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Printable Tax Forms 2010

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Printable Tax Forms 2010

Printable tax forms 2010 Publication 524 - Main Content Table of Contents Are You Eligible for the Credit?Qualified Individual Income Limits Credit Figured for You Figuring the Credit YourselfStep 1. Printable tax forms 2010 Determine Initial Amount Step 2. Printable tax forms 2010 Total Certain Nontaxable Pensions and Benefits Step 3. Printable tax forms 2010 Determine Excess Adjusted Gross Income Step 4. Printable tax forms 2010 Determine the Total of Steps 2 and 3 Step 5. Printable tax forms 2010 Determine Your Credit Examples How To Get Tax Help Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. Printable tax forms 2010 You are a qualified individual. Printable tax forms 2010 Your income is not more than certain limits. Printable tax forms 2010 You can use Figure A and Table 1 as guides to see if you are eligible for the credit. Printable tax forms 2010 Use Figure A first to see if you are a qualified individual. Printable tax forms 2010 If you are, go to Table 1 to make sure your income is not too high to take the credit. Printable tax forms 2010 You can take the credit only if you file Form 1040 or Form 1040A. Printable tax forms 2010 You cannot take the credit if you file Form 1040EZ or Form 1040NR. Printable tax forms 2010 Qualified Individual You are a qualified individual for this credit if you are a U. Printable tax forms 2010 S. Printable tax forms 2010 citizen or resident alien, and either of the following applies. Printable tax forms 2010 You were age 65 or older at the end of 2013. Printable tax forms 2010 You were under age 65 at the end of 2013 and all three of the following statements are true. Printable tax forms 2010 You retired on permanent and total disability (explained later). Printable tax forms 2010 You received taxable disability income for 2013. Printable tax forms 2010 On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). Printable tax forms 2010 Age 65. Printable tax forms 2010   You are considered to be age 65 on the day before your 65th birthday. Printable tax forms 2010 As a result, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Printable tax forms 2010 U. Printable tax forms 2010 S. Printable tax forms 2010 Citizen or Resident Alien You must be a U. Printable tax forms 2010 S. Printable tax forms 2010 citizen or resident alien (or be treated as a resident alien) to take the credit. Printable tax forms 2010 Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. Printable tax forms 2010 Exceptions. Printable tax forms 2010   You may be able to take the credit if you are a nonresident alien who is married to a U. Printable tax forms 2010 S. Printable tax forms 2010 citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. Printable tax forms 2010 S. Printable tax forms 2010 resident alien. Printable tax forms 2010 If you make that choice, both you and your spouse are taxed on your worldwide incomes. Printable tax forms 2010   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. Printable tax forms 2010 S. Printable tax forms 2010 citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. Printable tax forms 2010 S. Printable tax forms 2010 resident alien for the entire year. Printable tax forms 2010 In that case, you may be allowed to take the credit. Printable tax forms 2010   For information on these choices, see chapter 1 of Publication 519, U. Printable tax forms 2010 S. Printable tax forms 2010 Tax Guide for Aliens. Printable tax forms 2010 Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. Printable tax forms 2010 However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. Printable tax forms 2010 Head of household. Printable tax forms 2010   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet all the following tests. Printable tax forms 2010 You file a separate return. Printable tax forms 2010 You paid more than half the cost of keeping up your home during the tax year. Printable tax forms 2010 Your spouse did not live in your home at any time during the last 6 months of the tax year and the absence was not temporary. Printable tax forms 2010 (See Temporary absences under Head of Household in Publication 501. Printable tax forms 2010 ) Your home was the main home of your child, stepchild, or an eligible foster child for more than half the year. Printable tax forms 2010 An eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Printable tax forms 2010 You can claim an exemption for that child, or you cannot claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents. Printable tax forms 2010 For more information, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Printable tax forms 2010 Figure A. Printable tax forms 2010 Are You a Qualified Individual? Please click here for the text description of the image. Printable tax forms 2010 figure a Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). Printable tax forms 2010 You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. Printable tax forms 2010 Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. Printable tax forms 2010 If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. Printable tax forms 2010 You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. Printable tax forms 2010 Permanent and total disability. Printable tax forms 2010    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. Printable tax forms 2010 A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Printable tax forms 2010 See Physician's statement , later. Printable tax forms 2010 Substantial gainful activity. Printable tax forms 2010   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Printable tax forms 2010 Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. Printable tax forms 2010   Substantial gainful activity is not work you do to take care of yourself or your home. Printable tax forms 2010 It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. Printable tax forms 2010 However, doing this kind of work may show that you are able to engage in substantial gainful activity. Printable tax forms 2010    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. Printable tax forms 2010   The following examples illustrate the tests of substantial gainful activity. Printable tax forms 2010 Example 1. Printable tax forms 2010 Trisha, a sales clerk, retired on disability. Printable tax forms 2010 She is 53 years old and now works as a full-time babysitter for the minimum wage. Printable tax forms 2010 Even though Trisha is doing different work, she is able to do the duties of her new job in a full-time competitive work situation for the minimum wage. Printable tax forms 2010 She cannot take the credit because she is able to engage in substantial gainful activity. Printable tax forms 2010 Example 2. Printable tax forms 2010 Tom, a bookkeeper, retired on disability. Printable tax forms 2010 He is 59 years old and now drives a truck for a charitable organization. Printable tax forms 2010 He sets his own hours and is not paid. Printable tax forms 2010 Duties of this nature generally are performed for pay or profit. Printable tax forms 2010 Some weeks he works 10 hours, and some weeks he works 40 hours. Printable tax forms 2010 Over the year he averages 20 hours a week. Printable tax forms 2010 The kind of work and his average hours a week conclusively show that Tom is able to engage in substantial gainful activity. Printable tax forms 2010 This is true even though Tom is not paid and he sets his own hours. Printable tax forms 2010 He cannot take the credit. Printable tax forms 2010 Example 3. Printable tax forms 2010 John, who retired on disability, took a job with a former employer on a trial basis. Printable tax forms 2010 The purpose of the job was to see if John could do the work. Printable tax forms 2010 The trial period lasted for 6 months during which John was paid the minimum wage. Printable tax forms 2010 Because of John's disability, he was assigned only light duties of a nonproductive “make-work” nature. Printable tax forms 2010 The activity was gainful because John was paid at least the minimum wage. Printable tax forms 2010 But the activity was not substantial because his duties were nonproductive. Printable tax forms 2010 These facts do not, by themselves, show that John is able to engage in substantial gainful activity. Printable tax forms 2010 Example 4. Printable tax forms 2010 Joan, who retired on disability from a job as a bookkeeper, lives with her sister who manages several motel units. Printable tax forms 2010 Joan helps her sister for 1 or 2 hours a day by performing duties such as washing dishes, answering phones, registering guests, and bookkeeping. Printable tax forms 2010 Joan can select the time of day when she feels most fit to work. Printable tax forms 2010 Work of this nature, performed off and on during the day at Joan's convenience, is not activity of a “substantial and gainful” nature even if she is paid for the work. Printable tax forms 2010 The performance of these duties does not, of itself, show that Joan is able to engage in substantial gainful activity. Printable tax forms 2010 Sheltered employment. Printable tax forms 2010   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. Printable tax forms 2010 These qualified locations are in sheltered workshops, hospitals and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. Printable tax forms 2010   Compared to commercial employment, pay is lower for sheltered employment. Printable tax forms 2010 Therefore, one usually does not look for sheltered employment if he or she can get other employment. Printable tax forms 2010 The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. Printable tax forms 2010 Physician's statement. Printable tax forms 2010   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. Printable tax forms 2010 You can use the statement in the Instructions for Schedule R. Printable tax forms 2010   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. Printable tax forms 2010 Veterans. Printable tax forms 2010    If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. Printable tax forms 2010 VA Form 21-0172 must be signed by a person authorized by the VA to do so. Printable tax forms 2010 You can get this form from your local VA regional office. Printable tax forms 2010 Physician's statement obtained in earlier year. Printable tax forms 2010   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. Printable tax forms 2010 For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. Printable tax forms 2010 If you meet the required conditions, check the box on your Schedule R, Part II, line 2. Printable tax forms 2010   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. Printable tax forms 2010 Disability income. Printable tax forms 2010   If you are under age 65, you must also have taxable disability income to qualify for the credit. Printable tax forms 2010 Disability income must meet both of the following requirements. Printable tax forms 2010 It must be paid under your employer's accident or health plan or pension plan. Printable tax forms 2010 It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. Printable tax forms 2010 Payments that are not disability income. Printable tax forms 2010    Any payment you receive from a plan that does not provide for disability retirement is not disability income. Printable tax forms 2010 Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. Printable tax forms 2010    For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Printable tax forms 2010 Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. Printable tax forms 2010 Income Limits To determine if you can claim the credit, you must consider two income limits. Printable tax forms 2010 The first limit is the amount of your adjusted gross income (AGI). Printable tax forms 2010 The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. Printable tax forms 2010 The limits are shown in Table 1. Printable tax forms 2010 If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. Printable tax forms 2010 See Figuring the Credit Yourself , later. Printable tax forms 2010 Table 1. Printable tax forms 2010 Income Limits IF your filing status is THEN, even if you qualify (see Figure A), you CANNOT take the credit if   Your adjusted gross income (AGI)* is equal to or more than. Printable tax forms 2010 . Printable tax forms 2010 . Printable tax forms 2010     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. Printable tax forms 2010 . Printable tax forms 2010 . Printable tax forms 2010   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. Printable tax forms 2010 If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. Printable tax forms 2010 Credit Figured for You You can figure the credit yourself, or the Internal Revenue Service (IRS) will figure it for you. Printable tax forms 2010 See Figuring the Credit Yourself , next. Printable tax forms 2010 If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. Printable tax forms 2010 Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you. Printable tax forms 2010 If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 30. Printable tax forms 2010 If you file Form 1040, check box c on Form 1040, line 53, and enter “CFE” on the line next to that box. Printable tax forms 2010 Attach Schedule R to your return. Printable tax forms 2010 Table 2. Printable tax forms 2010 Initial Amounts IF your filing status is. Printable tax forms 2010 . Printable tax forms 2010 . Printable tax forms 2010   THEN enter on line 10 of Schedule R. Printable tax forms 2010 . Printable tax forms 2010 . Printable tax forms 2010 single,head of household, or qualifying widow(er) with dependent child and, by the end of 2013, you were       • 65 or older $5,000   • under 65 and retired on permanent and total disability1 $5,000 married filing a joint return and by the end of 2013       • both of you were 65 or older $7,500   • both of you were under 65 and one of you retired on permanent and total disability1 $5,000   • both of you were under 65 and both of you retired on permanent and total disability2 $7,500   • one of you was 65 or older, and the other was under 65 and retired on permanent  and total disability3 $7,500   • one of you was 65 or older, and the other was under 65 and not retired on permanent  and total disability $5,000 married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2013, you were       • 65 or older $3,750   • under 65 and retired on permanent and total disability1 $3,750   1 Amount cannot be more than the taxable disability income. Printable tax forms 2010     2 Amount cannot be more than your combined taxable disability income. Printable tax forms 2010     3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500. Printable tax forms 2010   Figuring the Credit Yourself If you figure the credit yourself, fill out the front of Schedule R. Printable tax forms 2010 Next, fill out Schedule R, Part III. Printable tax forms 2010 If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. Printable tax forms 2010 If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter “Sch R” on the line next to that box. Printable tax forms 2010 There are five steps in Part III to determine the amount of your credit. Printable tax forms 2010 Determine your initial amount (lines 10–12). Printable tax forms 2010 Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c). Printable tax forms 2010 Determine your excess adjusted gross income (lines 14–17). Printable tax forms 2010 Determine the total of steps 2 and 3 (line 18). Printable tax forms 2010 Determine your credit (lines 19–22). Printable tax forms 2010 These steps are discussed in more detail next. Printable tax forms 2010 Step 1. Printable tax forms 2010 Determine Initial Amount To figure the credit, you must first determine your initial amount using lines 10 through 12. Printable tax forms 2010 See Table 2. Printable tax forms 2010 Your initial amount is on line 12. Printable tax forms 2010 Initial amounts for persons under age 65. Printable tax forms 2010   If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income. Printable tax forms 2010 Special rules for joint returns. Printable tax forms 2010   If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000. Printable tax forms 2010   If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income. Printable tax forms 2010 Step 2. Printable tax forms 2010 Total Certain Nontaxable Pensions and Benefits Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. Printable tax forms 2010 You must reduce your initial amount by these payments. Printable tax forms 2010 Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. Printable tax forms 2010 If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received. Printable tax forms 2010 Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable. Printable tax forms 2010 Include the following nontaxable payments in the amounts you enter on lines 13a and 13b. Printable tax forms 2010 Nontaxable social security payments. Printable tax forms 2010 This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. Printable tax forms 2010 (Do not include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child's insurance benefit payments you may receive as a guardian. Printable tax forms 2010 ) Nontaxable railroad retirement pension payments treated as social security. Printable tax forms 2010 This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board. Printable tax forms 2010 Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). Printable tax forms 2010 (Do not include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980. Printable tax forms 2010 ) Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. Printable tax forms 2010 (Do not include amounts that are a return of your cost of a pension or annuity. Printable tax forms 2010 These amounts do not reduce your initial amount. Printable tax forms 2010 ) You should be sure to take into account all of the nontaxable amounts you receive. Printable tax forms 2010 These amounts are verified by the IRS through information supplied by other government agencies. Printable tax forms 2010 Step 3. Printable tax forms 2010 Determine Excess Adjusted Gross Income You also must reduce your initial amount by your excess adjusted gross income. Printable tax forms 2010 Figure your excess adjusted gross income on lines 14–17. Printable tax forms 2010 You figure your excess adjusted gross income as follows. Printable tax forms 2010 Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status. Printable tax forms 2010 $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child, $10,000 if you are married filing jointly, or $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year. Printable tax forms 2010 Divide the result of (1) by 2. Printable tax forms 2010 Step 4. Printable tax forms 2010 Determine the Total of Steps 2 and 3 To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17). Printable tax forms 2010 Step 5. Printable tax forms 2010 Determine Your Credit Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (. Printable tax forms 2010 15). Printable tax forms 2010 In certain cases, the amount of your credit may be limited. Printable tax forms 2010 See Limit on credit , later. Printable tax forms 2010 Example. Printable tax forms 2010 You are 66 years old and your spouse is 64. Printable tax forms 2010 Your spouse is not disabled. Printable tax forms 2010 You file a joint return on Form 1040. Printable tax forms 2010 Your adjusted gross income is $14,630. Printable tax forms 2010 Together you received $3,200 from social security, which was nontaxable. Printable tax forms 2010 You figure the credit as follows: Example applying the 5 step process Amount (Line references (shown in parentheses) are to the Schedule R)      1. Printable tax forms 2010 Initial amount (line 12) $5,000 2. Printable tax forms 2010 Total nontaxable social security  and other nontaxable  pensions (line 13c) $3,200   3. Printable tax forms 2010 Excess adjusted gross income  ($14,630–$10,000) ÷ 2 (line 17) 2,315   4. Printable tax forms 2010 Add (2) and (3) (line 18) 5,515 5. Printable tax forms 2010 Subtract (4) from (1) (line 12 – line 18 = line 19) (Do not enter less than -0-) $ -0- You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount. Printable tax forms 2010 Limit on credit. Printable tax forms 2010   The amount of credit you can claim is generally limited to the amount of your tax. Printable tax forms 2010 Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. Printable tax forms 2010 Examples The following examples illustrate the credit for the elderly or the disabled. Printable tax forms 2010 The initial amounts are taken from Table 2, earlier. Printable tax forms 2010 Example 1. Printable tax forms 2010 James Davis is 58 years old, single, and files Form 1040A. Printable tax forms 2010 In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. Printable tax forms 2010 He got the required physician's statement in 2011 and kept it with his tax records. Printable tax forms 2010 His physician signed on line B of the statement. Printable tax forms 2010 This year James checks the box in Schedule R, Part II. Printable tax forms 2010 He does not need to get another statement for 2013. Printable tax forms 2010 He received the following income for the year: Nontaxable social security $1,500 Interest (taxable) 100 Taxable disability pension 11,400       James' adjusted gross income is $11,500 ($11,400 + $100). Printable tax forms 2010 He figures the credit on Schedule R as follows: 1. Printable tax forms 2010 Initial amount   $5,000 2. Printable tax forms 2010 Taxable disability pension   11,400 3. Printable tax forms 2010 Smaller of line 1 or line 2   5,000 4. Printable tax forms 2010 Nontaxable social security  benefits $1,500     5. Printable tax forms 2010 Excess adjusted gross income  ($11,500 − $7,500) ÷ 2 2,000     6. Printable tax forms 2010 Add lines 4 and 5   3,500 7. Printable tax forms 2010 Subtract line 6 from line 3  (Do not enter less than (-0-))   1,500 8. Printable tax forms 2010 Multiply line 7 by 15% (. Printable tax forms 2010 15)   225 9. Printable tax forms 2010 Enter the amount from the  Credit Limit Worksheet in the  Instructions for Schedule R, line 21   151 10. Printable tax forms 2010 Credit (Enter the smaller of  line 8 or line 9)   $ 151 He enters $151 on line 30 of Form 1040A. Printable tax forms 2010 The Schedule R for James Davis is not shown. Printable tax forms 2010 Example 2. Printable tax forms 2010 William White is 53. Printable tax forms 2010 His wife Helen is 49. Printable tax forms 2010 William had a stroke 3 years ago and retired on permanent and total disability. Printable tax forms 2010 He is still permanently and totally disabled because of the stroke. Printable tax forms 2010 In November, Helen was injured in an accident at work and retired on permanent and total disability. Printable tax forms 2010 William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. Printable tax forms 2010 Helen earned $12,500 from her job and received a taxable disability pension of $1,700. Printable tax forms 2010 Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). Printable tax forms 2010 They do not itemize deductions. Printable tax forms 2010 They do not have any amounts that would increase their standard deduction. Printable tax forms 2010 Helen's doctor completed the physician's statement in the Instructions for Schedule R. Printable tax forms 2010 Helen is not required to include the statement with their return, but she must keep it for her records. Printable tax forms 2010 William got a physician's statement for the year he had the stroke. Printable tax forms 2010 His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. Printable tax forms 2010 William has kept the physician's statement with his records. Printable tax forms 2010 He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2. Printable tax forms 2010 William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. Printable tax forms 2010 They attach Schedule R to their Form 1040 and enter $41 on line 53. Printable tax forms 2010 They check box c on line 53 and enter “Sch R” on the line next to that box. Printable tax forms 2010 See their filled-in Schedule R and Helen's filled-in physician's statement, later. Printable tax forms 2010 Instructions for Physician's Statement     Taxpayer Physician If you retired after 1976, enter the date you retired in the space provided on the statement below. Printable tax forms 2010 A person is permanently and totally disabled if both of the following apply:   1. Printable tax forms 2010 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Printable tax forms 2010   2. Printable tax forms 2010 A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death. Printable tax forms 2010 Physician's Statement     I certify that Helen A. Printable tax forms 2010 White Name of disabled person was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. Printable tax forms 2010 If retired after 1976, enter the date retired ▶ November 1, 2013   Physician: Sign your name on either A or B below. Printable tax forms 2010 AThe disability has lasted or can be expected to last continuously for at least a year     Physician's signatureDate BThere is no reasonable probability that the disabled condition will ever improve Ayden D. Printable tax forms 2010 Doctor 2/8/14   Physician's signatureDate Physician's name Physician's address Ayden D. Printable tax forms 2010 Doctor 1900 Green St. Printable tax forms 2010 , Hometown, MD 20000         This image is too large to be displayed in the current screen. Printable tax forms 2010 Please click the link to view the image. Printable tax forms 2010 Page 1 of Schedule R for the Whites This image is too large to be displayed in the current screen. Printable tax forms 2010 Please click the link to view the image. Printable tax forms 2010 Page 2 of Schedule R for the Whites How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Printable tax forms 2010 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. Printable tax forms 2010 Free help with your tax return. Printable tax forms 2010   Free help in preparing your return is available nationwide from IRS-certified volunteers. Printable tax forms 2010 The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Printable tax forms 2010 The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Printable tax forms 2010 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. Printable tax forms 2010 Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Printable tax forms 2010 To find the nearest VITA or TCE site, visit IRS. Printable tax forms 2010 gov or call 1-800-906-9887. Printable tax forms 2010   As part of the TCE program, AARP offers the Tax-Aide counseling program. Printable tax forms 2010 To find the nearest AARP Tax-Aide site, visit AARP's website at www. Printable tax forms 2010 aarp. Printable tax forms 2010 org/money/taxaide or call 1-888-227-7669. Printable tax forms 2010   For more information on these programs, go to IRS. Printable tax forms 2010 gov and enter “VITA” in the search box. Printable tax forms 2010 Internet. Printable tax forms 2010 IRS. Printable tax forms 2010 gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Printable tax forms 2010 Apply for an Employer Identification Number (EIN). Printable tax forms 2010 Go to IRS. Printable tax forms 2010 gov and enter Apply for an EIN in the search box. Printable tax forms 2010 Request an Electronic Filing PIN by going to IRS. Printable tax forms 2010 gov and entering Electronic Filing PIN in the search box. Printable tax forms 2010 Check the status of your 2013 refund with Where's My Refund? Go to IRS. Printable tax forms 2010 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. Printable tax forms 2010 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. Printable tax forms 2010 Check the status of your amended return. Printable tax forms 2010 Go to IRS. Printable tax forms 2010 gov and enter Where's My Amended Return in the search box. Printable tax forms 2010 Download forms, instructions, and publications, including some accessible versions. Printable tax forms 2010 Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Printable tax forms 2010 gov or IRS2Go. Printable tax forms 2010 Tax return and tax account transcripts are generally available for the current year and past three years. Printable tax forms 2010 Figure your income tax withholding with the IRS Withholding Calculator on IRS. Printable tax forms 2010 gov. Printable tax forms 2010 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. Printable tax forms 2010 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Printable tax forms 2010 gov. Printable tax forms 2010 Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Printable tax forms 2010 gov or IRS2Go. Printable tax forms 2010 Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Printable tax forms 2010 An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Printable tax forms 2010 Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Printable tax forms 2010 If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Printable tax forms 2010 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Printable tax forms 2010 Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Printable tax forms 2010 gov. Printable tax forms 2010 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. Printable tax forms 2010 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Printable tax forms 2010 Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Printable tax forms 2010 AARP offers the Tax-Aide counseling program as part of the TCE program. Printable tax forms 2010 Visit AARP's website to find the nearest Tax-Aide location. Printable tax forms 2010 Research your tax questions. Printable tax forms 2010 Search publications and instructions by topic or keyword. Printable tax forms 2010 Read the Internal Revenue Code, regulations, or other official guidance. Printable tax forms 2010 Read Internal Revenue Bulletins. Printable tax forms 2010 Sign up to receive local and national tax news by email. Printable tax forms 2010 Phone. Printable tax forms 2010 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Printable tax forms 2010 Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Printable tax forms 2010 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. Printable tax forms 2010 Call to locate the nearest volunteer help site, 1-800-906-9887. Printable tax forms 2010 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. Printable tax forms 2010 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Printable tax forms 2010 Most VITA and TCE sites offer free electronic filing. Printable tax forms 2010 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Printable tax forms 2010 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Printable tax forms 2010 Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Printable tax forms 2010 The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Printable tax forms 2010 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. Printable tax forms 2010 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. Printable tax forms 2010 Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Printable tax forms 2010 Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Printable tax forms 2010 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Printable tax forms 2010 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). Printable tax forms 2010 You should receive your order within 10 business days. Printable tax forms 2010 Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Printable tax forms 2010 Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Printable tax forms 2010 Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Printable tax forms 2010 Call to ask tax questions, 1-800-829-1040. Printable tax forms 2010 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Printable tax forms 2010 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Printable tax forms 2010 These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Printable tax forms 2010 gsa. Printable tax forms 2010 gov/fedrelay. Printable tax forms 2010 Walk-in. Printable tax forms 2010 You can find a selection of forms, publications and services — in-person, face-to-face. Printable tax forms 2010 Products. Printable tax forms 2010 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Printable tax forms 2010 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Printable tax forms 2010 Services. Printable tax forms 2010 You can walk in to your local TAC most business days for personal, face-to-face tax help. Printable tax forms 2010 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Printable tax forms 2010 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. Printable tax forms 2010 No appointment is necessary—just walk in. Printable tax forms 2010 Before visiting, check www. Printable tax forms 2010 irs. Printable tax forms 2010 gov/localcontacts for hours of operation and services provided. Printable tax forms 2010 Mail. Printable tax forms 2010 You can send your order for forms, instructions, and publications to the address below. Printable tax forms 2010 You should receive a response within 10 business days after your request is received. Printable tax forms 2010  Internal Revenue Service 1201 N. Printable tax forms 2010 Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Printable tax forms 2010   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Printable tax forms 2010 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Printable tax forms 2010 What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Printable tax forms 2010 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. Printable tax forms 2010 You face (or your business is facing) an immediate threat of adverse action. Printable tax forms 2010 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Printable tax forms 2010   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. Printable tax forms 2010 Here's why we can help: TAS is an independent organization within the IRS. Printable tax forms 2010 Our advocates know how to work with the IRS. Printable tax forms 2010 Our services are free and tailored to meet your needs. Printable tax forms 2010 We have offices in every state, the District of Columbia, and Puerto Rico. Printable tax forms 2010 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. Printable tax forms 2010 irs. Printable tax forms 2010 gov/advocate, or call us toll-free at 1-877-777-4778. Printable tax forms 2010 How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Printable tax forms 2010 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Printable tax forms 2010 irs. Printable tax forms 2010 gov/sams. Printable tax forms 2010 Low Income Taxpayer Clinics. Printable tax forms 2010   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. Printable tax forms 2010 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Printable tax forms 2010 Visit www. Printable tax forms 2010 TaxpayerAdvocate. Printable tax forms 2010 irs. Printable tax forms 2010 gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Printable tax forms 2010 Prev  Up  Next   Home   More Online Publications
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Non-filer Investigations - Criminal Investigation (CI)

Overview
Taxpayers who fail to file income tax returns and pay taxes pose a serious threat to tax administration and the American economy.

Who Must File
All citizens must comply with the requirements of the tax law to file returns and pay taxes.

Facts & Fiction of Frivolous Arguments
The 16th Amendment was ratified on February 3, 1913 giving Congress the power "to lay and collect taxes."

IRS Warns of Frivolous Tax Arguments
IRS issued Press Releases that summarize several cases where the taxpayer was fined or penalized for frivolous contentions.

Department of Justice Issues Injunction
The Department of Justice has issued several injunctions against promoters of illegal tax plans or shelters that urge taxpayer to violate the tax laws.

Statistical Data
Enforcement statistics on investigations initiated, prosecutions recommended, indictments, sentenced investigations and months to serve in prison.

Examples of Non-filer Investigations
Examples are written from public record documents filed in the district courts where the case was prosecuted.

 


Criminal Enforcement Home Page

How to Report Suspected Tax Fraud Activities

Page Last Reviewed or Updated: 30-Oct-2013

The Printable Tax Forms 2010

Printable tax forms 2010 2. Printable tax forms 2010   Depreciation of Rental Property Table of Contents The BasicsWhat Rental Property Can Be Depreciated? When Does Depreciation Begin and End? Depreciation Methods Basis of Depreciable Property Claiming the Special Depreciation Allowance MACRS DepreciationDepreciation Systems Property Classes Under GDS Recovery Periods Under GDS Conventions Figuring Your Depreciation Deduction Figuring MACRS Depreciation Under ADS Claiming the Correct Amount of Depreciation You recover the cost of income producing property through yearly tax deductions. Printable tax forms 2010 You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Printable tax forms 2010 Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Printable tax forms 2010 You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. Printable tax forms 2010 You can deduct depreciation only on the part of your property used for rental purposes. Printable tax forms 2010 Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Printable tax forms 2010 You may have to use Form 4562 to figure and report your depreciation. Printable tax forms 2010 See Which Forms To Use in chapter 3. Printable tax forms 2010 Also see Publication 946. Printable tax forms 2010 Section 179 deduction. Printable tax forms 2010   The section 179 deduction is a means of recovering part or all of the cost of certain qualifying property in the year you place the property in service. Printable tax forms 2010 This deduction is not allowed for property used in connection with residential rental property. Printable tax forms 2010 See chapter 2 of Publication 946. Printable tax forms 2010 Alternative minimum tax (AMT). Printable tax forms 2010   If you use accelerated depreciation, you may be subject to the AMT. Printable tax forms 2010 Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Printable tax forms 2010   The prescribed depreciation methods for rental real estate are not accelerated, so the depreciation deduction is not adjusted for the AMT. Printable tax forms 2010 However, accelerated methods are generally used for other property connected with rental activities (for example, appliances and wall-to-wall carpeting). Printable tax forms 2010   To find out if you are subject to the AMT, see the Instructions for Form 6251. Printable tax forms 2010 The Basics The following section discusses the information you will need to have about the rental property and the decisions to be made before figuring your depreciation deduction. Printable tax forms 2010 What Rental Property Can Be Depreciated? You can depreciate your property if it meets all the following requirements. Printable tax forms 2010 You own the property. Printable tax forms 2010 You use the property in your business or income-producing activity (such as rental property). Printable tax forms 2010 The property has a determinable useful life. Printable tax forms 2010 The property is expected to last more than one year. Printable tax forms 2010 Property you own. Printable tax forms 2010   To claim depreciation, you usually must be the owner of the property. Printable tax forms 2010 You are considered as owning property even if it is subject to a debt. Printable tax forms 2010 Rented property. Printable tax forms 2010   Generally, if you pay rent for property, you cannot depreciate that property. Printable tax forms 2010 Usually, only the owner can depreciate it. Printable tax forms 2010 However, if you make permanent improvements to leased property, you may be able to depreciate the improvements. Printable tax forms 2010 See Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Printable tax forms 2010 Cooperative apartments. Printable tax forms 2010   If you are a tenant-stockholder in a cooperative housing corporation and rent your cooperative apartment to others, you can deduct depreciation on your stock in the corporation. Printable tax forms 2010 See chapter 4, Special Situations. Printable tax forms 2010 Property having a determinable useful life. Printable tax forms 2010   To be depreciable, your property must have a determinable useful life. Printable tax forms 2010 This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Printable tax forms 2010 What Rental Property Cannot Be Depreciated? Certain property cannot be depreciated. Printable tax forms 2010 This includes land and certain excepted property. Printable tax forms 2010 Land. Printable tax forms 2010   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Printable tax forms 2010 But if it does, the loss is accounted for upon disposition. Printable tax forms 2010 The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Printable tax forms 2010   Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. Printable tax forms 2010 These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. Printable tax forms 2010 Example. Printable tax forms 2010 You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. Printable tax forms 2010 Some of the bushes and trees were planted right next to the house, while others were planted around the outer border of the lot. Printable tax forms 2010 If you replace the house, you would have to destroy the bushes and trees right next to it. Printable tax forms 2010 These bushes and trees are closely associated with the house, so they have a determinable useful life. Printable tax forms 2010 Therefore, you can depreciate them. Printable tax forms 2010 Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. Printable tax forms 2010 Excepted property. Printable tax forms 2010   Even if the property meets all the requirements listed earlier under What Rental Property Can Be Depreciated , you cannot depreciate the following property. Printable tax forms 2010 Property placed in service and disposed of (or taken out of business use) in the same year. Printable tax forms 2010 Equipment used to build capital improvements. Printable tax forms 2010 You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Printable tax forms 2010 For more information, see chapter 1 of Publication 946. Printable tax forms 2010 When Does Depreciation Begin and End? You begin to depreciate your rental property when you place it in service for the production of income. Printable tax forms 2010 You stop depreciating it either when you have fully recovered your cost or other basis, or when you retire it from service, whichever happens first. Printable tax forms 2010 Placed in Service You place property in service in a rental activity when it is ready and available for a specific use in that activity. Printable tax forms 2010 Even if you are not using the property, it is in service when it is ready and available for its specific use. Printable tax forms 2010 Example 1. Printable tax forms 2010 On November 22 of last year, you purchased a dishwasher for your rental property. Printable tax forms 2010 The appliance was delivered on December 7, but was not installed and ready for use until January 3 of this year. Printable tax forms 2010 Because the dishwasher was not ready for use last year, it is not considered placed in service until this year. Printable tax forms 2010 If the appliance had been installed and ready for use when it was delivered in December of last year, it would have been considered placed in service in December, even if it was not actually used until this year. Printable tax forms 2010 Example 2. Printable tax forms 2010 On April 6, you purchased a house to use as residential rental property. Printable tax forms 2010 You made extensive repairs to the house and had it ready for rent on July 5. Printable tax forms 2010 You began to advertise the house for rent in July and actually rented it beginning September 1. Printable tax forms 2010 The house is considered placed in service in July when it was ready and available for rent. Printable tax forms 2010 You can begin to depreciate the house in July. Printable tax forms 2010 Example 3. Printable tax forms 2010 You moved from your home in July. Printable tax forms 2010 During August and September you made several repairs to the house. Printable tax forms 2010 On October 1, you listed the property for rent with a real estate company, which rented it on December 1. Printable tax forms 2010 The property is considered placed in service on October 1, the date when it was available for rent. Printable tax forms 2010 Conversion to business use. Printable tax forms 2010   If you place property in service in a personal activity, you cannot claim depreciation. Printable tax forms 2010 However, if you change the property's use to business or the production of income, you can begin to depreciate it at the time of the change. Printable tax forms 2010 You place the property in service for business or income-producing use on the date of the change. Printable tax forms 2010 Example. Printable tax forms 2010 You bought a house and used it as your personal home several years before you converted it to rental property. Printable tax forms 2010 Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. Printable tax forms 2010 You can begin to claim depreciation in the year you converted it to rental property because at that time its use changed to the production of income. Printable tax forms 2010 Idle Property Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). Printable tax forms 2010 For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it is not available for rent. Printable tax forms 2010 Cost or Other Basis Fully Recovered You must stop depreciating property when the total of your yearly depreciation deductions equals your cost or other basis of your property. Printable tax forms 2010 For this purpose, your yearly depreciation deductions include any depreciation that you were allowed to claim, even if you did not claim it. Printable tax forms 2010 See Basis of Depreciable Property , later. Printable tax forms 2010 Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Printable tax forms 2010 You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Printable tax forms 2010 You sell or exchange the property. Printable tax forms 2010 You convert the property to personal use. Printable tax forms 2010 You abandon the property. Printable tax forms 2010 The property is destroyed. Printable tax forms 2010 Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. Printable tax forms 2010 If you placed rental property in service before 1987, you are using one of the following methods. Printable tax forms 2010 ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987. Printable tax forms 2010 Straight line or declining balance method over the useful life of property placed in service before 1981. Printable tax forms 2010 See MACRS Depreciation , later, for more information. Printable tax forms 2010 Rental property placed in service before 2013. Printable tax forms 2010   Continue to use the same method of figuring depreciation that you used in the past. Printable tax forms 2010 Use of real property changed. Printable tax forms 2010   Generally, you must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. Printable tax forms 2010 This includes your residence that you changed to rental use. Printable tax forms 2010 See Property Owned or Used in 1986 in Publication 946, chapter 1, for those situations in which MACRS is not allowed. Printable tax forms 2010 Improvements made after 1986. Printable tax forms 2010   Treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. Printable tax forms 2010 As a result, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. Printable tax forms 2010 For more information about improvements, see Additions or improvements to property , later in this chapter under Recovery Periods Under GDS. Printable tax forms 2010 This publication discusses MACRS depreciation only. Printable tax forms 2010 If you need information about depreciating property placed in service before 1987, see Publication 534. Printable tax forms 2010 Basis of Depreciable Property The basis of property used in a rental activity is generally its adjusted basis when you place it in service in that activity. Printable tax forms 2010 This is its cost or other basis when you acquired it, adjusted for certain items occurring before you place it in service in the rental activity. Printable tax forms 2010 If you depreciate your property under MACRS, you may also have to reduce your basis by certain deductions and credits with respect to the property. Printable tax forms 2010 Basis and adjusted basis are explained in the following discussions. Printable tax forms 2010 If you used the property for personal purposes before changing it to rental use, its basis for depreciation is the lesser of its adjusted basis or its fair market value when you change it to rental use. Printable tax forms 2010 See Basis of Property Changed to Rental Use in chapter 4. Printable tax forms 2010 Cost Basis The basis of property you buy is usually its cost. Printable tax forms 2010 The cost is the amount you pay for it in cash, in debt obligation, in other property, or in services. Printable tax forms 2010 Your cost also includes amounts you pay for: Sales tax charged on the purchase (but see Exception next), Freight charges to obtain the property, and Installation and testing charges. Printable tax forms 2010 Exception. Printable tax forms 2010   If you deducted state and local general sales taxes as an itemized deduction on Schedule A (Form 1040), do not include those sales taxes as part of your cost basis. Printable tax forms 2010 Such taxes were deductible before 1987 and after 2003. Printable tax forms 2010 Loans with low or no interest. Printable tax forms 2010   If you buy property on any time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, less the amount considered to be unstated interest. Printable tax forms 2010 See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Printable tax forms 2010 Real property. Printable tax forms 2010   If you buy real property, such as a building and land, certain fees and other expenses you pay are part of your cost basis in the property. Printable tax forms 2010 Real estate taxes. Printable tax forms 2010   If you buy real property and agree to pay real estate taxes on it that were owed by the seller and the seller does not reimburse you, the taxes you pay are treated as part of your basis in the property. Printable tax forms 2010 You cannot deduct them as taxes paid. Printable tax forms 2010   If you reimburse the seller for real estate taxes the seller paid for you, you can usually deduct that amount. Printable tax forms 2010 Do not include that amount in your basis in the property. Printable tax forms 2010 Settlement fees and other costs. Printable tax forms 2010   The following settlement fees and closing costs for buying the property are part of your basis in the property. Printable tax forms 2010 Abstract fees. Printable tax forms 2010 Charges for installing utility services. Printable tax forms 2010 Legal fees. Printable tax forms 2010 Recording fees. Printable tax forms 2010 Surveys. Printable tax forms 2010 Transfer taxes. Printable tax forms 2010 Title insurance. Printable tax forms 2010 Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Printable tax forms 2010   The following are settlement fees and closing costs you cannot include in your basis in the property. Printable tax forms 2010 Fire insurance premiums. Printable tax forms 2010 Rent or other charges relating to occupancy of the property before closing. Printable tax forms 2010 Charges connected with getting or refinancing a loan, such as: Points (discount points, loan origination fees), Mortgage insurance premiums, Loan assumption fees, Cost of a credit report, and Fees for an appraisal required by a lender. Printable tax forms 2010   Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Printable tax forms 2010 Assumption of a mortgage. Printable tax forms 2010   If you buy property and become liable for an existing mortgage on the property, your basis is the amount you pay for the property plus the amount remaining to be paid on the mortgage. Printable tax forms 2010 Example. Printable tax forms 2010 You buy a building for $60,000 cash and assume a mortgage of $240,000 on it. Printable tax forms 2010 Your basis is $300,000. Printable tax forms 2010 Separating cost of land and buildings. Printable tax forms 2010   If you buy buildings and your cost includes the cost of the land on which they stand, you must divide the cost between the land and the buildings to figure the basis for depreciation of the buildings. Printable tax forms 2010 The part of the cost that you allocate to each asset is the ratio of the fair market value of that asset to the fair market value of the whole property at the time you buy it. Printable tax forms 2010   If you are not certain of the fair market values of the land and the buildings, you can divide the cost between them based on their assessed values for real estate tax purposes. Printable tax forms 2010 Example. Printable tax forms 2010 You buy a house and land for $200,000. Printable tax forms 2010 The purchase contract does not specify how much of the purchase price is for the house and how much is for the land. Printable tax forms 2010 The latest real estate tax assessment on the property was based on an assessed value of $160,000, of which $136,000 was for the house and $24,000 was for the land. Printable tax forms 2010 You can allocate 85% ($136,000 ÷ $160,000) of the purchase price to the house and 15% ($24,000 ÷ $160,000) of the purchase price to the land. Printable tax forms 2010 Your basis in the house is $170,000 (85% of $200,000) and your basis in the land is $30,000 (15% of $200,000). Printable tax forms 2010 Basis Other Than Cost You cannot use cost as a basis for property that you received: In return for services you performed; In an exchange for other property; As a gift; From your spouse, or from your former spouse as the result of a divorce; or As an inheritance. Printable tax forms 2010 If you received property in one of these ways, see Publication 551 for information on how to figure your basis. Printable tax forms 2010 Adjusted Basis To figure your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the production of income. Printable tax forms 2010 The result of these adjustments to the basis is the adjusted basis. Printable tax forms 2010 Increases to basis. Printable tax forms 2010   You must increase the basis of any property by the cost of all items properly added to a capital account. Printable tax forms 2010 These include the following. Printable tax forms 2010 The cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year. Printable tax forms 2010 Amounts spent after a casualty to restore the damaged property. Printable tax forms 2010 The cost of extending utility service lines to the property. Printable tax forms 2010 Legal fees, such as the cost of defending and perfecting title, or settling zoning issues. Printable tax forms 2010 Additions or improvements. Printable tax forms 2010   Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. Printable tax forms 2010 This includes all direct costs, such as material and labor, but does not include your own labor. Printable tax forms 2010 It also includes all expenses related to the addition or improvement. Printable tax forms 2010   For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Printable tax forms 2010 Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Printable tax forms 2010   Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. Printable tax forms 2010 For information on depreciating additions or improvements, see Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Printable tax forms 2010    The cost of landscaping improvements is usually treated as an addition to the basis of the land, which is not depreciable. Printable tax forms 2010 However, see What Rental Property Cannot Be Depreciated, earlier. Printable tax forms 2010 Assessments for local improvements. Printable tax forms 2010   Assessments for items which tend to increase the value of property, such as streets and sidewalks, must be added to the basis of the property. Printable tax forms 2010 For example, if your city installs curbing on the street in front of your house, and assesses you and your neighbors for its cost, you must add the assessment to the basis of your property. Printable tax forms 2010 Also add the cost of legal fees paid to obtain a decrease in an assessment levied against property to pay for local improvements. Printable tax forms 2010 You cannot deduct these items as taxes or depreciate them. Printable tax forms 2010    However, you can deduct as taxes, charges or assessments for maintenance, repairs, or interest charges related to the improvements. Printable tax forms 2010 Do not add them to your basis in the property. Printable tax forms 2010 Deducting vs. Printable tax forms 2010 capitalizing costs. Printable tax forms 2010   Do not add to your basis costs you can deduct as current expenses. Printable tax forms 2010 However, there are certain costs you can choose either to deduct or to capitalize. Printable tax forms 2010 If you capitalize these costs, include them in your basis. Printable tax forms 2010 If you deduct them, do not include them in your basis. Printable tax forms 2010   The costs you may choose to deduct or capitalize include carrying charges, such as interest and taxes, that you must pay to own property. Printable tax forms 2010   For more information about deducting or capitalizing costs and how to make the election, see Carrying Charges in Publication 535, chapter 7. Printable tax forms 2010 Decreases to basis. Printable tax forms 2010   You must decrease the basis of your property by any items that represent a return of your cost. Printable tax forms 2010 These include the following. Printable tax forms 2010 Insurance or other payment you receive as the result of a casualty or theft loss. Printable tax forms 2010 Casualty loss not covered by insurance for which you took a deduction. Printable tax forms 2010 Amount(s) you receive for granting an easement. Printable tax forms 2010 Residential energy credits you were allowed before 1986, or after 2005, if you added the cost of the energy items to the basis of your home. Printable tax forms 2010 Exclusion from income of subsidies for energy conservation measures. Printable tax forms 2010 Special depreciation allowance claimed on qualified property. Printable tax forms 2010 Depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Printable tax forms 2010 If you did not deduct enough or deducted too much in any year, see Depreciation under Decreases to Basis in Publication 551. Printable tax forms 2010   If your rental property was previously used as your main home, you must also decrease the basis by the following. Printable tax forms 2010 Gain you postponed from the sale of your main home before May 7, 1997, if the replacement home was converted to your rental property. Printable tax forms 2010 District of Columbia first-time homebuyer credit allowed on the purchase of your main home after August 4, 1997 and before January 1, 2012. Printable tax forms 2010 Amount of qualified principal residence indebtedness discharged on or after January 1, 2007. Printable tax forms 2010 Claiming the Special Depreciation Allowance For 2013, your residential rental property may qualify for a special depreciation allowance. Printable tax forms 2010 This allowance is figured before you figure your regular depreciation deduction. Printable tax forms 2010 See Publication 946, chapter 3, for details. Printable tax forms 2010 Also see the Instructions for Form 4562, Line 14. Printable tax forms 2010 If you qualify for, but choose not to take, a special depreciation allowance, you must attach a statement to your return. Printable tax forms 2010 The details of this election are in Publication 946, chapter 3, and the Instructions for Form 4562, Line 14. Printable tax forms 2010 MACRS Depreciation Most business and investment property placed in service after 1986 is depreciated using MACRS. Printable tax forms 2010 This section explains how to determine which MACRS depreciation system applies to your property. Printable tax forms 2010 It also discusses other information you need to know before you can figure depreciation under MACRS. Printable tax forms 2010 This information includes the property's: Recovery class, Applicable recovery period, Convention, Placed-in-service date, Basis for depreciation, and Depreciation method. Printable tax forms 2010 Depreciation Systems MACRS consists of two systems that determine how you depreciate your property—the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Printable tax forms 2010 You must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Printable tax forms 2010 Excluded Property You cannot use MACRS for certain personal property (such as furniture or appliances) placed in service in your rental property in 2013 if it had been previously placed in service before 1987 when MACRS became effective. Printable tax forms 2010 In most cases, personal property is excluded from MACRS if you (or a person related to you) owned or used it in 1986 or if your tenant is a person (or someone related to the person) who owned or used it in 1986. Printable tax forms 2010 However, the property is not excluded if your 2013 deduction under MACRS (using a half-year convention) is less than the deduction you would have under ACRS. Printable tax forms 2010 For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1. Printable tax forms 2010 Electing ADS If you choose, you can use the ADS method for most property. Printable tax forms 2010 Under ADS, you use the straight line method of depreciation. Printable tax forms 2010 The election of ADS for one item in a class of property generally applies to all property in that class that is placed in service during the tax year of the election. Printable tax forms 2010 However, the election applies on a property-by-property basis for residential rental property and nonresidential real property. Printable tax forms 2010 If you choose to use ADS for your residential rental property, the election must be made in the first year the property is placed in service. Printable tax forms 2010 Once you make this election, you can never revoke it. Printable tax forms 2010 For property placed in service during 2013, you make the election to use ADS by entering the depreciation on Form 4562, Part III, Section C, line 20c. Printable tax forms 2010 Property Classes Under GDS Each item of property that can be depreciated under MACRS is assigned to a property class, determined by its class life. Printable tax forms 2010 The property class generally determines the depreciation method, recovery period, and convention. Printable tax forms 2010 The property classes under GDS are: 3-year property, 5-year property, 7-year property, 10-year property, 15-year property, 20-year property, Nonresidential real property, and Residential rental property. Printable tax forms 2010 Under MACRS, property that you placed in service during 2013 in your rental activities generally falls into one of the following classes. Printable tax forms 2010 5-year property. Printable tax forms 2010 This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc. Printable tax forms 2010 ), automobiles, and light trucks. Printable tax forms 2010 This class also includes appliances, carpeting, furniture, etc. Printable tax forms 2010 , used in a residential rental real estate activity. Printable tax forms 2010 Depreciation on automobiles, other property used for transportation, computers and related peripheral equipment, and property of a type generally used for entertainment, recreation, or amusement is limited. Printable tax forms 2010 See chapter 5 of Publication 946. Printable tax forms 2010 7-year property. Printable tax forms 2010 This class includes office furniture and equipment (desks, file cabinets, etc. Printable tax forms 2010 ). Printable tax forms 2010 This class also includes any property that does not have a class life and that has not been designated by law as being in any other class. Printable tax forms 2010 15-year property. Printable tax forms 2010 This class includes roads, fences, and shrubbery (if depreciable). Printable tax forms 2010 Residential rental property. Printable tax forms 2010 This class includes any real property that is a rental building or structure (including a mobile home) for which 80% or more of the gross rental income for the tax year is from dwelling units. Printable tax forms 2010 It does not include a unit in a hotel, motel, inn, or other establishment where more than half of the units are used on a transient basis. Printable tax forms 2010 If you live in any part of the building or structure, the gross rental income includes the fair rental value of the part you live in. Printable tax forms 2010 The other property classes do not generally apply to property used in rental activities. Printable tax forms 2010 These classes are not discussed in this publication. Printable tax forms 2010 See Publication 946 for more information. Printable tax forms 2010 Recovery Periods Under GDS The recovery period of property is the number of years over which you recover its cost or other basis. Printable tax forms 2010 The recovery periods are generally longer under ADS than GDS. Printable tax forms 2010 The recovery period of property depends on its property class. Printable tax forms 2010 Under GDS, the recovery period of an asset is generally the same as its property class. Printable tax forms 2010 Class lives and recovery periods for most assets are listed in Appendix B of Publication 946. Printable tax forms 2010 See Table 2-1 for recovery periods of property commonly used in residential rental activities. Printable tax forms 2010 Qualified Indian reservation property. Printable tax forms 2010   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations. Printable tax forms 2010 For more information, see chapter 4 of Publication 946. Printable tax forms 2010 Additions or improvements to property. Printable tax forms 2010   Treat additions or improvements you make to your depreciable rental property as separate property items for depreciation purposes. Printable tax forms 2010   The property class and recovery period of the addition or improvement is the one that would apply to the original property if you had placed it in service at the same time as the addition or improvement. Printable tax forms 2010   The recovery period for an addition or improvement to property begins on the later of: The date the addition or improvement is placed in service, or The date the property to which the addition or improvement was made is placed in service. Printable tax forms 2010 Example. Printable tax forms 2010 You own a residential rental house that you have been renting since 1986 and depreciating under ACRS. Printable tax forms 2010 You built an addition onto the house and placed it in service in 2013. Printable tax forms 2010 You must use MACRS for the addition. Printable tax forms 2010 Under GDS, the addition is depreciated as residential rental property over 27. Printable tax forms 2010 5 years. Printable tax forms 2010 Table 2-1. Printable tax forms 2010 MACRS Recovery Periods for Property Used in Rental Activities   MACRS Recovery Period   Type of Property General Depreciation System Alternative Depreciation System   Computers and their peripheral equipment 5 years 5 years   Office machinery, such as: Typewriters Calculators Copiers 5 years 6 years   Automobiles 5 years 5 years   Light trucks 5 years 5 years   Appliances, such as: Stoves Refrigerators 5 years 9 years   Carpets 5 years 9 years   Furniture used in rental property 5 years 9 years   Office furniture and equipment, such as: Desks Files 7 years 10 years   Any property that does not have a class life and that has not been designated by law as being in any other class 7 years 12 years   Roads 15 years 20 years   Shrubbery 15 years 20 years   Fences 15 years 20 years   Residential rental property (buildings or structures) and structural components such as furnaces, waterpipes, venting, etc. Printable tax forms 2010 27. Printable tax forms 2010 5 years 40 years   Additions and improvements, such as a new roof The same recovery period as that of the property to which the addition or improvement is made, determined as if the property were placed in service at the same time as the addition or improvement. Printable tax forms 2010   Conventions A convention is a method established under MACRS to set the beginning and end of the recovery period. Printable tax forms 2010 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. Printable tax forms 2010 Mid-month convention. Printable tax forms 2010    A mid-month convention is used for all residential rental property and nonresidential real property. Printable tax forms 2010 Under this convention, you treat all property placed in service, or disposed of, during any month as placed in service, or disposed of, at the midpoint of that month. Printable tax forms 2010 Mid-quarter convention. Printable tax forms 2010   A mid-quarter convention must be used if the mid-month convention does not apply and the total depreciable basis of MACRS property placed in service in the last 3 months of a tax year (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) is more than 40% of the total basis of all such property you place in service during the year. Printable tax forms 2010   Under this convention, you treat all property placed in service, or disposed of, during any quarter of a tax year as placed in service, or disposed of, at the midpoint of the quarter. Printable tax forms 2010 Example. Printable tax forms 2010 During the tax year, Tom Martin purchased the following items to use in his rental property. Printable tax forms 2010 He elects not to claim the special depreciation allowance discussed earlier. Printable tax forms 2010 A dishwasher for $400 that he placed in service in January. Printable tax forms 2010 Used furniture for $100 that he placed in service in September. Printable tax forms 2010 A refrigerator for $800 that he placed in service in October. Printable tax forms 2010 Tom uses the calendar year as his tax year. Printable tax forms 2010 The total basis of all property placed in service that year is $1,300. Printable tax forms 2010 The $800 basis of the refrigerator placed in service during the last 3 months of his tax year exceeds $520 (40% × $1,300). Printable tax forms 2010 Tom must use the mid-quarter convention instead of the half-year convention for all three items. Printable tax forms 2010 Half-year convention. Printable tax forms 2010    The half-year convention is used if neither the mid-quarter convention nor the mid-month convention applies. Printable tax forms 2010 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 that tax year. Printable tax forms 2010   If this convention applies, you deduct a half year of depreciation for the first year and the last year that you depreciate the property. Printable tax forms 2010 You deduct a full year of depreciation for any other year during the recovery period. Printable tax forms 2010 Figuring Your Depreciation Deduction You can figure your MACRS depreciation deduction in one of two ways. Printable tax forms 2010 The deduction is substantially the same both ways. Printable tax forms 2010 You can either: Actually compute the deduction using the depreciation method and convention that apply over the recovery period of the property, or Use the percentage from the MACRS percentage tables. Printable tax forms 2010 In this publication we will use the percentage tables. Printable tax forms 2010 For instructions on how to compute the deduction, see chapter 4 of Publication 946. Printable tax forms 2010 Residential rental property. Printable tax forms 2010   You must use the straight line method and a mid-month convention for residential rental property. Printable tax forms 2010 In the first year that you claim depreciation for residential rental property, you can claim depreciation only for the number of months the property is in use, and you must use the mid-month convention (explained under Conventions , earlier). Printable tax forms 2010 5-, 7-, or 15-year property. Printable tax forms 2010   For property in the 5- or 7-year class, use the 200% declining balance method and a half-year convention. Printable tax forms 2010 However, in limited cases you must use the mid-quarter convention, if it applies. Printable tax forms 2010 For property in the 15-year class, use the 150% declining balance method and a half-year convention. Printable tax forms 2010   You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. Printable tax forms 2010 The choice to use the 150% method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Printable tax forms 2010 You make this election on Form 4562. Printable tax forms 2010 In Part III, column (f), enter “150 DB. Printable tax forms 2010 ” Once you make this election, you cannot change to another method. Printable tax forms 2010   If you use either the 200% or 150% declining balance method, you figure your deduction using the straight line method in the first tax year that the straight line method gives you an equal or larger deduction. Printable tax forms 2010   You can also choose to use the straight line method with a half-year or mid-quarter convention for 5-, 7-, or 15-year property. Printable tax forms 2010 The choice to use the straight line method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Printable tax forms 2010 You elect the straight line method on Form 4562. Printable tax forms 2010 In Part III, column (f), enter “S/L. Printable tax forms 2010 ” Once you make this election, you cannot change to another method. Printable tax forms 2010 MACRS Percentage Tables You can use the percentages in Table 2-2, earlier, to compute annual depreciation under MACRS. Printable tax forms 2010 The tables show the percentages for the first few years or until the change to the straight line method is made. Printable tax forms 2010 See Appendix A of Publication 946 for complete tables. Printable tax forms 2010 The percentages in Tables 2-2a, 2-2b, and 2-2c make the change from declining balance to straight line in the year that straight line will give a larger deduction. Printable tax forms 2010 If you elect to use the straight line method for 5-, 7-, or 15-year property, or the 150% declining balance method for 5- or 7-year property, use the tables in Appendix A of Publication 946. Printable tax forms 2010 How to use the percentage tables. Printable tax forms 2010   You must apply the table rates to your property's unadjusted basis (defined below) each year of the recovery period. Printable tax forms 2010   Once you begin using a percentage table to figure depreciation, you must continue to use it for the entire recovery period unless there is an adjustment to the basis of your property for a reason other than: Depreciation allowed or allowable, or An addition or improvement that is depreciated as a separate item of property. Printable tax forms 2010   If there is an adjustment for any reason other than (1) or (2), for example, because of a deductible casualty loss, you can no longer use the table. Printable tax forms 2010 For the year of the adjustment and for the remaining recovery period, figure depreciation using the property's adjusted basis at the end of the year and the appropriate depreciation method, as explained earlier under Figuring Your Depreciation Deduction . Printable tax forms 2010 See Figuring the Deduction Without Using the Tables in Publication 946, chapter 4. Printable tax forms 2010 Unadjusted basis. Printable tax forms 2010   This is the same basis you would use to figure gain on a sale (see Basis of Depreciable Property , earlier), but without reducing your original basis by any MACRS depreciation taken in earlier years. Printable tax forms 2010   However, you do reduce your original basis by other amounts claimed on the property, including: Any amortization, Any section 179 deduction, and Any special depreciation allowance. Printable tax forms 2010 For more information, see chapter 4 of Publication 946. Printable tax forms 2010 Please click here for the text description of the image. Printable tax forms 2010 Table 2-2 Tables 2-2a, 2-2b, and 2-2c. Printable tax forms 2010   The percentages in these tables take into account the half-year and mid-quarter conventions. Printable tax forms 2010 Use Table 2-2a for 5-year property, Table 2-2b for 7-year property, and Table 2-2c for 15-year property. Printable tax forms 2010 Use the percentage in the second column (half-year convention) unless you are required to use the mid-quarter convention (explained earlier). Printable tax forms 2010 If you must use the mid-quarter convention, use the column that corresponds to the calendar year quarter in which you placed the property in service. Printable tax forms 2010 Example 1. Printable tax forms 2010 You purchased a stove and refrigerator and placed them in service in June. Printable tax forms 2010 Your basis in the stove is $600 and your basis in the refrigerator is $1,000. Printable tax forms 2010 Both are 5-year property. Printable tax forms 2010 Using the half-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. Printable tax forms 2010 For that year your depreciation deduction is $120 ($600 × . Printable tax forms 2010 20) for the stove and $200 ($1,000 × . Printable tax forms 2010 20) for the refrigerator. Printable tax forms 2010 For Year 2, the depreciation percentage is 32%. Printable tax forms 2010 That year's depreciation deduction will be $192 ($600 × . Printable tax forms 2010 32) for the stove and $320 ($1,000 × . Printable tax forms 2010 32) for the refrigerator. Printable tax forms 2010 Example 2. Printable tax forms 2010 Assume the same facts as in Example 1, except you buy the refrigerator in October instead of June. Printable tax forms 2010 Since the refrigerator was placed in service in the last 3 months of the tax year, and its basis ($1,000) is more than 40% of the total basis of all property placed in service during the year ($1,600 × . Printable tax forms 2010 40 = $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. Printable tax forms 2010 Because you placed the refrigerator in service in October, you use the fourth quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 5%. Printable tax forms 2010 Your depreciation deduction for the refrigerator is $50 ($1,000 x . Printable tax forms 2010 05). Printable tax forms 2010 Because you placed the stove in service in June, you use the second quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 25%. Printable tax forms 2010 For that year, your depreciation deduction for the stove is $150 ($600 x . Printable tax forms 2010 25). Printable tax forms 2010 Table 2-2d. Printable tax forms 2010    Use this table when you are using the GDS 27. Printable tax forms 2010 5 year option for residential rental property. Printable tax forms 2010 Find the row for the month that you placed the property in service. Printable tax forms 2010 Use the percentages listed for that month to figure your depreciation deduction. Printable tax forms 2010 The mid-month convention is taken into account in the percentages shown in the table. Printable tax forms 2010 Continue to use the same row (month) under the column for the appropriate year. Printable tax forms 2010 Example. Printable tax forms 2010 You purchased a single family rental house for $185,000 and placed it in service on February 8. Printable tax forms 2010 The sales contract showed that the building cost $160,000 and the land cost $25,000. Printable tax forms 2010 Your basis for depreciation is its original cost, $160,000. Printable tax forms 2010 This is the first year of service for your residential rental property and you decide to use GDS which has a recovery period of 27. Printable tax forms 2010 5 years. Printable tax forms 2010 Using Table 2-2d, you find that the percentage for property placed in service in February of Year 1 is 3. Printable tax forms 2010 182%. Printable tax forms 2010 That year's depreciation deduction is $5,091 ($160,000 x . Printable tax forms 2010 03182). Printable tax forms 2010 Figuring MACRS Depreciation Under ADS Table 2–1, earlier, shows the ADS recovery periods for property used in rental activities. Printable tax forms 2010 See Appendix B in Publication 946 for other property. Printable tax forms 2010 If your property is not listed in Appendix B, it is considered to have no class life. Printable tax forms 2010 Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. Printable tax forms 2010 Use the mid-month convention for residential rental property and nonresidential real property. Printable tax forms 2010 For all other property, use the half-year or mid-quarter convention, as appropriate. Printable tax forms 2010 See Publication 946 for ADS depreciation tables. Printable tax forms 2010 Claiming the Correct Amount of Depreciation You should claim the correct amount of depreciation each tax year. Printable tax forms 2010 If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Printable tax forms 2010 For more information, see Depreciation under Decreases to Basis in Publication 551. Printable tax forms 2010 If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Printable tax forms 2010 S. Printable tax forms 2010 Individual Income Tax Return. Printable tax forms 2010 If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Printable tax forms 2010 Filing an amended return. Printable tax forms 2010   You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Printable tax forms 2010 You claimed the incorrect amount because of a mathematical error made in any year. Printable tax forms 2010 You claimed the incorrect amount because of a posting error made in any year. Printable tax forms 2010 You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. Printable tax forms 2010 You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Printable tax forms 2010   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return for the property used in your rental activity. Printable tax forms 2010 This also occurs when you use the same impermissible method of determining depreciation (for example, using the wrong MACRS recovery period) in two or more consecutively filed tax returns. Printable tax forms 2010   If an amended return is allowed, you must file it by the later of the following dates. Printable tax forms 2010 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Printable tax forms 2010 A return filed before an unextended due date is considered filed on that due date. Printable tax forms 2010 2 years from the time you paid your tax for that year. Printable tax forms 2010 Changing your accounting method. Printable tax forms 2010   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Printable tax forms 2010 In some instances, that consent is automatic. Printable tax forms 2010 For more information, see Changing Your Accounting Method in Publication 946,  chapter 1. Printable tax forms 2010 Prev  Up  Next   Home   More Online Publications