irs gov 1040ez MACRS Worksheet Part I   1. Irs gov 1040ez MACRS system (GDS or ADS)   2. Irs gov 1040ez Property class   3. Irs gov 1040ez Date placed in service   4. Irs gov 1040ez Recovery period   5. Irs gov 1040ez Method and convention   6. Irs gov 1040ez Depreciation rate (from tables)   Part II   7. Irs gov 1040ez Cost or other basis* $     8. Irs gov 1040ez Business/investment use   %   9. Irs gov 1040ez Multiply line 7 by line 8   $ 10. Irs gov 1040ez Total claimed for section 179 deduction and other items   $ 11. Irs gov 1040ez Subtract line 10 from line 9. Irs gov 1040ez This is your tentative basis for depreciation   $ 12. Irs gov 1040ez Multiply line 11 by . Irs gov 1040ez 50 if the 50% special depreciation allowance applies. Irs gov 1040ez This is your special depreciation allowance. Irs gov 1040ez Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   $ 13. Irs gov 1040ez Subtract line 12 from line 11. Irs gov 1040ez This is your basis for depreciation     14. Irs gov 1040ez Depreciation rate (from line 6)     15. Irs gov 1040ez Multiply line 13 by line 14. Irs gov 1040ez This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Irs gov 1040ez The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Irs gov 1040ez Example. Irs gov 1040ez You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Irs gov 1040ez You use the furniture only for business. Irs gov 1040ez This is the only property you placed in service this year. Irs gov 1040ez You did not elect a section 179 deduction and the property is not qualified property for purposes of claiming a special depreciation allowance so your property's unadjusted basis is its cost, $10,000. Irs gov 1040ez You use GDS and the half-year convention to figure your depreciation. Irs gov 1040ez You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Irs gov 1040ez Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Irs gov 1040ez You figure your depreciation deduction using the MACRS worksheet as follows. Irs gov 1040ez MACRS Worksheet Part I 1. Irs gov 1040ez MACRS system (GDS or ADS) GDS 2. Irs gov 1040ez Property class 7-year 3. Irs gov 1040ez Date placed in service 8/11/13 4. Irs gov 1040ez Recovery period 7-Year 5. Irs gov 1040ez Method and convention 200%DB/Half-Year 6. Irs gov 1040ez Depreciation rate (from tables) . Irs gov 1040ez 1429 Part II 7. Irs gov 1040ez Cost or other basis* $10,000     8. Irs gov 1040ez Business/investment use 100 %   9. Irs gov 1040ez Multiply line 7 by line 8   $10,000 10. Irs gov 1040ez Total claimed for section 179 deduction and other items   -0- 11. Irs gov 1040ez Subtract line 10 from line 9. Irs gov 1040ez This is your tentative basis for depreciation   $10,000 12. Irs gov 1040ez Multiply line 11 by . Irs gov 1040ez 50 if the 50% special depreciation allowance applies. Irs gov 1040ez This is your special depreciation allowance. Irs gov 1040ez Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   -0- 13. Irs gov 1040ez Subtract line 12 from line 11. Irs gov 1040ez This is your basis for depreciation   $10,000 14. Irs gov 1040ez Depreciation rate (from line 6)   . Irs gov 1040ez 1429 15. Irs gov 1040ez Multiply line 13 by line 14. Irs gov 1040ez This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Irs gov 1040ez If there are no adjustments to the basis of the property other than depreciation, your depreciation deduction for each subsequent year of the recovery period will be as follows. Irs gov 1040ez Year   Basis Percentage Deduction 2014 $ 10,000 24. Irs gov 1040ez 49%   $2,449   2015   10,000 17. Irs gov 1040ez 49   1,749   2016   10,000 12. Irs gov 1040ez 49   1,249   2017   10,000 8. Irs gov 1040ez 93   893   2018   10,000 8. Irs gov 1040ez 92   892   2019   10,000 8. Irs gov 1040ez 93   893   2020   10,000 4. Irs gov 1040ez 46   446   Examples The following examples are provided to show you how to use the percentage tables. Irs gov 1040ez In both examples, assume the following. Irs gov 1040ez You use the property only for business. Irs gov 1040ez You use the calendar year as your tax year. Irs gov 1040ez You use GDS for all the properties. Irs gov 1040ez Example 1. Irs gov 1040ez You bought a building and land for $120,000 and placed it in service on March 8. Irs gov 1040ez The sales contract showed that the building cost $100,000 and the land cost $20,000. Irs gov 1040ez It is nonresidential real property. Irs gov 1040ez The building's unadjusted basis is its original cost, $100,000. Irs gov 1040ez You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Irs gov 1040ez March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Irs gov 1040ez Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Irs gov 1040ez 033%   $2,033   2nd   100,000 2. Irs gov 1040ez 564   2,564   3rd   100,000 2. Irs gov 1040ez 564   2,564   Example 2. Irs gov 1040ez During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Irs gov 1040ez You placed the machine in service in January, the furniture in September, and the computer in October. Irs gov 1040ez You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Irs gov 1040ez You placed property in service during the last 3 months of the year, so you must first determine if you have to use the mid-quarter convention. Irs gov 1040ez The total bases of all property you placed in service during the year is $10,000. Irs gov 1040ez The $5,000 basis of the computer, which you placed in service during the last 3 months (the fourth quarter) of your tax year, is more than 40% of the total bases of all property ($10,000) you placed in service during the year. Irs gov 1040ez Therefore, you must use the mid-quarter convention for all three items. Irs gov 1040ez You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Irs gov 1040ez The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Irs gov 1040ez The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Irs gov 1040ez Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Irs gov 1040ez Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Irs gov 1040ez Year Property Basis Percentage Deduction 1st Machine $4,000 25. Irs gov 1040ez 00 $1,000   2nd Machine 4,000 21. Irs gov 1040ez 43 857   1st Furniture 1,000 10. Irs gov 1040ez 71 107   2nd Furniture 1,000 25. Irs gov 1040ez 51 255   1st Computer 5,000 5. Irs gov 1040ez 00 250   2nd Computer 5,000 38. Irs gov 1040ez 00 1,900   Sale or Other Disposition Before the Recovery Period Ends If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. Irs gov 1040ez You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. Irs gov 1040ez After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Irs gov 1040ez Half-year convention used. Irs gov 1040ez   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Irs gov 1040ez Mid-quarter convention used. Irs gov 1040ez   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Irs gov 1040ez Quarter Percentage First 12. Irs gov 1040ez 5% Second 37. Irs gov 1040ez 5 Third 62. Irs gov 1040ez 5 Fourth 87. Irs gov 1040ez 5 Example. Irs gov 1040ez On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Irs gov 1040ez You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Irs gov 1040ez Your unadjusted basis for the property was $10,000. Irs gov 1040ez You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Irs gov 1040ez Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Irs gov 1040ez Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Irs gov 1040ez 80% of $10,000). Irs gov 1040ez You disposed of the property on April 6, 2013. Irs gov 1040ez To determine your depreciation deduction for 2013, first figure the deduction for the full year. Irs gov 1040ez This is $1,368 (13. Irs gov 1040ez 68% of $10,000). Irs gov 1040ez April is in the second quarter of the year, so you multiply $1,368 by 37. Irs gov 1040ez 5% to get your depreciation deduction of $513 for 2013. Irs gov 1040ez Mid-month convention used. Irs gov 1040ez   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Irs gov 1040ez The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Irs gov 1040ez The denominator is 12. Irs gov 1040ez Example. Irs gov 1040ez On July 2, 2011, you purchased and placed in service residential rental property. Irs gov 1040ez The property cost $100,000, not including the cost of land. Irs gov 1040ez You used Table A-6 to figure your MACRS depreciation for this property. Irs gov 1040ez You sold the property on March 2, 2013. Irs gov 1040ez You file your tax return based on the calendar year. Irs gov 1040ez A full year of depreciation for 2013 is $3,636. Irs gov 1040ez This is $100,000 multiplied by . Irs gov 1040ez 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Irs gov 1040ez You then apply the mid-month convention for the 2½ months of use in 2013. Irs gov 1040ez Treat the month of disposition as one-half month of use. Irs gov 1040ez Multiply $3,636 by the fraction, 2. Irs gov 1040ez 5 over 12, to get your 2013 depreciation deduction of $757. Irs gov 1040ez 50. Irs gov 1040ez Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Irs gov 1040ez Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Irs gov 1040ez Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Irs gov 1040ez Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Irs gov 1040ez You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Irs gov 1040ez The straight line method is explained later. Irs gov 1040ez You figure depreciation for the year you place property in service as follows. Irs gov 1040ez Multiply your adjusted basis in the property by the declining balance rate. Irs gov 1040ez Apply the applicable convention. Irs gov 1040ez You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Irs gov 1040ez Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Irs gov 1040ez Multiply this new adjusted basis by the same declining balance rate used in earlier years. Irs gov 1040ez If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Irs gov 1040ez Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Irs gov 1040ez Declining balance rate. Irs gov 1040ez   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Irs gov 1040ez For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Irs gov 1040ez 00 (200%) by 3 to get 0. Irs gov 1040ez 6667, or a 66. Irs gov 1040ez 67% declining balance rate. Irs gov 1040ez For 15-year property depreciated using the 150% declining balance method, divide 1. Irs gov 1040ez 50 (150%) by 15 to get 0. Irs gov 1040ez 10, or a 10% declining balance rate. Irs gov 1040ez   The following table shows the declining balance rate for each property class and the first year for which the straight line method gives an equal or greater deduction. Irs gov 1040ez Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Irs gov 1040ez 667% 3rd 5-year 200% DB 40. Irs gov 1040ez 0 4th 7-year 200% DB 28. Irs gov 1040ez 571 5th 10-year 200% DB 20. Irs gov 1040ez 0 7th 15-year 150% DB 10. Irs gov 1040ez 0 7th 20-year 150% DB 7. Irs gov 1040ez 5 9th Straight Line Method When using the straight line method, you apply a different depreciation rate each year to the adjusted basis of your property. Irs gov 1040ez You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Irs gov 1040ez You figure depreciation for the year you place property in service as follows. Irs gov 1040ez Multiply your adjusted basis in the property by the straight line rate. Irs gov 1040ez Apply the applicable convention. Irs gov 1040ez You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Irs gov 1040ez Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Irs gov 1040ez Determine the depreciation rate for the year. Irs gov 1040ez Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Irs gov 1040ez If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Irs gov 1040ez Straight line rate. Irs gov 1040ez   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Irs gov 1040ez When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Irs gov 1040ez If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Irs gov 1040ez 0 (100%). Irs gov 1040ez Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Irs gov 1040ez It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Irs gov 1040ez See Straight line rate in the previous discussion. Irs gov 1040ez Use the applicable convention as explained in the following discussions. Irs gov 1040ez Half-year convention. Irs gov 1040ez   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Irs gov 1040ez You deduct a full year of depreciation for any other year during the recovery period. Irs gov 1040ez   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Irs gov 1040ez If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Irs gov 1040ez If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final 6 months of the recovery period is the amount of your unrecovered basis in the property. Irs gov 1040ez Mid-quarter convention. Irs gov 1040ez   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Irs gov 1040ez   A quarter of a full 12-month tax year is a period of 3 months. Irs gov 1040ez The first quarter in a year begins on the first day of the tax year. Irs gov 1040ez The second quarter begins on the first day of the fourth month of the tax year. Irs gov 1040ez The third quarter begins on the first day of the seventh month of the tax year. Irs gov 1040ez The fourth quarter begins on the first day of the tenth month of the tax year. Irs gov 1040ez A calendar year is divided into the following quarters. Irs gov 1040ez Quarter Months First January, February, March Second April, May, June Third July, August, September Fourth October, November, December   Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by the percentage listed below for the quarter you place the property in service. Irs gov 1040ez Quarter Percentage First 87. Irs gov 1040ez 5% Second 62. Irs gov 1040ez 5 Third 37. Irs gov 1040ez 5 Fourth 12. Irs gov 1040ez 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Irs gov 1040ez Quarter Percentage First 12. Irs gov 1040ez 5% Second 37. Irs gov 1040ez 5 Third 62. Irs gov 1040ez 5 Fourth 87. Irs gov 1040ez 5   If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final quarter of the recovery period is the amount of your unrecovered basis in the property. Irs gov 1040ez Mid-month convention. Irs gov 1040ez   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Irs gov 1040ez Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Irs gov 1040ez The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Irs gov 1040ez 5). Irs gov 1040ez The denominator is 12. Irs gov 1040ez   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Irs gov 1040ez If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Irs gov 1040ez Example. Irs gov 1040ez You use the calendar year and place nonresidential real property in service in August. Irs gov 1040ez The property is in service 4 full months (September, October, November, and December). Irs gov 1040ez Your numerator is 4. Irs gov 1040ez 5 (4 full months plus 0. Irs gov 1040ez 5). Irs gov 1040ez You multiply the depreciation for a full year by 4. Irs gov 1040ez 5/12, or 0. Irs gov 1040ez 375. Irs gov 1040ez Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Irs gov 1040ez Figures are rounded for purposes of the examples. Irs gov 1040ez Assume for all the examples that you use a calendar year as your tax year. Irs gov 1040ez Example 1—200% DB method and half-year convention. Irs gov 1040ez In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Irs gov 1040ez You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Irs gov 1040ez You use GDS and the 200% declining balance (DB) method to figure your depreciation. Irs gov 1040ez When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Irs gov 1040ez You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Irs gov 1040ez First year. Irs gov 1040ez You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Irs gov 1040ez The result is 40%. Irs gov 1040ez You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Irs gov 1040ez You apply the half-year convention by dividing the result ($400) by 2. Irs gov 1040ez Depreciation for the first year under the 200% DB method is $200. Irs gov 1040ez You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Irs gov 1040ez The result is 20%. Irs gov 1040ez You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Irs gov 1040ez You apply the half-year convention by dividing the result ($200) by 2. Irs gov 1040ez Depreciation for the first year under the SL method is $100. Irs gov 1040ez The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Irs gov 1040ez Second year. Irs gov 1040ez You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Irs gov 1040ez You multiply the result ($800) by the DB rate (40%). Irs gov 1040ez Depreciation for the second year under the 200% DB method is $320. Irs gov 1040ez You figure the SL depreciation rate by dividing 1 by 4. Irs gov 1040ez 5, the number of years remaining in the recovery period. Irs gov 1040ez (Based on the half-year convention, you used only half a year of the recovery period in the first year. Irs gov 1040ez ) You multiply the reduced adjusted basis ($800) by the result (22. Irs gov 1040ez 22%). Irs gov 1040ez Depreciation under the SL method for the second year is $178. Irs gov 1040ez The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Irs gov 1040ez Third year. Irs gov 1040ez You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Irs gov 1040ez You multiply the result ($480) by the DB rate (40%). Irs gov 1040ez Depreciation for the third year under the 200% DB method is $192. Irs gov 1040ez You figure the SL depreciation rate by dividing 1 by 3. Irs gov 1040ez 5. Irs gov 1040ez You multiply the reduced adjusted basis ($480) by the result (28. Irs gov 1040ez 57%). Irs gov 1040ez Depreciation under the SL method for the third year is $137. Irs gov 1040ez The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Irs gov 1040ez Fourth year. Irs gov 1040ez You reduce the adjusted basis ($480) by the de