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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Tax Forms For 2009

Tax Return Forms 2011E File Your State Taxes For FreeFile A 1040xHow To Amend A Previous Tax ReturnFiling State Income Tax For FreeFree E File 2013 Taxes2011 Taxes Free OnlinePrior TaxAmend Tax Return OnlineFree Taxes For MilitaryFederal Tax Forms 1040ez 2013File 2006 Taxes FreeWhat If I Did Not File 2011 TaxesFiling For Tax ExtensionState Tax Return FormsMy1040ez Com1040ez 2011 Form PdfBest Tax Preparation SoftwareE File Taxes FreeHelp With 1040xI Need To File My 2010 TaxesState Tax Forms Need FillState Tax FileH&r Block OnlineHow Do I Amend A Tax ReturnEz Form Online1040nr E File1040nr Tax Return2010 Taxes Online1040 Ez Form2010 Tax FormAmended Tax FormsEfile 1040x Form1040 Ez InstructionsWww Irs Gov Efile Index HtmlHow To File 1040x FormForms 1040x2011 E-fileIrs1040x1040ez 2010 Tax Form

Tax Forms For 2009

Tax forms for 2009 11. Tax forms for 2009   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Tax forms for 2009 It explains the following topics. Tax forms for 2009 How to figure whether your benefits are taxable. Tax forms for 2009 How to use the social security benefits worksheet (with examples). Tax forms for 2009 How to report your taxable benefits. Tax forms for 2009 How to treat repayments that are more than the benefits you received during the year. Tax forms for 2009 Social security benefits include monthly retirement, survivor, and disability benefits. Tax forms for 2009 They do not include supplemental security income (SSI) payments, which are not taxable. Tax forms for 2009 Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Tax forms for 2009 They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Tax forms for 2009 If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Tax forms for 2009 These forms show the amounts received and repaid, and taxes withheld for the year. Tax forms for 2009 You may receive more than one of these forms for the same year. Tax forms for 2009 You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Tax forms for 2009 See the Appendix at the end of Publication 915 for more information. Tax forms for 2009 Note. Tax forms for 2009 When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Tax forms for 2009 What is not covered in this chapter. Tax forms for 2009   This chapter does not cover the tax rules for the following railroad retirement benefits. Tax forms for 2009 Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Tax forms for 2009 Tier 2 benefits. Tax forms for 2009 Vested dual benefits. Tax forms for 2009 Supplemental annuity benefits. Tax forms for 2009 For information on these benefits, see Publication 575, Pension and Annuity Income. Tax forms for 2009   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Tax forms for 2009 For information about these benefits, see Publication 519, U. Tax forms for 2009 S. Tax forms for 2009 Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Tax forms for 2009   This chapter also does not cover the tax rules for foreign social security benefits. Tax forms for 2009 These benefits are taxable as annuities, unless they are exempt from U. Tax forms for 2009 S. Tax forms for 2009 tax or treated as a U. Tax forms for 2009 S. Tax forms for 2009 social security benefit under a tax treaty. Tax forms for 2009 Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Tax forms for 2009 When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Tax forms for 2009 S. Tax forms for 2009 savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Tax forms for 2009 Children's benefits. Tax forms for 2009   The rules in this chapter apply to benefits received by children. Tax forms for 2009 See Who is taxed , later. Tax forms for 2009 Figuring total income. Tax forms for 2009   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Tax forms for 2009 If the total is more than your base amount, part of your benefits may be taxable. Tax forms for 2009    If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Tax forms for 2009 Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Tax forms for 2009    If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Tax forms for 2009 If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Tax forms for 2009 Base amount. Tax forms for 2009   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Tax forms for 2009 Worksheet 11-1. Tax forms for 2009   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Tax forms for 2009 This is a quick way to check whether some of your benefits may be taxable. Tax forms for 2009 Worksheet 11-1. Tax forms for 2009 A Quick Way To Check if Your Benefits May Be Taxable A. Tax forms for 2009 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Tax forms for 2009 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Tax forms for 2009 (If you received more than one form, combine the amounts from box 5 and enter the total. Tax forms for 2009 ) A. Tax forms for 2009   Note. Tax forms for 2009 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Tax forms for 2009 B. Tax forms for 2009 Enter one-half of the amount on line A B. Tax forms for 2009   C. Tax forms for 2009 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Tax forms for 2009   D. Tax forms for 2009 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Tax forms for 2009   E. Tax forms for 2009 Add lines B, C, and D E. Tax forms for 2009   Note. Tax forms for 2009 Compare the amount on line E to your base amount for your filing status. Tax forms for 2009 If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Tax forms for 2009 If the amount on line E is more than your base amount, some of your benefits may be taxable. Tax forms for 2009 You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Tax forms for 2009 If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Tax forms for 2009 Example. Tax forms for 2009 You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Tax forms for 2009 In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Tax forms for 2009 Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Tax forms for 2009 You also received a taxable pension of $22,800 and interest income of $500. Tax forms for 2009 You did not have any tax-exempt interest income. Tax forms for 2009 Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Tax forms for 2009 Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Tax forms for 2009 Filled-in Worksheet 11-1. Tax forms for 2009 A Quick Way To Check if Your Benefits May Be Taxable A. Tax forms for 2009 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Tax forms for 2009 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Tax forms for 2009 (If you received more than one form, combine the amounts from box 5 and enter the total. Tax forms for 2009 ) A. Tax forms for 2009 $11,000 Note. Tax forms for 2009 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Tax forms for 2009 B. Tax forms for 2009 Enter one-half of the amount on line A B. Tax forms for 2009 5,500 C. Tax forms for 2009 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Tax forms for 2009 23,300 D. Tax forms for 2009 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Tax forms for 2009 -0- E. Tax forms for 2009 Add lines B, C, and D E. Tax forms for 2009 $28,800 Note. Tax forms for 2009 Compare the amount on line E to your base amount for your filing status. Tax forms for 2009 If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Tax forms for 2009 If the amount on line E is more than your base amount, some of your benefits may be taxable. Tax forms for 2009 You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Tax forms for 2009 If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Tax forms for 2009 Who is taxed. Tax forms for 2009   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Tax forms for 2009 For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Tax forms for 2009 One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Tax forms for 2009 Repayment of benefits. Tax forms for 2009   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Tax forms for 2009 It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Tax forms for 2009 If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Tax forms for 2009   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Tax forms for 2009 Your repayments are shown in box 4. Tax forms for 2009 The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Tax forms for 2009 Use the amount in box 5 to figure whether any of your benefits are taxable. Tax forms for 2009 Tax withholding and estimated tax. Tax forms for 2009   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Tax forms for 2009 If you choose to do this, you must complete a Form W-4V. Tax forms for 2009   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Tax forms for 2009 For details, see Publication 505 or the instructions for Form 1040-ES. Tax forms for 2009 How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Tax forms for 2009 You cannot use Form 1040EZ. Tax forms for 2009 Reporting on Form 1040. Tax forms for 2009   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Tax forms for 2009 Reporting on Form 1040A. Tax forms for 2009   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Tax forms for 2009 Benefits not taxable. Tax forms for 2009   If you are filing Form 1040EZ, do not report any benefits on your tax return. Tax forms for 2009 If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Tax forms for 2009 How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Tax forms for 2009 Generally, the higher that total amount, the greater the taxable part of your benefits. Tax forms for 2009 Maximum taxable part. Tax forms for 2009   Generally, up to 50% of your benefits will be taxable. Tax forms for 2009 However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Tax forms for 2009 The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Tax forms for 2009 You are married filing separately and lived with your spouse at any time during 2013. Tax forms for 2009 Which worksheet to use. Tax forms for 2009   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Tax forms for 2009 You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Tax forms for 2009 You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Tax forms for 2009 In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Tax forms for 2009 Situation (1) does not apply and you take an exclusion for interest from qualified U. Tax forms for 2009 S. Tax forms for 2009 savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Tax forms for 2009 In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Tax forms for 2009 You received a lump-sum payment for an earlier year. Tax forms for 2009 In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Tax forms for 2009 See Lump-sum election next. Tax forms for 2009 Lump-sum election. Tax forms for 2009   You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Tax forms for 2009    This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Tax forms for 2009 No part of the lump-sum death benefit is subject to tax. Tax forms for 2009   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Tax forms for 2009 However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Tax forms for 2009 You can elect this method if it lowers your taxable benefits. Tax forms for 2009 Making the election. Tax forms for 2009   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Tax forms for 2009 That discussion also explains how to make the election. Tax forms for 2009    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Tax forms for 2009 Do not file an amended return for the earlier year. Tax forms for 2009 Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Tax forms for 2009 Example 1. Tax forms for 2009 George White is single and files Form 1040 for 2013. Tax forms for 2009 He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Tax forms for 2009 The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Tax forms for 2009 To figure his taxable benefits, George completes the worksheet shown here. Tax forms for 2009 Filled-in Worksheet 1. Tax forms for 2009 Figuring Your Taxable Benefits 1. Tax forms for 2009 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Tax forms for 2009 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Tax forms for 2009 Enter one-half of line 1 2,990 3. Tax forms for 2009 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Tax forms for 2009     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Tax forms for 2009 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Tax forms for 2009 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Tax forms for 2009 Combine lines 2, 3, 4, and 5 31,980 7. Tax forms for 2009 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Tax forms for 2009     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Tax forms for 2009 Is the amount on line 7 less than the amount on line 6?     No. Tax forms for 2009 None of your social security benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Tax forms for 2009   Yes. Tax forms for 2009 Subtract line 7 from line 6 31,980 9. Tax forms for 2009 If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 25,000   Note. Tax forms for 2009 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Tax forms for 2009 85) and enter the result on line 17. Tax forms for 2009 Then go to line 18. Tax forms for 2009   10. Tax forms for 2009 Is the amount on line 9 less than the amount on line 8?     No. Tax forms for 2009 None of your benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Tax forms for 2009     Yes. Tax forms for 2009 Subtract line 9 from line 8 6,980 11. Tax forms for 2009 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 9,000 12. Tax forms for 2009 Subtract line 11 from line 10. Tax forms for 2009 If zero or less, enter -0- -0- 13. Tax forms for 2009 Enter the smaller of line 10 or line 11 6,980 14. Tax forms for 2009 Enter one-half of line 13 3,490 15. Tax forms for 2009 Enter the smaller of line 2 or line 14 2,990 16. Tax forms for 2009 Multiply line 12 by 85% (. Tax forms for 2009 85). Tax forms for 2009 If line 12 is zero, enter -0- -0- 17. Tax forms for 2009 Add lines 15 and 16 2,990 18. Tax forms for 2009 Multiply line 1 by 85% (. Tax forms for 2009 85) 5,083 19. Tax forms for 2009 Taxable benefits. Tax forms for 2009 Enter the smaller of line 17 or line 18. Tax forms for 2009 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Tax forms for 2009 On line 20a of his Form 1040, George enters his net benefits of $5,980. Tax forms for 2009 On line 20b, he enters his taxable benefits of $2,990. Tax forms for 2009 Example 2. Tax forms for 2009 Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Tax forms for 2009 Ray is retired and received a fully taxable pension of $15,500. Tax forms for 2009 He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Tax forms for 2009 Alice worked during the year and had wages of $14,000. Tax forms for 2009 She made a deductible payment to her IRA account of $1,000. Tax forms for 2009 Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Tax forms for 2009 They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Tax forms for 2009 They find none of Ray's social security benefits are taxable. Tax forms for 2009 On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Tax forms for 2009 Filled-in Worksheet 1. Tax forms for 2009 Figuring Your Taxable Benefits 1. Tax forms for 2009 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Tax forms for 2009 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Tax forms for 2009 Enter one-half of line 1 2,800 3. Tax forms for 2009 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Tax forms for 2009     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Tax forms for 2009 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Tax forms for 2009 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Tax forms for 2009 Combine lines 2, 3, 4, and 5 32,550 7. Tax forms for 2009 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Tax forms for 2009     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Tax forms for 2009 Is the amount on line 7 less than the amount on line 6?     No. Tax forms for 2009 None of your social security benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Tax forms for 2009   Yes. Tax forms for 2009 Subtract line 7 from line 6 31,550 9. Tax forms for 2009 If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Tax forms for 2009 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Tax forms for 2009 85) and enter the result on line 17. Tax forms for 2009 Then go to line 18. Tax forms for 2009   10. Tax forms for 2009 Is the amount on line 9 less than the amount on line 8?     No. Tax forms for 2009 None of your benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Tax forms for 2009     Yes. Tax forms for 2009 Subtract line 9 from line 8   11. Tax forms for 2009 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013   12. Tax forms for 2009 Subtract line 11 from line 10. Tax forms for 2009 If zero or less, enter -0-   13. Tax forms for 2009 Enter the smaller of line 10 or line 11   14. Tax forms for 2009 Enter one-half of line 13   15. Tax forms for 2009 Enter the smaller of line 2 or line 14   16. Tax forms for 2009 Multiply line 12 by 85% (. Tax forms for 2009 85). Tax forms for 2009 If line 12 is zero, enter -0-   17. Tax forms for 2009 Add lines 15 and 16   18. Tax forms for 2009 Multiply line 1 by 85% (. Tax forms for 2009 85)   19. Tax forms for 2009 Taxable benefits. Tax forms for 2009 Enter the smaller of line 17 or line 18. Tax forms for 2009 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Tax forms for 2009 Joe and Betty Johnson file a joint return on Form 1040 for 2013. Tax forms for 2009 Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Tax forms for 2009 Joe's Form RRB-1099 shows $10,000 in box 5. Tax forms for 2009 Betty is a retired government worker and receives a fully taxable pension of $38,000. Tax forms for 2009 They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Tax forms for 2009 S. Tax forms for 2009 savings bond. Tax forms for 2009 The savings bond interest qualified for the exclusion. Tax forms for 2009 They figure their taxable benefits by completing Worksheet 1. Tax forms for 2009 Because they have qualified U. Tax forms for 2009 S. Tax forms for 2009 savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Tax forms for 2009 On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Tax forms for 2009 Filled-in Worksheet 1. Tax forms for 2009 Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Tax forms for 2009 • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Tax forms for 2009 None of your benefits are taxable for 2013. Tax forms for 2009 For more information, see Repayments More Than Gross Benefits. Tax forms for 2009 • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Tax forms for 2009 S. Tax forms for 2009 Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Tax forms for 2009 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Tax forms for 2009 1. Tax forms for 2009 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Tax forms for 2009 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Tax forms for 2009 Enter one-half of line 1 5,000 3. Tax forms for 2009 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Tax forms for 2009     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Tax forms for 2009 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Tax forms for 2009 Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Tax forms for 2009 Combine lines 2, 3, 4, and 5 45,500 7. Tax forms for 2009 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Tax forms for 2009     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Tax forms for 2009 Is the amount on line 7 less than the amount on line 6?     No. Tax forms for 2009 None of your social security benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Tax forms for 2009   Yes. Tax forms for 2009 Subtract line 7 from line 6 45,500 9. Tax forms for 2009 If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Tax forms for 2009 If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Tax forms for 2009 85) and enter the result on line 17. Tax forms for 2009 Then go to line 18. Tax forms for 2009   10. Tax forms for 2009 Is the amount on line 9 less than the amount on line 8?     No. Tax forms for 2009 None of your benefits are taxable. Tax forms for 2009 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Tax forms for 2009 If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Tax forms for 2009     Yes. Tax forms for 2009 Subtract line 9 from line 8 13,500 11. Tax forms for 2009 Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 12,000 12. Tax forms for 2009 Subtract line 11 from line 10. Tax forms for 2009 If zero or less, enter -0- 1,500 13. Tax forms for 2009 Enter the smaller of line 10 or line 11 12,000 14. Tax forms for 2009 Enter one-half of line 13 6,000 15. Tax forms for 2009 Enter the smaller of line 2 or line 14 5,000 16. Tax forms for 2009 Multiply line 12 by 85% (. Tax forms for 2009 85). Tax forms for 2009 If line 12 is zero, enter -0- 1,275 17. Tax forms for 2009 Add lines 15 and 16 6,275 18. Tax forms for 2009 Multiply line 1 by 85% (. Tax forms for 2009 85) 8,500 19. Tax forms for 2009 Taxable benefits. Tax forms for 2009 Enter the smaller of line 17 or line 18. Tax forms for 2009 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Tax forms for 2009 Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Tax forms for 2009 Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Tax forms for 2009 Disability payments. Tax forms for 2009   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Tax forms for 2009 If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Tax forms for 2009 If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Tax forms for 2009 Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Tax forms for 2009 Legal expenses. Tax forms for 2009   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Tax forms for 2009   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Tax forms for 2009 Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Tax forms for 2009 If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Tax forms for 2009 Do not use a worksheet in this case. Tax forms for 2009 If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Tax forms for 2009 If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Tax forms for 2009 Joint return. Tax forms for 2009   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Tax forms for 2009 You do this to get your net benefits when figuring if your combined benefits are taxable. Tax forms for 2009 Example. Tax forms for 2009 John and Mary file a joint return for 2013. Tax forms for 2009 John received Form SSA-1099 showing $3,000 in box 5. Tax forms for 2009 Mary also received Form SSA-1099 and the amount in box 5 was ($500). Tax forms for 2009 John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Tax forms for 2009 Repayment of benefits received in an earlier year. Tax forms for 2009   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Tax forms for 2009 Deduction $3,000 or less. Tax forms for 2009   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Tax forms for 2009 Claim it on Schedule A (Form 1040), line 23. Tax forms for 2009 Deduction more than $3,000. Tax forms for 2009    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Tax forms for 2009 Figure your tax for 2013 in the following steps. Tax forms for 2009 Figure the tax without the itemized deduction included on Schedule A, line 28. Tax forms for 2009 For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Tax forms for 2009 Then refigure the tax for that year. Tax forms for 2009 Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Tax forms for 2009 Subtract the result in (c) from the result in (a). Tax forms for 2009 Compare the tax figured in methods (1) and (2). Tax forms for 2009 Your tax for 2013 is the smaller of the two amounts. Tax forms for 2009 If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Tax forms for 2009 If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Tax forms for 2009 Check box d and enter “I. Tax forms for 2009 R. Tax forms for 2009 C. Tax forms for 2009 1341” in the space next to that box. Tax forms for 2009 If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Tax forms for 2009 Prev  Up  Next   Home   More Online Publications
Español

Federal Voting Assistance Program

The Federal Voting Assistance Program helps uniformed services and overseas voters exercise their right to vote.

Contact the Agency or Department

Website: Federal Voting Assistance Program

E-mail:

Address: 4800 Mark Center Drive
Mailbox 10

Arlington, VA 22350-5000

Phone Number: 800-438-VOTE (8683)

The Tax Forms For 2009

Tax forms for 2009 4. Tax forms for 2009   Farm Business Expenses Table of Contents What's New for 2013 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible ExpensesReasonable allocation. Tax forms for 2009 Prepaid Farm Supplies Prepaid Livestock Feed Labor Hired Repairs and Maintenance Interest Breeding Fees Fertilizer and Lime Taxes Insurance Rent and Leasing Depreciation Business Use of Your Home Truck and Car Expenses Travel Expenses Marketing Quota Penalties Tenant House Expenses Items Purchased for Resale Other Expenses Domestic Production Activities Deduction Capital ExpensesForestation and reforestation costs. Tax forms for 2009 Nondeductible ExpensesPersonal, Living, and Family Expenses Other Nondeductible Items Losses From Operating a FarmAt-Risk Limits Passive Activity Limits Excess Farm Loss Limit Not-for-Profit FarmingUsing the presumption later. Tax forms for 2009 Category 1. Tax forms for 2009 Category 2. Tax forms for 2009 Category 3. Tax forms for 2009 What's New for 2013 Standard mileage rate. Tax forms for 2009  For 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56. Tax forms for 2009 5 cents. Tax forms for 2009 See Truck and Car Expenses , later. Tax forms for 2009 Simplified method for business use of home deduction. Tax forms for 2009  The IRS now provides a simplified method to determine your expenses for business use of your home. Tax forms for 2009 For more information, see Schedule C (Form 1040), Part II, and its instructions. Tax forms for 2009 Introduction You can generally deduct the current costs of operating your farm. Tax forms for 2009 Current costs are expenses you do not have to capitalize or include in inventory costs. Tax forms for 2009 However, your deduction for the cost of livestock feed and certain other supplies may be limited. Tax forms for 2009 If you have an operating loss, you may not be able to deduct all of it. Tax forms for 2009 Topics - This chapter discusses: Deductible expenses Domestic production activities deduction Capital expenses Nondeductible expenses Losses from operating a farm Not-for-profit farming Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home 925 Passive Activity and At-Risk Rules 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch F (Form 1040) Profit or Loss From Farming 1045 Application for Tentative Refund 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit 8903 Domestic Production Activities Deduction See chapter 16 for information about getting publications and forms. Tax forms for 2009 Deductible Expenses The ordinary and necessary costs of operating a farm for profit are deductible business expenses. Tax forms for 2009 “Ordinary” means what most farmers do and “necessary” means what is useful and helpful in farming. Tax forms for 2009 Schedule F, Part II, lists some common farm expenses that are typically deductible. Tax forms for 2009 This chapter discusses many of these expenses, as well as others not listed on Schedule F. Tax forms for 2009 Reimbursed expenses. Tax forms for 2009   If the reimbursement is received in the same year that the expense is claimed, reduce the expense by the amount of the reimbursement. Tax forms for 2009 If the reimbursement is received in a year after the expense is claimed, include the reimbursement amount in income. Tax forms for 2009 See Refund or reimbursement under Income From Other Sources in chapter 3. Tax forms for 2009 Personal and business expenses. Tax forms for 2009   Some expenses you pay during the tax year may be part personal and part business. Tax forms for 2009 These may include expenses for gasoline, oil, fuel, water, rent, electricity, telephone, automobile upkeep, repairs, insurance, interest, and taxes. Tax forms for 2009   You must allocate these mixed expenses between their business and personal parts. Tax forms for 2009 Generally, the personal part of these expenses is not deductible. Tax forms for 2009 The business portion of the expenses is deductible on Schedule F. Tax forms for 2009 Example. Tax forms for 2009 You paid $1,500 for electricity during the tax year. Tax forms for 2009 You used 1/3 of the electricity for personal purposes and 2/3 for farming. Tax forms for 2009 Under these circumstances, you can deduct $1,000 (2/3 of $1,500) of your electricity expense as a farm business expense. Tax forms for 2009 Reasonable allocation. Tax forms for 2009   It is not always easy to determine the business and nonbusiness parts of an expense. Tax forms for 2009 There is no method of allocation that applies to all mixed expenses. Tax forms for 2009 Any reasonable allocation is acceptable. Tax forms for 2009 What is reasonable depends on the circumstances in each case. Tax forms for 2009 Prepaid Farm Supplies Prepaid farm supplies include the following items if paid for during the year. Tax forms for 2009 Feed, seed, fertilizer, and similar farm supplies not used or consumed during the year, but not including farm supplies that you would have consumed during the year if not for a fire, storm, flood, other casualty, disease, or drought. Tax forms for 2009 Poultry (including egg-laying hens and baby chicks) bought for use (or for both use and resale) in your farm business. Tax forms for 2009 However, include only the amount that would be deductible in the following year if you had capitalized the cost and deducted it ratably over the lesser of 12 months or the useful life of the poultry. Tax forms for 2009 Poultry bought for resale and not resold during the year. Tax forms for 2009 Deduction limit. Tax forms for 2009   If you use the cash method of accounting to report your income and expenses, your deduction for prepaid farm supplies in the year you pay for them may be limited to 50% of your other deductible farm expenses for the year (all Schedule F deductions except prepaid farm supplies). Tax forms for 2009 This limit does not apply if you meet one of the exceptions described later. Tax forms for 2009 See Chapter 2 for a discussion of the cash method of accounting. Tax forms for 2009   If the limit applies, you can deduct the excess cost of farm supplies other than poultry in the year you use or consume the supplies. Tax forms for 2009 The excess cost of poultry bought for use (or for both use and resale) in your farm business is deductible in the year following the year you pay for it. Tax forms for 2009 The excess cost of poultry bought for resale is deductible in the year you sell or otherwise dispose of that poultry. Tax forms for 2009 Example. Tax forms for 2009 You may not qualify for the exception described next. Tax forms for 2009 During 2013, you bought fertilizer ($4,000), feed ($1,000), and seed ($500) for use on your farm in the following year. Tax forms for 2009 Your total prepaid farm supplies expense for 2013 is $5,500. Tax forms for 2009 Your other deductible farm expenses totaled $10,000 for 2013. Tax forms for 2009 Therefore, your deduction for prepaid farm supplies cannot be more than $5,000 (50% of $10,000) for 2013. Tax forms for 2009 The excess prepaid farm supplies expense of $500 ($5,500 − $5,000) is deductible in a later tax year when you use or consume the supplies. Tax forms for 2009 Exceptions. Tax forms for 2009   This limit on the deduction for prepaid farm supplies expense does not apply if you are a farm-related taxpayer and either of the following apply. Tax forms for 2009 Your prepaid farm supplies expense is more than 50% of your other deductible farm expenses because of a change in business operations caused by unusual circumstances. Tax forms for 2009 Your total prepaid farm supplies expense for the preceding 3 tax years is less than 50% of your total other deductible farm expenses for those 3 tax years. Tax forms for 2009   You are a farm-related taxpayer if any of the following tests apply. Tax forms for 2009 Your main home is on a farm. Tax forms for 2009 Your principal business is farming. Tax forms for 2009 A member of your family meets (1) or (2). Tax forms for 2009 For this purpose, your family includes your brothers and sisters, half-brothers and half-sisters, spouse, parents, grandparents, children, grandchildren, and aunts and uncles and their children. Tax forms for 2009    Whether or not the deduction limit for prepaid farm supplies applies, your expenses for prepaid livestock feed may be subject to the rules for advance payment of livestock feed, discussed next. Tax forms for 2009 Prepaid Livestock Feed If you report your income and expenses under the cash method of accounting, you cannot deduct in the year paid the cost of feed your livestock will consume in a later year unless you meet all the following tests. Tax forms for 2009 The payment is for the purchase of feed rather than a deposit. Tax forms for 2009 The prepayment has a business purpose and is not merely for tax avoidance. Tax forms for 2009 Deducting the prepayment does not result in a material distortion of your income. Tax forms for 2009 If you meet all three tests, you can deduct the prepaid feed, subject to the limit on prepaid farm supplies discussed earlier. Tax forms for 2009 If you fail any of these tests, you can deduct the prepaid feed only in the year it is consumed. Tax forms for 2009 This rule does not apply to the purchase of commodity futures contracts. Tax forms for 2009 Payment for the purchase of feed. Tax forms for 2009   Whether a payment is for the purchase of feed or a deposit depends on the facts and circumstances in each case. Tax forms for 2009 It is for the purchase of feed if you can show you made it under a binding commitment to accept delivery of a specific quantity of feed at a fixed price and you are not entitled, by contract or business custom, to a refund or repurchase. Tax forms for 2009   The following are some factors that show a payment is a deposit rather than for the purchase of feed. Tax forms for 2009 The absence of specific quantity terms. Tax forms for 2009 The right to a refund of any unapplied payment credit at the end of the contract. Tax forms for 2009 The seller's treatment of the payment as a deposit. Tax forms for 2009 The right to substitute other goods or products for those specified in the contract. Tax forms for 2009   A provision permitting substitution of ingredients to vary the particular feed mix to meet your livestock's current diet requirements will not suggest a deposit. Tax forms for 2009 Further, a price adjustment to reflect market value at the date of delivery is not, by itself, proof of a deposit. Tax forms for 2009 Business purpose. Tax forms for 2009   The prepayment has a business purpose only if you have a reasonable expectation of receiving some business benefit from prepaying the cost of livestock feed. Tax forms for 2009 The following are some examples of business benefits. Tax forms for 2009 Fixing maximum prices and securing an assured feed supply. Tax forms for 2009 Securing preferential treatment in anticipation of a feed shortage. Tax forms for 2009   Other factors considered in determining the existence of a business purpose are whether the prepayment was a condition imposed by the seller and whether that condition was meaningful. Tax forms for 2009 No material distortion of income. Tax forms for 2009   The following are some factors considered in determining whether deducting prepaid livestock feed materially distorts income. Tax forms for 2009 Your customary business practice in conducting your livestock operations. Tax forms for 2009 The expense in relation to past purchases. Tax forms for 2009 The time of year you made the purchase. Tax forms for 2009 The expense in relation to your income for the year. Tax forms for 2009 Labor Hired You can deduct reasonable wages paid for regular farm labor, piecework, contract labor, and other forms of labor hired to perform your farming operations. Tax forms for 2009 You can pay wages in cash or in noncash items such as inventory, capital assets, or assets used in your business. Tax forms for 2009 The cost of boarding farm labor is a deductible labor cost. Tax forms for 2009 Other deductible costs you incur for farm labor include health insurance, workers' compensation insurance, and other benefits. Tax forms for 2009 If you must withhold social security, Medicare, and income taxes from your employees' cash wages, you can still deduct the full amount of wages before withholding. Tax forms for 2009 See chapter 13 for more information on employment taxes. Tax forms for 2009 Also, deduct the employer's share of the social security and Medicare taxes you must pay on your employees' wages as a farm business expense on Schedule F, line 29. Tax forms for 2009 See Taxes , later. Tax forms for 2009 Property for services. Tax forms for 2009   If you transfer property to an employee in payment for services, you can deduct as wages paid the fair market value of the property on the date of transfer. Tax forms for 2009 If the employee pays you anything for the property, deduct as wages the fair market value of the property minus the payment by the employee for the property. Tax forms for 2009   Treat the wages deducted as an amount received for the property. Tax forms for 2009 You may have a gain or loss to report if the property's adjusted basis on the date of transfer is different from its fair market value. Tax forms for 2009 Any gain or loss has the same character the exchanged property had in your hands. Tax forms for 2009 For more information, see chapter 8. Tax forms for 2009 Child as an employee. Tax forms for 2009   You can deduct reasonable wages or other compensation you pay to your child for doing farmwork if a true employer-employee relationship exists between you and your child. Tax forms for 2009 Include these wages in the child's income. Tax forms for 2009 The child may have to file an income tax return. Tax forms for 2009 These wages may also be subject to social security and Medicare taxes if your child is age 18 or older. Tax forms for 2009 For more information, see Family Employees in chapter 13. Tax forms for 2009    A Form W-2, Wage and Tax Statement, should be issued to the child employee. Tax forms for 2009   The fact that your child spends the wages to buy clothes or other necessities you normally furnish does not prevent you from deducting your child's wages as a farm expense. Tax forms for 2009 The amount of wages paid to the child could cause a loss of the dependency exemption depending on how the child uses the money. Tax forms for 2009 Spouse as an employee. Tax forms for 2009   You can deduct reasonable wages or other compensation you pay to your spouse if a true employer-employee relationship exists between you and your spouse. Tax forms for 2009 Wages you pay to your spouse are subject to social security and Medicare taxes. Tax forms for 2009 For more information, see Family Employees in chapter 13. Tax forms for 2009 Nondeductible Pay You cannot deduct wages paid for certain household work, construction work, and maintenance of your home. Tax forms for 2009 However, those wages may be subject to the employment taxes discussed in chapter 13. Tax forms for 2009 Household workers. Tax forms for 2009   Do not deduct amounts paid to persons engaged in household work, except to the extent their services are used in boarding or otherwise caring for farm laborers. Tax forms for 2009 Construction labor. Tax forms for 2009   Do not deduct wages paid to hired help for the construction of new buildings or other improvements. Tax forms for 2009 These wages are part of the cost of the building or other improvement. Tax forms for 2009 You must capitalize them. Tax forms for 2009 Maintaining your home. Tax forms for 2009   If your farm employee spends time maintaining or repairing your home, the wages and employment taxes you pay for that work are nondeductible personal expenses. Tax forms for 2009 For example, assume you have a farm employee for the entire tax year and the employee spends 5% of the time maintaining your home. Tax forms for 2009 The employee devotes the remaining time to work on your farm. Tax forms for 2009 You cannot deduct 5% of the wages and employment taxes you pay for that employee. Tax forms for 2009 Employment Credits Reduce your deduction for wages by the amount of any employment credits you claim such as the work opportunity credit for qualified tax-exempt organizations hiring qualified veterans (Form 5884-C). Tax forms for 2009 Repairs and Maintenance You can deduct most expenses for the repair and maintenance of your farm property. Tax forms for 2009 Common items of repair and maintenance are repainting, replacing shingles and supports on farm buildings, and periodic or routine maintenance of trucks, tractors, and other farm machinery. Tax forms for 2009 However, repairs to, or overhauls of, depreciable property that substantially prolong the life of the property, increase its value, or adapt it to a different use are capital expenses. Tax forms for 2009 For example, if you repair the barn roof, the cost is deductible. Tax forms for 2009 But if you replace the roof, it is a capital expense. Tax forms for 2009 For more information, see Capital Expenses , later. Tax forms for 2009 Interest You can deduct as a farm business expense interest paid on farm mortgages and other obligations you incur in your farm business. Tax forms for 2009 Cash method. Tax forms for 2009   If you use the cash method of accounting, you can generally deduct interest paid during the tax year. Tax forms for 2009 You cannot deduct interest paid with funds received from the original lender through another loan, advance, or other arrangement similar to a loan. Tax forms for 2009 You can, however, deduct the interest when you start making payments on the new loan. Tax forms for 2009 For more information, see Cash Method in chapter 2. Tax forms for 2009 Prepaid interest. Tax forms for 2009   Under the cash method, you generally cannot deduct any interest paid before the year it is due. Tax forms for 2009 Interest paid in advance may be deducted only in the tax year in which it is due. Tax forms for 2009 Accrual method. Tax forms for 2009   If you use an accrual method of accounting, you can deduct only interest that has accrued during the tax year. Tax forms for 2009 However, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. Tax forms for 2009 For more information, see Accrual Method in chapter 2. Tax forms for 2009 Allocation of interest. Tax forms for 2009   If you use the proceeds of a loan for more than one purpose, you must allocate the interest on that loan to each use. Tax forms for 2009 Allocate the interest to the following categories. Tax forms for 2009 Trade or business interest. Tax forms for 2009 Passive activity interest. Tax forms for 2009 Investment interest. Tax forms for 2009 Portfolio interest. Tax forms for 2009 Personal interest. Tax forms for 2009   You generally allocate interest on a loan the same way you allocate the loan proceeds. Tax forms for 2009 You allocate loan proceeds by tracing disbursements to specific uses. Tax forms for 2009 The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. Tax forms for 2009 Secured loan. Tax forms for 2009   The allocation of loan proceeds and the related interest is generally not affected by the use of property that secures the loan. Tax forms for 2009 Example. Tax forms for 2009 You secure a loan with property used in your farming business. Tax forms for 2009 You use the loan proceeds to buy a car for personal use. Tax forms for 2009 You must allocate interest expense on the loan to personal use (purchase of the car) even though the loan is secured by farm business property. Tax forms for 2009 If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. Tax forms for 2009 The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. Tax forms for 2009 However, you can choose to treat the loan as not secured by your home. Tax forms for 2009 For more information, see Publication 936. Tax forms for 2009 Allocation period. Tax forms for 2009   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. Tax forms for 2009 The date the loan is repaid. Tax forms for 2009 The date the loan is reallocated to another use. Tax forms for 2009 More information. Tax forms for 2009   For more information on interest, see chapter 4 in Publication 535. Tax forms for 2009 Breeding Fees You can deduct breeding fees as a farm business expense. Tax forms for 2009 However, if you use an accrual method of accounting, you must capitalize breeding fees and allocate them to the cost basis of the calf, foal, etc. Tax forms for 2009 For more information on who must use an accrual method of accounting, see Accrual Method Required under Accounting Methods in chapter 2. Tax forms for 2009 Fertilizer and Lime You can deduct in the year paid or incurred the cost of fertilizer, lime, and other materials applied to farmland to enrich, neutralize, or condition it if the benefits last a year or less. Tax forms for 2009 You can also deduct the cost of applying these materials in the year you pay or incur it. Tax forms for 2009 However, see Prepaid Farm Supplies , earlier, for a rule that may limit your deduction for these materials. Tax forms for 2009 If the benefits of the fertilizer, lime, or other materials last substantially more than one year, you generally capitalize their cost and deduct a part each year the benefits last. Tax forms for 2009 However, you can choose to deduct these expenses in the year paid or incurred. Tax forms for 2009 If you make this choice, you will need IRS approval if you later decide to capitalize the cost of previously deducted items. Tax forms for 2009 If you sell farmland on which fertilizer or lime has been applied and if the selling price of the land includes part or all of the cost of the fertilizer or lime, you report the sale amount attributable to the fertilizer or lime as ordinary income. Tax forms for 2009 Farmland, for these purposes, is land used for producing crops, fruits, or other agricultural products or for sustaining livestock. Tax forms for 2009 It does not include land you have never used previously for producing crops or sustaining livestock. Tax forms for 2009 You cannot deduct initial land preparation costs. Tax forms for 2009 (See Capital Expenses , later. Tax forms for 2009 ) Include government payments you receive for lime or fertilizer in income. Tax forms for 2009 See Fertilizer and Lime under Agricultural Program Payments in chapter 3. Tax forms for 2009 Taxes You can deduct as a farm business expense the real estate and personal property taxes on farm business assets, such as farm equipment, animals, farmland, and farm buildings. Tax forms for 2009 You also can deduct the social security and Medicare taxes you pay to match the amount withheld from the wages of farm employees and any federal unemployment tax you pay. Tax forms for 2009 For information on employment taxes, see chapter 13. Tax forms for 2009 Allocation of taxes. Tax forms for 2009   The taxes on the part of your farm you use as your home (including the furnishings and surrounding land not used for farming) are nonbusiness taxes. Tax forms for 2009 You may be able to deduct these nonbusiness taxes as itemized deductions on Schedule A (Form 1040). Tax forms for 2009 To determine the nonbusiness part, allocate the taxes between the farm assets and nonbusiness assets. Tax forms for 2009 The allocation can be done from the assessed valuations. Tax forms for 2009 If your tax statement does not show the assessed valuations, you can usually get them from the tax assessor. Tax forms for 2009 State and local general sales taxes. Tax forms for 2009   State and local general sales taxes on nondepreciable farm business expense items are deductible as part of the cost of those items. Tax forms for 2009 Include state and local general sales taxes imposed on the purchase of assets for use in your farm business as part of the cost you depreciate. Tax forms for 2009 Also treat the taxes as part of your cost if they are imposed on the seller and passed on to you. Tax forms for 2009 State and federal income taxes. Tax forms for 2009   Individuals cannot deduct state and federal income taxes as farm business expenses. Tax forms for 2009 Individuals can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). Tax forms for 2009 However, you cannot deduct federal income tax. Tax forms for 2009 Highway use tax. Tax forms for 2009   You can deduct the federal use tax on highway motor vehicles paid on a truck or truck tractor used in your farm business. Tax forms for 2009 For information on the tax itself, including information on vehicles subject to the tax, see the Instructions for Form 2290, Heavy Highway Vehicle Use Tax Return. Tax forms for 2009 Self-employment tax deduction. Tax forms for 2009   You can deduct as an adjustment to income on Form 1040 one-half of your self-employment tax in figuring your adjusted gross income. Tax forms for 2009 For more information, see chapter 12. Tax forms for 2009 Insurance You generally can deduct the ordinary and necessary cost of insurance for your farm business as a business expense. Tax forms for 2009 This includes premiums you pay for the following types of insurance. Tax forms for 2009 Fire, storm, crop, theft, liability, and other insurance on farm business assets. Tax forms for 2009 Health and accident insurance on your farm employees. Tax forms for 2009 Workers' compensation insurance set by state law that covers any claims for job-related bodily injuries or diseases suffered by employees on your farm, regardless of fault. Tax forms for 2009 Business interruption insurance. Tax forms for 2009 State unemployment insurance on your farm employees (deductible as taxes if they are considered taxes under state law). Tax forms for 2009 Insurance to secure a loan. Tax forms for 2009   If you take out a policy on your life or on the life of another person with a financial interest in your farm business to get or protect a business loan, you cannot deduct the premiums as a business expense. Tax forms for 2009 In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. Tax forms for 2009 Advance premiums. Tax forms for 2009   Deduct advance payments of insurance premiums only in the year to which they apply, regardless of your accounting method. Tax forms for 2009 Example. Tax forms for 2009 On June 28, 2013, you paid a premium of $3,000 for fire insurance on your barn. Tax forms for 2009 The policy will cover a period of 3 years beginning on July 1, 2013. Tax forms for 2009 Only the cost for the 6 months in 2013 is deductible as an insurance expense on your 2013 calendar year tax return. Tax forms for 2009 Deduct $500, which is the premium for 6 months of the 36-month premium period, or 6/36 of $3,000. Tax forms for 2009 In both 2014 and 2015, deduct $1,000 (12/36 of $3,000). Tax forms for 2009 Deduct the remaining $500 in 2016. Tax forms for 2009 Had the policy been effective on January 1, 2013, the deductible expense would have been $1,000 for each of the years 2013, 2014, and 2015, based on one-third of the premium used each year. Tax forms for 2009 Business interruption insurance. Tax forms for 2009   Use and occupancy and business interruption insurance premiums are deductible as a business expense. Tax forms for 2009 This insurance pays for lost profits if your business is shut down due to a fire or other cause. Tax forms for 2009 Report any proceeds in full on Schedule F, Part I. Tax forms for 2009 Self-employed health insurance deduction. Tax forms for 2009   If you are self-employed, you can deduct as an adjustment to income on Form 1040 your payments for medical, dental, and qualified long-term care insurance coverage for yourself, your spouse, and your dependents when figuring your adjusted gross income on your Form 1040. Tax forms for 2009 Effective March 30, 2010, the insurance can also cover any child of yours under age 27 at the end of 2013, even if the child was not your dependent. Tax forms for 2009 Generally, this deduction cannot be more than the net profit from the business under which the plan was established. Tax forms for 2009   If you or your spouse is also an employee of another person, you cannot take the deduction for any month in which you are eligible to participate in a subsidized health plan maintained by your employer or your spouse's employer. Tax forms for 2009   Generally, use the Self-Employed Health Insurance Deduction Worksheet in the Instructions for Form 1040 to figure your deduction. Tax forms for 2009 Include the remaining part of the insurance payment in your medical expenses on Schedule A (Form 1040) if you itemize your deductions. Tax forms for 2009   For more information, see Deductible Premiums in Publication 535, chapter 6. Tax forms for 2009 Rent and Leasing If you lease property for use in your farm business, you can generally deduct the rent you pay on Schedule F. Tax forms for 2009 However, you cannot deduct rent you pay in crop shares if you deduct the cost of raising the crops as farm expenses. Tax forms for 2009 Advance payments. Tax forms for 2009   Deduct advance payments of rent only in the year to which they apply, regardless of your accounting method. Tax forms for 2009 Farm home. Tax forms for 2009   If you rent a farm, do not deduct the part of the rental expense that represents the fair rental value of the farm home in which you live. Tax forms for 2009 Lease or Purchase If you lease a farm building or equipment, you must determine whether or not the agreement must be treated as a conditional sales contract rather than a lease. Tax forms for 2009 If the agreement is treated as a conditional sales contract, the payments under the agreement (so far as they do not represent interest or other charges) are payments for the purchase of the property. Tax forms for 2009 Do not deduct these payments as rent, but capitalize the cost of the property and recover this cost through depreciation. Tax forms for 2009 Conditional sales contract. Tax forms for 2009   Whether an agreement is a conditional sales contract depends on the intent of the parties. Tax forms for 2009 Determine intent based on the provisions of the agreement and the facts and circumstances that exist when you make the agreement. Tax forms for 2009 No single test, or special combination of tests, always applies. Tax forms for 2009 However, in general, an agreement may be considered a conditional sales contract rather than a lease if any of the following is true. Tax forms for 2009 The agreement applies part of each payment toward an equity interest you will receive. Tax forms for 2009 You get title to the property after you make a stated amount of required payments. Tax forms for 2009 The amount you must pay to use the property for a short time is a large part of the amount you would pay to get title to the property. Tax forms for 2009 You pay much more than the current fair rental value of the property. Tax forms for 2009 You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Tax forms for 2009 Determine this value when you make the agreement. Tax forms for 2009 You have an option to buy the property at a nominal price compared to the total amount you have to pay under the agreement. Tax forms for 2009 The agreement designates part of the payments as interest, or part of the payments can be easily recognized as interest. Tax forms for 2009 Example. Tax forms for 2009 You lease new farm equipment from a dealer who both sells and leases. Tax forms for 2009 The agreement includes an option to purchase the equipment for a specified price. Tax forms for 2009 The lease payments and the specified option price equal the sales price of the equipment plus interest. Tax forms for 2009 Under the agreement, you are responsible for maintenance, repairs, and the risk of loss. Tax forms for 2009 For federal income tax purposes, the agreement is a conditional sales contract. Tax forms for 2009 You cannot deduct any of the lease payments as rent. Tax forms for 2009 You can deduct interest, repairs, insurance, depreciation, and other expenses related to the equipment. Tax forms for 2009 Motor vehicle leases. Tax forms for 2009   Special rules apply to lease agreements that have a terminal rental adjustment clause. Tax forms for 2009 In general, this is a clause that provides for a rental price adjustment based on the amount the lessor is able to sell the vehicle for at the end of the lease. Tax forms for 2009 If your rental agreement contains a terminal rental adjustment clause, treat the agreement as a lease if the agreement otherwise qualifies as a lease. Tax forms for 2009 For more information, see Internal Revenue Code (IRC) section 7701(h). Tax forms for 2009 Leveraged leases. Tax forms for 2009   Special rules apply to leveraged leases of equipment (arrangements in which the equipment is financed by a nonrecourse loan from a third party). Tax forms for 2009 For more information, see Publication 535, chapter 3, and Revenue Procedure 2001-28, which begins on page 1156 of Internal Revenue Bulletin 2001-19 at www. Tax forms for 2009 irs. Tax forms for 2009 gov/pub/irs-irbs/irb01-19. Tax forms for 2009 pdf. Tax forms for 2009 Depreciation If property you acquire to use in your farm business is expected to last more than one year, you generally cannot deduct the entire cost in the year you acquire it. Tax forms for 2009 You must recover the cost over more than one year and deduct part of it each year on Schedule F as depreciation or amortization. Tax forms for 2009 However, you can choose to deduct part or all of the cost of certain qualifying property, up to a limit, as a section 179 deduction in the year you place it in service. Tax forms for 2009 Depreciation, amortization, and the section 179 deduction are discussed in chapter 7. Tax forms for 2009 Business Use of Your Home You can deduct expenses for the business use of your home if you use part of your home exclusively and regularly: As the principal place of business for any trade or business in which you engage, As a place to meet or deal with patients, clients, or customers in the normal course of your trade or business, or In connection with your trade or business, if you are using a separate structure that is not attached to your home. Tax forms for 2009 Your home office will qualify as your principal place of business for deducting expenses for its use if you meet both of the following requirements. Tax forms for 2009 You use it exclusively and regularly for the administrative or management activities of your trade or business. Tax forms for 2009 You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Tax forms for 2009 If you use part of your home for business, you must divide the expenses of operating your home between personal and business use. Tax forms for 2009 The IRS now provides a simplified method to determine your expenses for business use of your home. Tax forms for 2009 For more information, see Schedule C (Form 1040), Part II, and its instructions. Tax forms for 2009 Deduction limit. Tax forms for 2009   If your gross income from farming equals or exceeds your total farm expenses (including expenses for the business use of your home), you can deduct all your farm expenses. Tax forms for 2009 But if your gross income from farming is less than your total farm expenses, your deduction for certain expenses for the use of your home in your farming business is limited. Tax forms for 2009   Your deduction for otherwise nondeductible expenses, such as utilities, insurance, and depreciation (with depreciation taken last), cannot be more than the gross income from farming minus the following expenses. Tax forms for 2009 The business part of expenses you could deduct even if you did not use your home for business (such as deductible mortgage interest, real estate taxes, and casualty and theft losses). Tax forms for 2009 Farm expenses other than expenses that relate to the use of your home. Tax forms for 2009 If you are self-employed, do not include your deduction for half of your self-employment tax. Tax forms for 2009   Deductions over the current year's limit can be carried over to your next tax year. Tax forms for 2009 They are subject to the deduction limit for the next tax year. Tax forms for 2009 More information. Tax forms for 2009   See Publication 587 for more information on deducting expenses for the business use of your home. Tax forms for 2009 Telephone expense. Tax forms for 2009   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Tax forms for 2009 However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for your farm business, are deductible business expenses. Tax forms for 2009 Cell phone charges for calls relating to your farm business are deductible. Tax forms for 2009 If the cell phone you use for your farm business is part of a family cell phone plan, you must allocate and deduct only the portion of the charges attributable to farm business calls. Tax forms for 2009 Truck and Car Expenses You can deduct the actual cost of operating a truck or car in your farm business. Tax forms for 2009 Only expenses for business use are deductible. Tax forms for 2009 These include such items as gasoline, oil, repairs, license tags, insurance, and depreciation (subject to certain limits). Tax forms for 2009 Standard mileage rate. Tax forms for 2009   Instead of using actual costs, under certain conditions you can use the standard mileage rate. Tax forms for 2009 The standard mileage rate for each mile of business use is 56. Tax forms for 2009 5 cents in 2013. Tax forms for 2009 You can use the standard mileage rate for a car or a light truck, such as a van, pickup, or panel truck, you own or lease. Tax forms for 2009   You cannot use the standard mileage rate if you operate five or more cars or light trucks at the same time. Tax forms for 2009 You are not using five or more vehicles at the same time if you alternate using the vehicles (you use them at different times) for business. Tax forms for 2009 Example. Tax forms for 2009 Maureen owns a car and four pickup trucks that are used in her farm business. Tax forms for 2009 Her farm employees use the trucks and she uses the car for business. Tax forms for 2009 Maureen cannot use the standard mileage rate for the car or the trucks. Tax forms for 2009 This is because all five vehicles are used in Maureen's farm business at the same time. Tax forms for 2009 She must use actual expenses for all vehicles. Tax forms for 2009 Business use percentage. Tax forms for 2009   You can claim 75% of the use of a car or light truck as business use without any records if you used the vehicle during most of the normal business day directly in connection with the business of farming. Tax forms for 2009 You choose this method of substantiating business use the first year the vehicle is placed in service. Tax forms for 2009 Once you make this choice, you may not change to another method later. Tax forms for 2009 The following are uses directly connected with the business of farming. Tax forms for 2009 Cultivating land. Tax forms for 2009 Raising or harvesting any agricultural or horticultural commodity. Tax forms for 2009 Raising, shearing, feeding, caring for, training, and managing animals. Tax forms for 2009 Driving to the feed or supply store. Tax forms for 2009   If you keep records and they show that your business use was more than 75%, you may be able to claim more. Tax forms for 2009 See Recordkeeping requirements under Travel Expenses , below. Tax forms for 2009 More information. Tax forms for 2009   For more information on deductible truck and car expenses, see Publication 463, chapter 4. Tax forms for 2009 If you pay your employees for the use of their truck or car in your farm business, see Reimbursements to employees under Travel Expenses next. Tax forms for 2009 Travel Expenses You can deduct ordinary and necessary expenses you incur while traveling away from home for your farm business. Tax forms for 2009 You cannot deduct lavish or extravagant expenses. Tax forms for 2009 Usually, the location of your farm business is considered your home for tax purposes. Tax forms for 2009 You are traveling away from home if: Your duties require you to be absent from your farm substantially longer than an ordinary work day, and You need to get sleep or rest to meet the demands of your work while away from home. Tax forms for 2009 If you meet these requirements and can prove the time, place, and business purpose of your travel, you can deduct your ordinary and necessary travel expenses. Tax forms for 2009 The following are some types of deductible travel expenses. Tax forms for 2009 Air, rail, bus, and car transportation; Meals and lodging; Dry cleaning and laundry; Telephone and fax; Transportation between your hotel and your temporary work or business meeting location; and Tips for any of the above expenses. Tax forms for 2009 Meals. Tax forms for 2009   You ordinarily can deduct only 50% of your business-related meals expenses. Tax forms for 2009 You can deduct the cost of your meals while traveling on business only if your business trip is overnight or long enough to require you to stop for sleep or rest to properly perform your duties. Tax forms for 2009 You cannot deduct any of the cost of meals if it is not necessary for you to rest, unless you meet the rules for business entertainment. Tax forms for 2009 For information on entertainment expenses, see Publication 463, chapter 2. Tax forms for 2009   The expense of a meal includes amounts you spend for your food, beverages, taxes, and tips relating to the meal. Tax forms for 2009 You can deduct either 50% of the actual cost or 50% of a standard meal allowance that covers your daily meal and incidental expenses. Tax forms for 2009    Recordkeeping requirements. Tax forms for 2009 You must be able to prove your deductions for travel by adequate records or other evidence that will support your own statement. Tax forms for 2009 Estimates or approximations do not qualify as proof of an expense. Tax forms for 2009   You should keep an account book or similar record, supported by adequate documentary evidence, such as receipts, that together support each element of an expense. Tax forms for 2009 Generally, it is best to record the expense and get documentation of it at the time you pay it. Tax forms for 2009   If you choose to deduct a standard meal allowance rather than the actual expense, you do not have to keep records to prove amounts spent for meals and incidental items. Tax forms for 2009 However, you must still keep records to prove the actual amount of other travel expenses, and the time, place, and business purpose of your travel. Tax forms for 2009 More information. Tax forms for 2009   For detailed information on travel, recordkeeping, and the standard meal allowance, see Publication 463. Tax forms for 2009 Reimbursements to employees. Tax forms for 2009   You generally can deduct reimbursements you pay to your employees for travel and transportation expenses they incur in the conduct of your business. Tax forms for 2009 Employees may be reimbursed under an accountable or nonaccountable plan. Tax forms for 2009 Under an accountable plan, the employee must provide evidence of expenses. Tax forms for 2009 Under a nonaccountable plan, no evidence of expenses is required. Tax forms for 2009 If you reimburse expenses under an accountable plan, deduct them as travel and transportation expenses. Tax forms for 2009 If you reimburse expenses under a nonaccountable plan, you must report the reimbursements as wages on Form W-2 and deduct them as wages. Tax forms for 2009 For more information, see Publication 535, chapter 11. Tax forms for 2009 Marketing Quota Penalties You can deduct as Other expenses on Schedule F penalties you pay for marketing crops in excess of farm marketing quotas. Tax forms for 2009 However, if you do not pay the penalty, but instead the purchaser of your crop deducts it from the payment to you, include in gross income only the amount you received. Tax forms for 2009 Do not take a separate deduction for the penalty. Tax forms for 2009 Tenant House Expenses You can deduct the costs of maintaining houses and their furnishings for tenants or hired help as farm business expenses. Tax forms for 2009 These costs include repairs, utilities, insurance, and depreciation. Tax forms for 2009 The value of a dwelling you furnish to a tenant under the usual tenant-farmer arrangement is not taxable income to the tenant. Tax forms for 2009 Items Purchased for Resale If you use the cash method of accounting, you ordinarily deduct the cost of livestock and other items purchased for resale only in the year of sale. Tax forms for 2009 You deduct this cost, including freight charges for transporting the livestock to the farm, on Schedule F, Part I. Tax forms for 2009 However, see Chickens, seeds, and young plants , below. Tax forms for 2009 Example. Tax forms for 2009 You use the cash method of accounting. Tax forms for 2009 In 2013, you buy 50 steers you will sell in 2014. Tax forms for 2009 You cannot deduct the cost of the steers on your 2013 tax return. Tax forms for 2009 You deduct their cost on your 2014 Schedule F, Part I. Tax forms for 2009 Chickens, seeds, and young plants. Tax forms for 2009   If you are a cash method farmer, you can deduct the cost of hens and baby chicks bought for commercial egg production, or for raising and resale, as an expense on Schedule F, Part I, in the year paid if you do it consistently and it does not distort income. Tax forms for 2009 You also can deduct the cost of seeds and young plants bought for further development and cultivation before sale as an expense on Schedule F, Part I, when paid if you do this consistently and you do not figure your income on the crop method. Tax forms for 2009 However, see Prepaid Farm Supplies , earlier, for a rule that may limit your deduction for these items. Tax forms for 2009   If you deduct the cost of chickens, seeds, and young plants as an expense, report their entire selling price as income. Tax forms for 2009 You cannot also deduct the cost from the selling price. Tax forms for 2009   You cannot deduct the cost of seeds and young plants for Christmas trees and timber as an expense. Tax forms for 2009 Deduct the cost of these seeds and plants through depletion allowances. Tax forms for 2009 For more information, see Depletion in chapter 7. Tax forms for 2009   The cost of chickens and plants used as food for your family is never deductible. Tax forms for 2009   Capitalize the cost of plants with a preproductive period of more than 2 years, unless you can elect out of the uniform capitalization rules. Tax forms for 2009 These rules are discussed in chapter 6. Tax forms for 2009 Example. Tax forms for 2009 You use the cash method of accounting. Tax forms for 2009 In 2013, you buy 500 baby chicks to raise for resale in 2014. Tax forms for 2009 You also buy 50 bushels of winter wheat seed in 2013 that you sow in the fall. Tax forms for 2009 Unless you previously adopted the method of deducting these costs in the year you sell the chickens or the harvested crops, you can deduct the cost of both the baby chicks and the seed wheat in 2013. Tax forms for 2009 Election to use crop method. Tax forms for 2009   If you use the crop method, you can delay deducting the cost of seeds and young plants until you sell them. Tax forms for 2009 You must get IRS approval to use the crop method. Tax forms for 2009 If you follow this method, deduct the cost from the selling price to determine your profit on Schedule F, Part I. Tax forms for 2009 For more information, see Crop method under Special Methods of Accounting in chapter 2. Tax forms for 2009 Choosing a method. Tax forms for 2009   You can adopt either the crop method or the cash method for deducting the cost in the first year you buy egg-laying hens, pullets, chicks, or seeds and young plants. Tax forms for 2009   Although you must use the same method for egg-laying hens, pullets, and chicks, you can use a different method for seeds and young plants. Tax forms for 2009 Once you use a particular method for any of these items, use it for those items until you get IRS approval to change your method. Tax forms for 2009 For more information, see Change in Accounting Method in chapter 2. Tax forms for 2009 Other Expenses The following list, while not all-inclusive, shows some expenses you can deduct as other farm expenses on Schedule F, Part II. Tax forms for 2009 These expenses must be for business purposes and  (1) paid, if you use the cash method of accounting, or (2) incurred, if you use an accrual method of accounting. Tax forms for 2009 Accounting fees. Tax forms for 2009 Advertising. Tax forms for 2009 Business travel and meals. Tax forms for 2009 Commissions. Tax forms for 2009 Consultant fees. Tax forms for 2009 Crop scouting expenses. Tax forms for 2009 Dues to cooperatives. Tax forms for 2009 Educational expenses (to maintain and improve farming skills). Tax forms for 2009 Farm-related attorney fees. Tax forms for 2009 Farm magazines. Tax forms for 2009 Ginning. Tax forms for 2009 Insect sprays and dusts. Tax forms for 2009 Litter and bedding. Tax forms for 2009 Livestock fees. Tax forms for 2009 Marketing fees. Tax forms for 2009 Milk assessment. Tax forms for 2009 Recordkeeping expenses. Tax forms for 2009 Service charges. Tax forms for 2009 Small tools expected to last one year or less. Tax forms for 2009 Stamps and stationery. Tax forms for 2009 Subscriptions to professional, technical, and trade journals that deal with farming. Tax forms for 2009 Tying material and containers. Tax forms for 2009 Loan expenses. Tax forms for 2009   You prorate and deduct loan expenses, such as legal fees and commissions, you pay to get a farm loan over the term of the loan. Tax forms for 2009 Tax preparation fees. Tax forms for 2009   You can deduct as a farm business expense on Schedule F the cost of preparing that part of your tax return relating to your farm business. Tax forms for 2009 You may be able to deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. Tax forms for 2009   You also can deduct on Schedule F the amount you pay or incur in resolving tax issues relating to your farm business. Tax forms for 2009 Domestic Production Activities Deduction Generally, you are allowed a deduction for income attributable to domestic production activities. Tax forms for 2009 You can deduct 9% of the lesser of your qualified production activities income or your taxable income (adjusted gross income for individuals) for the tax year. Tax forms for 2009 Your deduction is limited to 50% of the Form W-2 wages you paid for the tax year that are properly allocable to domestic production gross receipts. Tax forms for 2009 For this purpose, Form W-2 wages do not include noncash wages paid for agricultural labor, such as compensation paid as commodities. Tax forms for 2009 Also, excluded from Form W-2 wages are wages paid to your children under age 18 and nontaxable fringe benefits. Tax forms for 2009 Income from cooperatives. Tax forms for 2009   If you receive a patronage dividend or qualified per-unit retain allocation from a cooperative which is engaged in the manufacturing, production, growth, or extraction in whole or in significant part of any agricultural or horticultural product or in the marketing of agricultural or horticultural products, your income from the cooperative can give rise to a domestic production activities deduction. Tax forms for 2009 This deduction amount is reported on Form 1099-PATR, box 6. Tax forms for 2009 In order for you to qualify for the deduction, the cooperative is required to send you a written notice designating your portion of the domestic production activities deduction. Tax forms for 2009 More information. Tax forms for 2009   For more information on the domestic production activities deduction, see the Instructions for Form 8903. Tax forms for 2009 Capital Expenses A capital expense is a payment, or a debt incurred, for the acquisition, improvement, or restoration of an asset that is expected to last more than one year. Tax forms for 2009 You include the expense in the basis of the asset. Tax forms for 2009 Uniform capitalization rules also require you to capitalize or include in inventory certain other expenses. Tax forms for 2009 See chapters 2  and 6. Tax forms for 2009 Capital expenses are generally not deductible, but they may be depreciable. Tax forms for 2009 However, you can elect to deduct certain capital expenses, such as the following. Tax forms for 2009 The cost of fertilizer, lime, etc. Tax forms for 2009 (See Fertilizer and Lime under Deductible Expenses , earlier. Tax forms for 2009 ) Soil and water conservation expenses. Tax forms for 2009 (See chapter 5. Tax forms for 2009 ) The cost of property that qualifies for a deduction under section 179. Tax forms for 2009 (See chapter 7. Tax forms for 2009 ) Business start-up costs. Tax forms for 2009 (See Business start-up and organizational costs , later. Tax forms for 2009 ) Forestation and reforestation costs. Tax forms for 2009 (See Forestation and reforestation costs , later. Tax forms for 2009 ) Generally, the costs of the following items, including the costs of material, hired labor, and installation, are capital expenses. Tax forms for 2009 Land and buildings. Tax forms for 2009 Additions, alterations, and improvements to buildings, etc. Tax forms for 2009 Cars and trucks. Tax forms for 2009 Equipment and machinery. Tax forms for 2009 Fences. Tax forms for 2009 Draft, breeding, sport, and dairy livestock. Tax forms for 2009 Repairs to machinery, equipment, trucks, and cars that prolong their useful life, increase their value, or adapt them to different use. Tax forms for 2009 Water wells, including drilling and equipping costs. Tax forms for 2009 Land preparation costs, such as: Clearing land for farming, Leveling and conditioning land, Purchasing and planting trees, Building irrigation canals and ditches, Laying irrigation pipes, Installing drain tile, Modifying channels or streams, Constructing earthen, masonry, or concrete tanks, reservoirs, or dams, and Building roads. Tax forms for 2009 Business start-up and organizational costs. Tax forms for 2009   You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. Tax forms for 2009 The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Tax forms for 2009 Any remaining costs must be amortized. Tax forms for 2009 See chapter 7. Tax forms for 2009   You elect to deduct start-up or organizational costs by claiming the deduction on the income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Tax forms for 2009 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Tax forms for 2009 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax forms for 2009 9100-2” at the top of the amended return. Tax forms for 2009 File the amended return at the same address you filed the original return. Tax forms for 2009 The election applies when figuring taxable income for the current tax year and all subsequent years. Tax forms for 2009   You can choose to forgo the election by clearly electing to capitalize your start-up or organizational costs on an income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Tax forms for 2009 For more information about start-up and organizational costs, see chapter 7. Tax forms for 2009 Crop production expenses. Tax forms for 2009   The uniform capitalization rules generally require you to capitalize expenses incurred in producing plants. Tax forms for 2009 However, except for certain taxpayers required to use an accrual method of accounting, the capitalization rules do not apply to plants with a preproductive period of 2 years or less. Tax forms for 2009 For more information, see Uniform Capitalization Rules in chapter 6. Tax forms for 2009 Timber. Tax forms for 2009   Capitalize the cost of acquiring timber. Tax forms for 2009 Do not include the cost of land in the cost of the timber. Tax forms for 2009 You must generally capitalize direct costs incurred in reforestation. Tax forms for 2009 However, you can elect to deduct some forestation and reforestation costs. Tax forms for 2009 See Forestation and reforestation costs next. Tax forms for 2009 Reforestation costs include the following. Tax forms for 2009 Site preparation costs, such as: Girdling, Applying herbicide, Baiting rodents, and Clearing and controlling brush. Tax forms for 2009 The cost of seed or seedlings. Tax forms for 2009 Labor and tool expenses. Tax forms for 2009 Depreciation on equipment used in planting or seeding. Tax forms for 2009 Costs incurred in replanting to replace lost seedlings. Tax forms for 2009 You can choose to capitalize certain indirect reforestation costs. Tax forms for 2009   These capitalized amounts are your basis for the timber. Tax forms for 2009 Recover your basis when you sell the timber or take depletion allowances when you cut the timber. Tax forms for 2009 See Depletion in chapter 7. Tax forms for 2009 Forestation and reforestation costs. Tax forms for 2009   You can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Tax forms for 2009 Any remaining costs can be amortized over an 84-month period. Tax forms for 2009 See chapter 7. Tax forms for 2009 If you make an election to deduct or amortize qualifying reforestation costs, you should create and maintain separate timber accounts for each qualified timber property. Tax forms for 2009 The accounts should include all reforestation treatments and the dates they were applied. Tax forms for 2009 Any qualified timber property that is subject to the deduction or amortization election cannot be included in any other timber account for which depletion is allowed. Tax forms for 2009 The timber account should be maintained until the timber is disposed of. Tax forms for 2009 For more information, see Notice 2006-47, 2006-20 I. Tax forms for 2009 R. Tax forms for 2009 B. Tax forms for 2009 892, available at  www. Tax forms for 2009 irs. Tax forms for 2009 gov/irb/2006-20_IRB/ar11. Tax forms for 2009 html. Tax forms for 2009   You elect to deduct forestation and reforestation costs by claiming the deduction on the income tax return filed by the due date (including extensions) for the tax year in which the expenses were paid or incurred. Tax forms for 2009 If you are filing Form T (Timber), Forest Activities Schedule, also complete Form T (Timber), Part IV. Tax forms for 2009 If you are not filing Form T (Timber), attach a statement to your return with the following information. Tax forms for 2009 The unique stand identification numbers. Tax forms for 2009 The total number of acres reforested during the tax year. Tax forms for 2009 The nature of the reforestation treatments. Tax forms for 2009 The total amounts of the qualified reforestation expenditures eligible to be amortized or deducted. Tax forms for 2009   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Tax forms for 2009 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Tax forms for 2009 9100-2” at the top of the amended return. Tax forms for 2009 File the amended return at the same address you filed the original return. Tax forms for 2009    For more information about forestation and reforestation costs, see chapter 7. Tax forms for 2009    For more information about timber, see Agriculture Handbook Number 731, Forest Landowners' Guide to the Federal Income Tax. Tax forms for 2009 You can view this publication on the Internet at  www. Tax forms for 2009 fs. Tax forms for 2009 fed. Tax forms for 2009 us/publications. Tax forms for 2009 Christmas tree cultivation. Tax forms for 2009   If you are in the business of planting and cultivating Christmas trees to sell when they are more than 6 years old, capitalize expenses incurred for planting and stump culture and add them to the basis of the standing trees. Tax forms for 2009 Recover these expenses as part of your adjusted basis when you sell the standing trees or as depletion allowances when you cut the trees. Tax forms for 2009 For more information, see Timber Depletion under Depletion in chapter 7. Tax forms for 2009   You can deduct as business expenses the costs incurred for shearing and basal pruning of these trees. Tax forms for 2009 Expenses incurred for silvicultural practices, such as weeding or cleaning, and noncommercial thinning are also deductible as business expenses. Tax forms for 2009   Capitalize the cost of land improvements, such as road grading, ditching, and fire breaks, that have a useful life beyond the tax year. Tax forms for 2009 If the improvements do not have a determinable useful life, add their cost to the basis of the land. Tax forms for 2009 The cost is recovered when you sell or otherwise dispose of it. Tax forms for 2009 If the improvements have a determinable useful life, recover their cost through depreciation. Tax forms for 2009 Capitalize the cost of equipment and other depreciable assets, such as culverts and fences, to the extent you do not use them in planting Christmas trees. Tax forms for 2009 Recover these costs through depreciation. Tax forms for 2009 Nondeductible Expenses You cannot deduct personal expenses and certain other items on your tax return even if they relate to your farm. Tax forms for 2009 Personal, Living, and Family Expenses You cannot deduct certain personal, living, and family expenses as business expenses. Tax forms for 2009 These include rent and insurance premiums paid on property used as your home, life insurance premiums on yourself or your family, the cost of maintaining cars, trucks, or horses for personal use, allowances to minor children, attorneys' fees and legal expenses incurred in personal matters, and household expenses. Tax forms for 2009 Likewise, the cost of purchasing or raising produce or livestock consumed by you or your family is not deductible. Tax forms for 2009 Other Nondeductible Items You cannot deduct the following items on your tax return. Tax forms for 2009 Loss of growing plants, produce, and crops. Tax forms for 2009   Losses of plants, produce, and crops raised for sale are generally not deductible. Tax forms for 2009 However, you may have a deductible loss on plants with a preproductive period of more than 2 years. Tax forms for 2009 See chapter 11 for more information. Tax forms for 2009 Repayment of loans. Tax forms for 2009   You cannot deduct the repayment of a loan. Tax forms for 2009 However, if you use the proceeds of a loan for farm business expenses, you can deduct the interest on the loan. Tax forms for 2009 See Interest , earlier. Tax forms for 2009 Estate, inheritance, legacy, succession, and gift taxes. Tax forms for 2009   You cannot deduct estate, inheritance, legacy, succession, and gift taxes. Tax forms for 2009 Loss of livestock. Tax forms for 2009   You cannot deduct as a loss the value of raised livestock that die if you deducted the cost of raising them as an expense. Tax forms for 2009 Losses from sales or exchanges between related persons. Tax forms for 2009   You cannot deduct losses from sales or exchanges of property between you and certain related persons, including your spouse, brother, sister, ancestor, or lineal descendant. Tax forms for 2009 For more information, see chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Tax forms for 2009 Cost of raising unharvested crops. Tax forms for 2009   You cannot deduct the cost of raising unharvested crops sold with land owned more than one year if you sell both at the same time and to the same person. Tax forms for 2009 Add these costs to the basis of the land to determine the gain or loss on the sale. Tax forms for 2009 For more information, see Section 1231 Gains and Losses in chapter 9. Tax forms for 2009 Cost of unharvested crops bought with land. Tax forms for 2009   Capitalize the purchase price of land, including the cost allocable to unharvested crops. Tax forms for 2009 You cannot deduct the cost of the crops at the time of purchase. Tax forms for 2009 However, you can deduct this cost in figuring net profit or loss in the tax year you sell the crops. Tax forms for 2009 Cost related to gifts. Tax forms for 2009   You cannot deduct costs related to your gifts of agricultural products or property held for sale in the ordinary course of your business. Tax forms for 2009 The costs are not deductible in the year of the gift or any later year. Tax forms for 2009 For example, you cannot deduct the cost of raising cattle or the cost of planting and raising unharvested wheat on parcels of land given as a gift to your children. Tax forms for 2009 Club dues and membership fees. Tax forms for 2009   Generally, you cannot deduct amounts you pay or incur for membership in any club organized for business, pleasure, recreation, or any other social purpose. Tax forms for 2009 This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Tax forms for 2009 Exception. Tax forms for 2009   The following organizations will not be treated as a club organized for business, pleasure, recreation, or other social purposes, unless one of its main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Tax forms for 2009 Boards of trade. Tax forms for 2009 Business leagues. Tax forms for 2009 Chambers of commerce. Tax forms for 2009 Civic or public service organizations. Tax forms for 2009 Professional associations. Tax forms for 2009 Trade associations. Tax forms for 2009 Real estate boards. Tax forms for 2009 Fines and penalties. Tax forms for 2009   You cannot deduct fines and penalties, except penalties for exceeding marketing quotas, discussed earlier. Tax forms for 2009 Losses From Operating a Farm If your deductible farm expenses are more than your farm income, you have a loss from the operation of your farm. Tax forms for 2009 The amount of the loss you can deduct when figuring your taxable income may be limited. Tax forms for 2009 To figure your deductible loss, you must apply the following limits. Tax forms for 2009 The at-risk limits. Tax forms for 2009 The passive activity limits. Tax forms for 2009 The following discussions explain these limits. Tax forms for 2009 If your deductible loss after applying these limits is more than your other income for the year, you may have a net operating loss. Tax forms for 2009 See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Tax forms for 2009 If you do not carry on your farming activity to make a profit, your loss deduction may be limited by the not-for-profit rules. Tax forms for 2009 See Not-for-Profit Farming, later. Tax forms for 2009 At-Risk Limits The at-risk rules limit your deduction for losses from most business or income-producing activities, including farming. Tax forms for 2009 These rules limit the losses you can deduct when figuring your taxable income. Tax forms for 2009 The deductible loss from an activity is limited to the amount you have at risk in the activity. Tax forms for 2009 You are at risk in any activity for: The money and adjusted basis of property you contribute to the activity, and Amounts you borrow for use in the activity if: You are personally liable for repayment, or You pledge property (other than property used in the activity) as security for the loan. Tax forms for 2009 You are not at risk, however, for amounts you borrow for use in a farming activity from a person who has an interest in the activity (other than as a creditor) or a person related to someone (other than you) having such an interest. Tax forms for 2009 For more information, see Publication 925. Tax forms for 2009 Passive Activity Limits A passive activity is generally any activity involving the conduct of any trade or business in which you do not materially participate. Tax forms for 2009 Generally, a rental activity is a passive activity. Tax forms for 2009 If you have a passive activity, special rules limit the loss you can deduct in the tax year. Tax forms for 2009 You generally can deduct losses from passive activities only up to income from passive activities. Tax forms for 2009 Credits are similarly limited. Tax forms for 2009 For more information, see Publication 925. Tax forms for 2009 Excess Farm Loss Limit For tax years beginning after 2009, excess farm losses (defined below) are not deductible if you received certain applicable subsidies. Tax forms for 2009 This limit applies to any farming businesses, other than a C corporation, that received a direct or counter-cyclical payment (or any payment in lieu of such payments) under title I of the Food, Conservation, and Energy Act of 2008, or from a Commodity Credit Corporation loan. Tax forms for 2009 Your farming losses are limited to the greater of: $300,000 ($150,000 for a married person filing a separate return), or The total net farm income for the prior five tax years. Tax forms for 2009 Farming losses from casualty losses or losses by reason of disease or drought are disregarded for purposes of figuring this limitation. Tax forms for 2009 Also, the limitation on farm losses should be applied before the passive activity loss rules are applied. Tax forms for 2009 For more details, see IRC section 461(j). Tax forms for 2009 Excess farm loss. Tax forms for 2009   Generally, an excess farm loss is the amount of your farming loss that exceeds the amount of the limitation (as described above). Tax forms for 2009 This loss can be determined by taking the excess of: The total deductions for the tax year from your farming businesses, over The total gross income or gain for the tax year from your farming businesses, plus the greater of: $300,000 ($150,000 for a married person filing a separate return), or The excess (if any) of the total gross income or gain from your farming businesses for the prior five tax years over the total deductions from your farming businesses for the prior five tax years. Tax forms for 2009   Excess farm losses that are disallowed can be carried forward to the next tax year and treated as a deduction from that year. Tax forms for 2009 Not-for-Profit Farming If you operate a farm for profit, you can deduct all the ordinary and necessary expenses of carrying on the business of farming on Schedule F. Tax forms for 2009 However, if you do not carry on your farming activity, or other activity you engage or invest in, to make a profit, you report the income from the activity on Form 1040, line 21, and you can deduct expenses of carrying on the activity only if you itemize your deductions on Schedule A (Form 1040). Tax forms for 2009 Also, there is a limit on the deductions you can take. Tax forms for 2009 You cannot use a loss from that activity to offset income from other activities. Tax forms for 2009 Activities you do as a hobby, or mainly for sport or recreation, come under this limit. Tax forms for 2009 An investment activity intended only to produce tax losses for the investors also comes under this limit. Tax forms for 2009 The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. Tax forms for 2009 It does not apply to corporations other than S corporations. Tax forms for 2009 In determining whether you are carrying on your farming activity for profit, all the facts are taken into account. Tax forms for 2009 No one factor alone is decisive. Tax forms for 2009 Among the factors to consider are whether: You operate your farm in a businesslike manner; The time and effort you spend on farming indicate you intend to make it profitable; You depend on income from farming for your livelihood; Your losses are due to circumstances beyond your control or are normal in the start-up phase of farming; You change your methods of operation in an attempt to improve profitability; You, or your advisors, have the knowledge needed to carry on the farming activity as a successful business; You were successful in making a profit in similar activities in the past; You make a profit from farming in some years and the amount of profit you make; and You can expect to make a future profit from the appreciation of the assets used in the farming activity. Tax forms for 2009 Presumption of profit. Tax forms for 2009   Your farming or other activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Tax forms for 2009 Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. Tax forms for 2009 The activity must be substantially the same for each year within this period. Tax forms for 2009 You have a profit when the gross income from an activity is more than the deductions for it. Tax forms for 2009   If a taxpayer dies before the end of the 5-year (or 7-year) period, the period ends on the date of the taxpayer's death. Tax forms for 2009   If your business or investment activity passes this 3- (or 2-) years-of-profit test, presume it is carried on for profit. Tax forms for 2009 This means the limits discussed here do not apply. Tax forms for 2009 You can take all your business deductions from the activity on Schedule F, even for the years that you have a loss. Tax forms for 2009 You can rely on this presumption in every case, unless the IRS shows it is not valid. Tax forms for 2009   If you fail the 3- (or 2-) years-of-profit test, you still may be considered to operate your farm for profit by considering the factors listed earlier. Tax forms for 2009 Using the presumption later. Tax forms for 2009   If you are starting out in farming and do not have 3 (or 2) years showing a profit, you may want to take advantage of this presumption later, after you have had the 5 (or 7) years of experience allowed by the test. Tax forms for 2009   You can choose to do this by filing Form 5213. Tax forms for 2009 Filing this form postpones any determination that your farming activity is not carried on for profit until 5 (or 7) years have passed since you first started farming. Tax forms for 2009 You must file Form 5213 within 3 years after the due date of your return for the year in which you first carried on the activity, or, if earlier, within 60 days after receiving a written notice from the IRS proposing to disallow deductions attributable to the activity. Tax forms for 2009   The benefit gained by making this choice is that the IRS will not immediately question whether your farming activity is engaged in for profit. Tax forms for 2009 Accordingly, it will not limit your deductions. Tax forms for 2009 Rather, you will gain time to earn a profit in 3 (or 2) out of the first 5 (or 7) years you carry on the farming activity. Tax forms for 2009 If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. Tax forms for 2009 If you do not have 3 (or 2) years of profit (and cannot otherwise show that you operated your farm for profit), the limit applies retroactively to any year in the 5-year (or 7-year) period with a loss. Tax forms for 2009   Filing Form 5213 automatically extends the period of limitations on any year