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Tax Preparation Software

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Tax Preparation Software

Tax preparation software 1. Tax preparation software   Deducting Business Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: What Can I Deduct?Cost of Goods Sold Capital Expenses Capital versus Deductible Expenses Personal versus Business Expenses How Much Can I Deduct?Not-for-profit limits. Tax preparation software At-risk limits. Tax preparation software Passive activities. Tax preparation software Net operating loss. Tax preparation software When Can I Deduct an Expense?Economic performance. Tax preparation software Not-for-Profit ActivitiesGross Income Limit on Deductions What's New Optional safe harbor method to determine the business use of a home deduction. Tax preparation software  Beginning in 2013, you can use the optional safe harbor method to determine the deduction for the business use of your home. Tax preparation software See Optional safe harbor method under Business use of your home , later. Tax preparation software Introduction This chapter covers the general rules for deducting business expenses. Tax preparation software Business expenses are the costs of carrying on a trade or business, and they are usually deductible if the business is operated to make a profit. Tax preparation software Topics - This chapter discusses: What you can deduct How much you can deduct When you can deduct Not-for-profit activities Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 542 Corporations 547 Casualties, Disasters, and Thefts 587 Business Use of Your Home 925 Passive Activity and At-Risk Rules 936 Home Mortgage Interest Deduction 946 How To Depreciate Property Form (and Instructions) Sch A (Form 1040) Itemized Deductions 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit See chapter 12 for information about getting publications and forms. Tax preparation software What Can I Deduct? To be deductible, a business expense must be both ordinary and necessary. Tax preparation software An ordinary expense is one that is common and accepted in your industry. Tax preparation software A necessary expense is one that is helpful and appropriate for your trade or business. Tax preparation software An expense does not have to be indispensable to be considered necessary. Tax preparation software Even though an expense may be ordinary and necessary, you may not be allowed to deduct the expense in the year you paid or incurred it. Tax preparation software In some cases you may not be allowed to deduct the expense at all. Tax preparation software Therefore, it is important to distinguish usual business expenses from expenses that include the following. Tax preparation software The expenses used to figure cost of goods sold, Capital expenses, and Personal expenses. Tax preparation software Cost of Goods Sold If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Tax preparation software Some of your business expenses may be included in figuring cost of goods sold. Tax preparation software Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. Tax preparation software If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense. Tax preparation software The following are types of expenses that go into figuring cost of goods sold. Tax preparation software The cost of products or raw materials, including freight. Tax preparation software Storage. Tax preparation software Direct labor (including contributions to pension or annuity plans) for workers who produce the products. Tax preparation software Factory overhead. Tax preparation software Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Tax preparation software Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs. Tax preparation software This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million. Tax preparation software For more information, see the following sources. Tax preparation software Cost of goods sold—chapter 6 of Publication 334. Tax preparation software Inventories—Publication 538. Tax preparation software Uniform capitalization rules—Publication 538 and section 263A of the Internal Revenue Code and the related regulations. Tax preparation software Capital Expenses You must capitalize, rather than deduct, some costs. Tax preparation software These costs are a part of your investment in your business and are called “capital expenses. Tax preparation software ” Capital expenses are considered assets in your business. Tax preparation software In general, you capitalize three types of costs. Tax preparation software Business start-up costs (See Tip below). Tax preparation software Business assets. Tax preparation software Improvements. Tax preparation software You can elect to deduct or amortize certain business start-up costs. Tax preparation software See chapters 7 and 8. Tax preparation software Cost recovery. Tax preparation software   Although you generally cannot take a current deduction for a capital expense, you may be able to recover the amount you spend through depreciation, amortization, or depletion. Tax preparation software These recovery methods allow you to deduct part of your cost each year. Tax preparation software In this way, you are able to recover your capital expense. Tax preparation software See Amortization (chapter 8) and Depletion (chapter 9) in this publication. Tax preparation software A taxpayer can elect to deduct a portion of the costs of certain depreciable property as a section 179 deduction. Tax preparation software A greater portion of these costs can be deducted if the property is qualified disaster assistance property. Tax preparation software See Publication 946 for details. Tax preparation software Going Into Business The costs of getting started in business, before you actually begin business operations, are capital expenses. Tax preparation software These costs may include expenses for advertising, travel, or wages for training employees. Tax preparation software If you go into business. Tax preparation software   When you go into business, treat all costs you had to get your business started as capital expenses. Tax preparation software   Usually you recover costs for a particular asset through depreciation. Tax preparation software Generally, you cannot recover other costs until you sell the business or otherwise go out of business. Tax preparation software However, you can choose to amortize certain costs for setting up your business. Tax preparation software See Starting a Business in chapter 8 for more information on business start-up costs. Tax preparation software If your attempt to go into business is unsuccessful. Tax preparation software   If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories. Tax preparation software The costs you had before making a decision to acquire or begin a specific business. Tax preparation software These costs are personal and nondeductible. Tax preparation software They include any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility. Tax preparation software The costs you had in your attempt to acquire or begin a specific business. Tax preparation software These costs are capital expenses and you can deduct them as a capital loss. Tax preparation software   If you are a corporation and your attempt to go into a new trade or business is not successful, you may be able to deduct all investigatory costs as a loss. Tax preparation software   The costs of any assets acquired during your unsuccessful attempt to go into business are a part of your basis in the assets. Tax preparation software You cannot take a deduction for these costs. Tax preparation software You will recover the costs of these assets when you dispose of them. Tax preparation software Business Assets There are many different kinds of business assets; for example, land, buildings, machinery, furniture, trucks, patents, and franchise rights. Tax preparation software You must fully capitalize the cost of these assets, including freight and installation charges. Tax preparation software Certain property you produce for use in your trade or business must be capitalized under the uniform capitalization rules. Tax preparation software See Regulations section 1. Tax preparation software 263A-2 for information on these rules. Tax preparation software Improvements Improvements are generally major expenditures. Tax preparation software Some examples are: new electric wiring, a new roof, a new floor, new plumbing, bricking up windows to strengthen a wall, and lighting improvements. Tax preparation software The costs of making improvements to a business asset are capital expenses if the improvements add to the value of the asset, appreciably lengthen the time you can use it, or adapt it to a different use. Tax preparation software Beginning in 2014, you must capitalize as improvements costs that are for the betterment of a unit of property, restore the unit of property, or adapt the unit of property to a new or different use. Tax preparation software Temporary regulations allow you to capitalize costs meeting the above criteria for tax years beginning after 2011. Tax preparation software However, you can currently deduct repairs that keep your property in a normal efficient operating condition as a business expense. Tax preparation software Treat as repairs amounts paid to replace parts of a machine that only keep it in a normal operating condition. Tax preparation software Restoration plan. Tax preparation software   Capitalize the cost of reconditioning, improving, or altering your property as part of a general restoration plan to make it suitable for your business. Tax preparation software This applies even if some of the work would by itself be classified as repairs. Tax preparation software Capital versus Deductible Expenses To help you distinguish between capital and deductible expenses, different examples are given below. Tax preparation software Motor vehicles. Tax preparation software   You usually capitalize the cost of a motor vehicle you use in your business. Tax preparation software You can recover its cost through annual deductions for depreciation. Tax preparation software   There are dollar limits on the depreciation you can claim each year on passenger automobiles used in your business. Tax preparation software See Publication 463. Tax preparation software   Generally, repairs you make to your business vehicle are currently deductible. Tax preparation software However, amounts you pay to recondition and overhaul a business vehicle are capital expenses and are recovered through depreciation. Tax preparation software Roads and driveways. Tax preparation software    The cost of building a private road on your business property and the cost of replacing a gravel driveway with a concrete one are capital expenses you may be able to depreciate. Tax preparation software The cost of maintaining a private road on your business property is a deductible expense. Tax preparation software Tools. Tax preparation software   Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor. Tax preparation software Machinery parts. Tax preparation software   Unless the uniform capitalization rules apply, the cost of replacing short-lived parts of a machine to keep it in good working condition, but not add to its life, is a deductible expense. Tax preparation software Heating equipment. Tax preparation software   The cost of changing from one heating system to another is a capital expense. Tax preparation software Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. Tax preparation software However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. Tax preparation software You can deduct the business part. Tax preparation software For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you generally can deduct 70% of the interest as a business expense. Tax preparation software The remaining 30% is personal interest and generally is not deductible. Tax preparation software See chapter 4 for information on deducting interest and the allocation rules. Tax preparation software Business use of your home. Tax preparation software   If you use part of your home for business, you may be able to deduct expenses for the business use of your home. Tax preparation software These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Tax preparation software   To qualify to claim expenses for the business use of your home, you must meet both of the following tests. Tax preparation software The business part of your home must be used exclusively and regularly for your trade or business. Tax preparation software The business part of your home must be: Your principal place of business, or A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) used in connection with your trade or business. Tax preparation software   You generally do not have to meet the exclusive use test for the part of your home that you regularly use either for the storage of inventory or product samples, or as a daycare facility. Tax preparation software   Your home office qualifies as your principal place of business if you meet the following requirements. Tax preparation software You use the office exclusively and regularly for administrative or management activities of your trade or business. Tax preparation software You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Tax preparation software   If you have more than one business location, determine your principal place of business based on the following factors. Tax preparation software The relative importance of the activities performed at each location. Tax preparation software If the relative importance factor does not determine your principal place of business, consider the time spent at each location. Tax preparation software Optional safe harbor method. Tax preparation software   Beginning in 2013, individual taxpayers can use the optional safe harbor method to determine the amount of deductible expenses attributable to certain business use of a residence during the tax year. Tax preparation software This method is an alternative to the calculation, allocation, and substantiation of actual expenses. Tax preparation software   The deduction under the optional method is limited to $1,500 per year based on $5 a square foot for up to 300 square feet. Tax preparation software Under this method, you claim your allowable mortgage interest, real estate taxes, and casualty losses on the home as itemized deductions on Schedule A (Form 1040). Tax preparation software You are not required to allocate these deductions between personal and business use, as is required under the regular method. Tax preparation software If you use the optional method, you cannot depreciate the portion of your home used in a trade or business. Tax preparation software   Business expenses unrelated to the home, such as advertising, supplies, and wages paid to employees, are still fully deductible. Tax preparation software All of the requirements discussed earlier under Business use of your home still apply. Tax preparation software   For more information on the deduction for business use of your home, including the optional safe harbor method, see Publication 587. Tax preparation software    If you were entitled to deduct depreciation on the part of your home used for business, you cannot exclude the part of the gain from the sale of your home that equals any depreciation you deducted (or could have deducted) for periods after May 6, 1997. Tax preparation software Business use of your car. Tax preparation software   If you use your car exclusively in your business, you can deduct car expenses. Tax preparation software If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Tax preparation software Generally, commuting expenses between your home and your business location, within the area of your tax home, are not deductible. Tax preparation software   You can deduct actual car expenses, which include depreciation (or lease payments), gas and oil, tires, repairs, tune-ups, insurance, and registration fees. Tax preparation software Or, instead of figuring the business part of these actual expenses, you may be able to use the standard mileage rate to figure your deduction. Tax preparation software Beginning in 2013, the standard mileage rate is 56. Tax preparation software 5 cents per mile. Tax preparation software   If you are self-employed, you can also deduct the business part of interest on your car loan, state and local personal property tax on the car, parking fees, and tolls, whether or not you claim the standard mileage rate. Tax preparation software   For more information on car expenses and the rules for using the standard mileage rate, see Publication 463. Tax preparation software How Much Can I Deduct? Generally, you can deduct the full amount of a business expense if it meets the criteria of ordinary and necessary and it is not a capital expense. Tax preparation software Recovery of amount deducted (tax benefit rule). Tax preparation software   If you recover part of an expense in the same tax year in which you would have claimed a deduction, reduce your current year expense by the amount of the recovery. Tax preparation software If you have a recovery in a later year, include the recovered amount in income in that year. Tax preparation software However, if part of the deduction for the expense did not reduce your tax, you do not have to include that part of the recovered amount in income. Tax preparation software   For more information on recoveries and the tax benefit rule, see Publication 525. Tax preparation software Payments in kind. Tax preparation software   If you provide services to pay a business expense, the amount you can deduct is limited to your out-of-pocket costs. Tax preparation software You cannot deduct the cost of your own labor. Tax preparation software   Similarly, if you pay a business expense in goods or other property, you can deduct only what the property costs you. Tax preparation software If these costs are included in the cost of goods sold, do not deduct them again as a business expense. Tax preparation software Limits on losses. Tax preparation software   If your deductions for an investment or business activity are more than the income it brings in, you have a loss. Tax preparation software There may be limits on how much of the loss you can deduct. Tax preparation software Not-for-profit limits. Tax preparation software   If you carry on your business activity without the intention of making a profit, you cannot use a loss from it to offset other income. Tax preparation software See Not-for-Profit Activities , later. Tax preparation software At-risk limits. Tax preparation software   Generally, a deductible loss from a trade or business or other income-producing activity is limited to the investment you have “at risk” in the activity. Tax preparation software You are at risk in any activity for the following. Tax preparation software The money and adjusted basis of property you contribute to the activity. Tax preparation software 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 preparation software For more information, see Publication 925. Tax preparation software Passive activities. Tax preparation software   Generally, you are in a passive activity if you have a trade or business activity in which you do not materially participate, or a rental activity. Tax preparation software In general, deductions for losses from passive activities only offset income from passive activities. Tax preparation software You cannot use any excess deductions to offset other income. Tax preparation software In addition, passive activity credits can only offset the tax on net passive income. Tax preparation software Any excess loss or credits are carried over to later years. Tax preparation software Suspended passive losses are fully deductible in the year you completely dispose of the activity. Tax preparation software For more information, see Publication 925. Tax preparation software Net operating loss. Tax preparation software   If your deductions are more than your income for the year, you may have a “net operating loss. Tax preparation software ” You can use a net operating loss to lower your taxes in other years. Tax preparation software See Publication 536 for more information. Tax preparation software   See Publication 542 for information about net operating losses of corporations. Tax preparation software When Can I Deduct an Expense? When you can deduct an expense depends on your accounting method. Tax preparation software An accounting method is a set of rules used to determine when and how income and expenses are reported. Tax preparation software The two basic methods are the cash method and the accrual method. Tax preparation software Whichever method you choose must clearly reflect income. Tax preparation software For more information on accounting methods, see Publication 538. Tax preparation software Cash method. Tax preparation software   Under the cash method of accounting, you generally deduct business expenses in the tax year you pay them. Tax preparation software Accrual method. Tax preparation software   Under an accrual method of accounting, you generally deduct business expenses when both of the following apply. Tax preparation software The all-events test has been met. Tax preparation software The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Tax preparation software Economic performance has occurred. Tax preparation software Economic performance. Tax preparation software   You generally cannot deduct or capitalize a business expense until economic performance occurs. Tax preparation software If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided, or the property is used. Tax preparation software If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Tax preparation software Example. Tax preparation software Your tax year is the calendar year. Tax preparation software In December 2013, the Field Plumbing Company did some repair work at your place of business and sent you a bill for $600. Tax preparation software You paid it by check in January 2014. Tax preparation software If you use the accrual method of accounting, deduct the $600 on your tax return for 2013 because all events have occurred to “fix” the fact of liability (in this case the work was completed), the liability can be determined, and economic performance occurred in that year. Tax preparation software If you use the cash method of accounting, deduct the expense on your 2014 return. Tax preparation software Prepayment. Tax preparation software   You generally cannot deduct expenses in advance, even if you pay them in advance. Tax preparation software This rule applies to both the cash and accrual methods. Tax preparation software It applies to prepaid interest, prepaid insurance premiums, and any other expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Tax preparation software Example. Tax preparation software In 2013, you sign a 10-year lease and immediately pay your rent for the first 3 years. Tax preparation software Even though you paid the rent for 2013, 2014, and 2015, you can only deduct the rent for 2013 on your 2013 tax return. Tax preparation software You can deduct the rent for 2014 and 2015 on your tax returns for those years. Tax preparation software Contested liability. Tax preparation software   Under the cash method, you can deduct a contested liability only in the year you pay the liability. Tax preparation software Under the accrual method, you can deduct contested liabilities such as taxes (except foreign or U. Tax preparation software S. Tax preparation software possession income, war profits, and excess profits taxes) either in the tax year you pay the liability (or transfer money or other property to satisfy the obligation) or in the tax year you settle the contest. Tax preparation software However, to take the deduction in the year of payment or transfer, you must meet certain conditions. Tax preparation software See Regulations section 1. Tax preparation software 461-2. Tax preparation software Related person. Tax preparation software   Under an accrual method of accounting, you generally deduct expenses when you incur them, even if you have not yet paid them. Tax preparation software However, if you and the person you owe are related and that person uses the cash method of accounting, you must pay the expense before you can deduct it. Tax preparation software Your deduction is allowed when the amount is includible in income by the related cash method payee. Tax preparation software See Related Persons in Publication 538. Tax preparation software Not-for-Profit Activities If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. Tax preparation software Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit. Tax preparation software The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. Tax preparation software It does not apply to corporations other than S corporations. Tax preparation software In determining whether you are carrying on an activity for profit, several factors are taken into account. Tax preparation software No one factor alone is decisive. Tax preparation software Among the factors to consider are whether: You carry on the activity in a businesslike manner, The time and effort you put into the activity indicate you intend to make it profitable, You depend on the income for your livelihood, Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), You change your methods of operation in an attempt to improve profitability, You (or your advisors) have the knowledge needed to carry on the activity as a successful business, You were successful in making a profit in similar activities in the past, The activity makes a profit in some years, and You can expect to make a future profit from the appreciation of the assets used in the activity. Tax preparation software Presumption of profit. Tax preparation software   An 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 preparation software 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 preparation software The activity must be substantially the same for each year within this period. Tax preparation software You have a profit when the gross income from an activity exceeds the deductions. Tax preparation software   If a taxpayer dies before the end of the 5-year (or 7-year) period, the “test” period ends on the date of the taxpayer's death. Tax preparation software   If your business or investment activity passes this 3- (or 2-) years-of-profit test, the IRS will presume it is carried on for profit. Tax preparation software This means the limits discussed here will not apply. Tax preparation software You can take all your business deductions from the activity, even for the years that you have a loss. Tax preparation software You can rely on this presumption unless the IRS later shows it to be invalid. Tax preparation software Using the presumption later. Tax preparation software   If you are starting an activity and do not have 3 (or 2) years showing a profit, you can elect to have the presumption made after you have the 5 (or 7) years of experience allowed by the test. Tax preparation software   You can elect to do this by filing Form 5213. Tax preparation software Filing this form postpones any determination that your activity is not carried on for profit until 5 (or 7) years have passed since you started the activity. Tax preparation software   The benefit gained by making this election is that the IRS will not immediately question whether your activity is engaged in for profit. Tax preparation software Accordingly, it will not restrict your deductions. Tax preparation software Rather, you will gain time to earn a profit in the required number of years. Tax preparation software If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. Tax preparation software If you do not have 3 (or 2) years of profit, the limit can be applied retroactively to any year with a loss in the 5-year (or 7-year) period. Tax preparation software   Filing Form 5213 automatically extends the period of limitations on any year in the 5-year (or 7-year) period to 2 years after the due date of the return for the last year of the period. Tax preparation software The period is extended only for deductions of the activity and any related deductions that might be affected. Tax preparation software    You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity, or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. Tax preparation software Gross Income Gross income from a not-for-profit activity includes the total of all gains from the sale, exchange, or other disposition of property, and all other gross receipts derived from the activity. Tax preparation software Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the activity. Tax preparation software You can determine gross income from any not-for-profit activity by subtracting the cost of goods sold from your gross receipts. Tax preparation software However, if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of accounting. Tax preparation software Limit on Deductions If your activity is not carried on for profit, take deductions in the following order and only to the extent stated in the three categories. Tax preparation software If you are an individual, these deductions may be taken only if you itemize. Tax preparation software These deductions may be taken on Schedule A (Form 1040). Tax preparation software Category 1. Tax preparation software   Deductions you can take for personal as well as for business activities are allowed in full. Tax preparation software For individuals, all nonbusiness deductions, such as those for home mortgage interest, taxes, and casualty losses, belong in this category. Tax preparation software Deduct them on the appropriate lines of Schedule A (Form 1040). Tax preparation software For tax years beginning after December 31, 2008, you can deduct a casualty loss on property you own for personal use only to the extent it is more than $500 and exceeds 10% of your adjusted gross income (AGI). Tax preparation software The 10% AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009, and individuals are allowed to claim the net disaster losses even if they do not itemize their deductions. Tax preparation software The reduction amount returns to $100 for tax years beginning after December 31, 2009. Tax preparation software See Publication 547 for more information on casualty losses. Tax preparation software For the limits that apply to home mortgage interest, see Publication 936. Tax preparation software Category 2. Tax preparation software   Deductions that do not result in an adjustment to the basis of property are allowed next, but only to the extent your gross income from the activity is more than your deductions under the first category. Tax preparation software Most business deductions, such as those for advertising, insurance premiums, interest, utilities, and wages, belong in this category. Tax preparation software Category 3. Tax preparation software   Business deductions that decrease the basis of property are allowed last, but only to the extent the gross income from the activity exceeds the deductions you take under the first two categories. Tax preparation software Deductions for depreciation, amortization, and the part of a casualty loss an individual could not deduct in category (1) belong in this category. Tax preparation software Where more than one asset is involved, allocate depreciation and these other deductions proportionally. Tax preparation software    Individuals must claim the amounts in categories (2) and (3) as miscellaneous deductions on Schedule A (Form 1040). Tax preparation software They are subject to the 2%-of-adjusted-gross-income limit. Tax preparation software See Publication 529 for information on this limit. Tax preparation software Example. Tax preparation software Adriana is engaged in a not-for-profit activity. Tax preparation software The income and expenses of the activity are as follows. Tax preparation software Gross income $3,200 Subtract:     Real estate taxes $700   Home mortgage interest 900   Insurance 400   Utilities 700   Maintenance 200   Depreciation on an automobile 600   Depreciation on a machine 200 3,700 Loss $(500)   Adriana must limit her deductions to $3,200, the gross income she earned from the activity. Tax preparation software The limit is reached in category (3), as follows. Tax preparation software Limit on deduction $3,200 Category 1: Taxes and interest $1,600   Category 2: Insurance, utilities, and maintenance 1,300 2,900 Available for Category 3 $ 300   The $800 of depreciation is allocated between the automobile and machine as follows. Tax preparation software $600 $800 x $300 = $225 depreciation for the automobile             $200 $800 x $300 = $75 depreciation for the machine The basis of each asset is reduced accordingly. Tax preparation software Adriana includes the $3,200 of gross income on line 21 (other income) of Form 1040. Tax preparation software The $1,600 for category (1) is deductible in full on the appropriate lines for taxes and interest on Schedule A (Form 1040). Tax preparation software Adriana deducts the remaining $1,600 ($1,300 for category (2) and $300 for category (3)) as other miscellaneous deductions on Schedule A (Form 1040) subject to the 2%-of-adjusted-gross-income limit. Tax preparation software Partnerships and S corporations. Tax preparation software   If a partnership or S corporation carries on a not-for-profit activity, these limits apply at the partnership or S corporation level. Tax preparation software They are reflected in the individual shareholder's or partner's distributive shares. Tax preparation software More than one activity. Tax preparation software   If you have several undertakings, each may be a separate activity or several undertakings may be combined. Tax preparation software The following are the most significant facts and circumstances in making this determination. Tax preparation software The degree of organizational and economic interrelationship of various undertakings. Tax preparation software The business purpose that is (or might be) served by carrying on the various undertakings separately or together in a business or investment setting. Tax preparation software The similarity of the undertakings. Tax preparation software   The IRS will generally accept your characterization if it is supported by facts and circumstances. Tax preparation software    If you are carrying on two or more different activities, keep the deductions and income from each one separate. Tax preparation software Figure separately whether each is a not-for-profit activity. Tax preparation software Then figure the limit on deductions and losses separately for each activity that is not for profit. Tax preparation software Prev  Up  Next   Home   More Online Publications
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Recent Updates

Exempt Organizations Financial Data—2013 data on tax-exempt organizations were published on Tax Stats. These data include selected financial items from more than 600,000 Forms 990, 990-EZ and 990-PF filed by tax-exempt organizations and processed by the IRS during calendar year 2013. The latest release was expanded to include nearly 500 financial and other data items. The data are in ASCII space-delimited format, and supporting documentation is available.

2013 IRS Data BookThe Internal Revenue Service (IRS) has released the 2013 IRS Data Book, a snapshot of agency activities for Fiscal Year 2013—Oct. 1, 2012, to Sept. 30, 2013. In addition to information on taxes collected and returns processed, the report also includes information about enforcement, taxpayer assistance, and the IRS budget and workforce, among others.

2014 Winter SOI Bulletin—Statistics of Income (SOI) has released the 2014 Winter SOI Bulletin. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers.

This issue of the SOI Bulletin includes articles on the following topics:

  • Individual Income Tax Returns, Preliminary Data, 2012
  • Sales of Capital Assets Panel Data Reported on Individual Tax Returns, 2004–2007
  • Split-Interest Trusts, Filing Year 2012
  • Nonprofit Charitable Organizations, 2010

(March 2014)

Corporation Foreign Tax Credit, 2010Two new tables presenting data from Form 1118, Foreign Tax Credit—Corporations, are now available on SOI’s Tax Stats Webpage. The tables present data from the population of returns filed for Tax Year 2010. Table 1.1 displays data on returns with income in an excess credit position while table 1.2 shows data on returns in an excess limit position. Data presented includes foreign-source income, deductions, and taxes by major and selected minor industry. (February, 2014)

Exempt Organizations Microdata Files, Tax Years 1985–1997—Historical microdata files based on Forms 990 and Forms 990-EZ sampled for the annual studies of nonprofit charitable and other tax-exempt organizations are now available. Annual data are available for organizations exempt from income tax under Internal Revenue Code Section 501(c)(3). Additional data for tax-exempt organizations under IRC Sections 501(c)(4) through 501(c)(9) are available for limited tax years. (February, 2014)

2011 Individual Income Tax ZIP Code and County DataUnited States’ ZIP Code and county data for Tax Year 2011 are now available on Tax Stats. The data present selected income and tax return items by State, ZIP Code, county, and size of adjusted gross income. These data are based on individual income tax returns filed with the IRS. (February, 2014)

Fiduciary Income Tax, 2012—Three tables presenting Filing Year 2012 data for income from estates and trusts (Form 1041) are now available. The statistics cover sources of income and deductions at the National and State levels. Data are classified by trust type and filing status. (February, 2014)

U.S. Gift Tax Returns table Gift Tax, 2012 - One table presenting Filing Year 2012 data for United States Gift (and Generation-Skipping Transfer) Tax Returns (Form 709), including information on total gifts, deductions, credits, and net tax amounts, is now available. Data are presented by tax status and size of total taxable gifts. (January 2014)

2013 Fall SOI Bulletin—Statistics of Income (SOI) has released the 2013 Fall SOI Bulletin. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers.

This issue of the SOI Bulletin includes articles on the following topics:

  • Individual Income Tax Returns, 2011
  • Partnership Returns, 2011
  • Accumulation and Distribution of Individual Retirement Arrangements, 2010

(January 2014)

The Statistics of Income Tax Stats Table Wizard was recently updated! The Table Wizard allows users to query tax data on corporations, individuals, tax-exempt organizations, estates, gifts trusts, and more. The resulting data can then be downloaded. This update includes the following data:

  • Corporate data by industry (Forms 1120 and 1120s)—2004 through 2010
  • 501c(3)  Exempt Organizations (Form 990)—2004 through 2007
  • Domestic Private Foundations and Charitable Trusts (Form 990-PF)—2004 through 2008
  • Unrelated Business Income Tax Returns (Form 990-T)—2006 through 2008
  • Estate Tax Returns (Form 706)—2007 through 2010
  • Gift Tax Returns (Form 709)—2005 through 2010

(December 2013)

2011 Individual Income Tax Estimated Data Line CountsThe 2011 Statistics of Income (SOI) estimated data line counts publication presents estimates of frequencies of taxpayer entries on the lines of the forms and schedules filed with individual tax returns as shown on the 2011 Individual SOI Complete Report file. The statistics are based on a sample of returns that have been weighted to estimate the entire 2011 Tax Year population. The publication includes corresponding dollar amounts of selected lines filed in concurrence with the number of returns filed. (December 2013)

Tax Year 2001–2011 Individual Income Tax Return Statistics by Selected Descending and Ascending Cumulative PercentilesStatistics based on all individual income tax returns by selected descending and ascending cumulative percentiles are now available for Tax Years 2001–2011. Tables present historical statistics on income and tax by cumulative percentiles based on the number of returns. They also show distributions of adjusted gross income (AGI) and total income tax, as defined for each tax year, by descending and ascending cumulative percentiles of returns in both current and constant dollars. These tables can be used to make comparisons across cumulative percentile classes beginning with Tax Year 2001. This release is based on all individual income tax returns except returns of dependents. (December 2013)

2011 Partnership Returns Line Item Estimates (Publication 5035)—This publication presents estimates of frequencies of taxpayer entries recorded on the applicable lines of the forms and schedules filed with partnership tax returns for Tax Year 2011. It also contains corresponding population estimates of dollar amounts recorded on those lines (as applicable). (November 2013)

Partnerships, 2011—Twenty-two tables presenting Tax Year 2011 data for partnership returns (Forms 1065 and 1065-B), including types of partnerships and specific industrial sectors, are now available. The statistics cover balance sheets, trade or business income and deductions, portfolio income, rental income (including rental real estate income), and total net income. Data are classified by industry and size of total assets. In addition, historical tables provide balance sheet and income statement data as well as counts of partnership returns, by size of assets and receipts. 
(November 2013)

Foreign Recipients of US Income Study, 2011 Tax Year—Two tables presenting data for Tax Year 2011 from Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, are now available. The tables include statistics for the number of returns, total income, tax withheld, income subject to withholding, income exempt from withholding, and income by category. Data are available by selected countries and selected recipient types. (October 2013)

Issue Year 2011 Tax-Exempt Bond Tables— Updated tax-exempt bond data for both governmental and private activity bonds issued in calendar year 2011 are now available on Tax Stats. Data include the term of issue, purpose, bond size, and uses of bond proceeds. Tax credit bond data, by bond type, and State-level data, by bond purpose, are also available. (October 2013)

 

 



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Page Last Reviewed or Updated: 28-Mar-2014

The Tax Preparation Software

Tax preparation software Index A Accelerated Cost Recovery System (ACRS), MACRS Depreciation (see also Modified Accelerated Cost Recovery System (MACRS)) Effective date, Depreciation Methods Accounting methods Accrual method, Accrual method. Tax preparation software Cash method, Cash method. Tax preparation software Change of method, Changing your accounting method. Tax preparation software Constructive receipt of income, Cash method. Tax preparation software , More information. Tax preparation software Accrual method taxpayers, Accrual method. Tax preparation software ACRS (Accelerated Cost Recovery System) Effective date, Depreciation Methods Active participation, Active participation. Tax preparation software Activities not for profit, Duplex. Tax preparation software Additions to property, Additions or improvements to property. Tax preparation software (see also Improvements) Basis, Increases to basis. Tax preparation software , Additions or improvements. Tax preparation software MACRS recovery period, Additions or improvements to property. Tax preparation software Adjusted basis MACRS depreciation, Adjusted Basis Adjusted gross income (AGI) Modified (see Modified adjusted gross income (MAGI)) Advance rent, Advance rent. Tax preparation software Security deposits, Security deposits. Tax preparation software Advertising, Types of Expenses Allocation of expenses Change of property to rental use, Payments added to capital account. Tax preparation software How to divide expenses, Dividing Expenses Part of property rented, Renting Part of Property, How to divide expenses. Tax preparation software Personal use of rental property, Personal use of rental property. Tax preparation software , Personal Use of Dwelling Unit (Including Vacation Home) Alternative Depreciation System (ADS) Election of, Electing ADS MACRS, MACRS Depreciation, Table 2-2d. Tax preparation software Alternative minimum tax (AMT) Accelerated depreciation methods, Alternative minimum tax (AMT). Tax preparation software Amended returns, Filing an amended return. Tax preparation software Apartments Basement apartments, Examples. Tax preparation software Dwelling units, Dwelling unit. Tax preparation software Appraisal fees, Settlement fees and other costs. Tax preparation software Assessments for maintenance, Assessments for local improvements. Tax preparation software Assessments, local (see Local assessments) Assistance (see Tax help) Assumption of mortgage, Assumption of a mortgage. Tax preparation software Attorneys' fees, Settlement fees and other costs. Tax preparation software , Increases to basis. Tax preparation software Automobiles MACRS recovery periods, Property Classes Under GDS B Basis Adjusted basis, Adjusted Basis Assessments for local improvements, Assessments for local improvements. Tax preparation software Basis other than cost, Basis Other Than Cost Cost basis, Cost Basis Decreases to, Decreases to basis. Tax preparation software Deductions Capitalization of costs vs. Tax preparation software , Deducting vs. Tax preparation software capitalizing costs. Tax preparation software Not greater than basis, Cost or Other Basis Fully Recovered Fair market value, Fair market value. Tax preparation software Increases to, Increases to basis. Tax preparation software MACRS depreciable basis, Basis of Depreciable Property Property changed to rental use, Basis of Property Changed to Rental Use C Capital expenditures Deductions vs. Tax preparation software effect on basis, Deducting vs. Tax preparation software capitalizing costs. Tax preparation software Local benefit taxes, Local benefit taxes. Tax preparation software Mortgages, payments to obtain, Expenses paid to obtain a mortgage. Tax preparation software Cars MACRS recovery periods, Property Classes Under GDS Cash method taxpayers, Cash method. Tax preparation software Casualty losses, Exception for Rental Real Estate With Active Participation Change of accounting method, Changing your accounting method. Tax preparation software Charitable contributions Use of property, Donation of use of the property. Tax preparation software Cleaning and maintenance, Types of Expenses Closing costs, Settlement fees and other costs. Tax preparation software Commissions, Types of Expenses Computers MACRS recovery periods, Property Classes Under GDS Condominiums, Condominiums, Dwelling unit. Tax preparation software Constructive receipt of income, Cash method. Tax preparation software , More information. Tax preparation software Cooperative housing, Cooperative apartments. Tax preparation software , Cooperatives, Dwelling unit. Tax preparation software Cost basis, Cost Basis Credit reports, Settlement fees and other costs. Tax preparation software Credits Residential energy credits, Decreases to basis. Tax preparation software D Days of personal use, What is a day of personal use? Days used for repairs and maintenance, Days used for repairs and maintenance. Tax preparation software Deductions Capitalizing costs vs. Tax preparation software effect on basis, Deducting vs. Tax preparation software capitalizing costs. Tax preparation software Depreciation (see Depreciation) Limitations on, Form 4562. Tax preparation software Passive activity losses (see Passive activity) Depreciation, Depreciation of Rental Property, Changing your accounting method. Tax preparation software Alternative Depreciation System (ADS) (see Modified Accelerated Cost Recovery System (MACRS)) Basis (see Basis) Change of accounting method, Changing your accounting method. Tax preparation software Change of property to rental use, Property Changed to Rental Use Claiming correct amount of, Claiming the Correct Amount of Depreciation Declining balance method, Depreciation Methods Duration of property expected to last more than one year, What Rental Property Can Be Depreciated? Eligible property, What Rental Property Can Be Depreciated? First-year expensing, Section 179 deduction. Tax preparation software MACRS (see Modified Accelerated Cost Recovery System (MACRS)) Methods, Depreciation Methods, Figuring Your Depreciation Deduction Ownership of property, What Rental Property Can Be Depreciated?, Property you own. Tax preparation software Rental expense, Depreciation. Tax preparation software Rented property, Rented property. Tax preparation software Section 179 deduction, Section 179 deduction. Tax preparation software Special depreciation allowances, Claiming the Special Depreciation Allowance Straight line method, Depreciation Methods Useful life, What Rental Property Can Be Depreciated?, Property having a determinable useful life. Tax preparation software Vacant rental property, Vacant rental property. Tax preparation software Discount, bonds and notes issued at (see Original issue discount (OID)) Dividing of expenses (see Allocation of expenses) Dwelling units Definition, Dwelling unit. Tax preparation software Fair rental price, Fair rental price. Tax preparation software Personal use of, Personal Use of Dwelling Unit (Including Vacation Home), What is a day of personal use? E Easements, Decreases to basis. Tax preparation software Equipment rental expense, Rental of equipment. Tax preparation software F Fair market value (FMV), Fair market value. Tax preparation software Fair rental price, Dividing Expenses, Fair rental price. Tax preparation software Fees Loan origination fees, Points, Settlement fees and other costs. Tax preparation software Points (see Points) Settlement fees and other costs, Settlement fees and other costs. Tax preparation software Tax return preparation fees, Legal and other professional fees. Tax preparation software First-year expensing, Section 179 deduction. Tax preparation software Form 1040 Not rented for profit income, Where to report. Tax preparation software Part of property rented, Renting Part of Property Rental income and expenses, Reporting Rental Income, Expenses, and Losses Schedule E, Schedule E (Form 1040) Form 1098 Mortgage interest, Form 1098, Mortgage Interest Statement. Tax preparation software Form 4684 Casualties and thefts, How to report. Tax preparation software Form 4797 Sales of business property, How to report. Tax preparation software Form 8582 Passive activity losses, Form 8582. Tax preparation software , Form 8582 not required. Tax preparation software Free tax services, Free help with your tax return. Tax preparation software G Gains and losses At-risk rules, At-Risk Rules Casualty and theft losses, Exception for Rental Real Estate With Active Participation Limits on rental losses, Form 4562. Tax preparation software Passive activity losses, Passive Activity Limits Rental real estate activities, Exception for Rental Real Estate With Active Participation Sale of rental property, Sale or exchange of rental property. Tax preparation software , How to report. Tax preparation software General depreciation system (GDS) (see Modified Accelerated Cost Recovery System (MACRS)) H Help (see Tax help) Home Main home, Main home. Tax preparation software Use as rental property (see Use of home) I Improvements, Table 1-1. Tax preparation software Examples of Improvements (see also Repairs) Assessments for local improvements, Assessments for local improvements. Tax preparation software Basis, Increases to basis. Tax preparation software , Additions or improvements. Tax preparation software Depreciation of rented property, Rented property. Tax preparation software MACRS recovery period, Additions or improvements to property. Tax preparation software Insurance, Types of Expenses Casualty or theft loss payments, Decreases to basis. Tax preparation software Change of property to rental use, Property Changed to Rental Use Fire insurance premiums, cost basis, Settlement fees and other costs. Tax preparation software Part of property rented, Renting Part of Property Premiums paid in advance, Insurance premiums paid in advance. Tax preparation software Title insurance, cost basis, Settlement fees and other costs. Tax preparation software Interest payments, Interest expense. Tax preparation software (see also Mortgages) Loan origination fees, Points Rental expenses, Types of Expenses L Land Cost basis, Separating cost of land and buildings. Tax preparation software Depreciation, Land. Tax preparation software Leases Cancellation payments, Canceling a lease. Tax preparation software Equipment leasing, Rental of equipment. Tax preparation software Limits Passive activity losses and credits, Passive Activity Limits Rental losses, Limits on Rental Losses Loans Assumption fees, Settlement fees and other costs. Tax preparation software Charges connected with getting or refinancing, cost basis, Settlement fees and other costs. Tax preparation software Low or no interest, Loans with low or no interest. Tax preparation software Origination fees, Points Local assessments, Assessments for local improvements. Tax preparation software Losses (see Gains and losses) M Missing children, photographs of, Reminders Modified Accelerated Cost Recovery System (MACRS), MACRS Depreciation, Figuring MACRS Depreciation Under ADS Additions or improvements to property, Additions or improvements to property. Tax preparation software Adjusted basis, Adjusted Basis Alternative Depreciation System (ADS), MACRS Depreciation, Figuring MACRS Depreciation Under ADS Basis other than cost, Basis Other Than Cost Conventions, Conventions Cost basis, Cost Basis Depreciable basis, Basis of Depreciable Property Effective date, Depreciation Methods Excluded property, Excluded Property General Depreciation System (GDS), MACRS Depreciation, Property Classes Under GDS, Figuring Your Depreciation Deduction Nonresidential rental property, Property Classes Under GDS Property used in rental activities (Table 2-1), Table 2-1. Tax preparation software MACRS Recovery Periods for Property Used in Rental Activities Recovery periods, Table 2-1. Tax preparation software MACRS Recovery Periods for Property Used in Rental Activities, 5-, 7-, or 15-year property. Tax preparation software Residential rental property, Property Classes Under GDS, Residential rental property. Tax preparation software Special depreciation allowances, Claiming the Special Depreciation Allowance Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Tax preparation software Mortgages, Expenses paid to obtain a mortgage. Tax preparation software Assumption of, cost basis, Assumption of a mortgage. Tax preparation software Change of property to rental use, Property Changed to Rental Use End of, OID, Loan or mortgage ends. Tax preparation software Interest, Interest expense. Tax preparation software , Property Changed to Rental Use, Renting Part of Property Mortgage insurance premiums, Settlement fees and other costs. Tax preparation software Part of property rented, Renting Part of Property N Nonresidential real property, Property Classes Under GDS Not-for-profit activities, Duplex. Tax preparation software O Original issue discount (OID), Points, Loan or mortgage ends. Tax preparation software P Part interest Expenses, Part interest. Tax preparation software Income, Part interest. Tax preparation software Passive activity Maximum special allowance, Maximum special allowance. Tax preparation software Personal property Rental income from, Property or services. Tax preparation software Personal use of rental property, Payments added to capital account. Tax preparation software , Personal Use of Dwelling Unit (Including Vacation Home) (see also Property changed to rental use) Placed-in-service date, Placed in Service Points, Types of Expenses, Points, Settlement fees and other costs. Tax preparation software Pre-rental expenses, Pre-rental expenses. Tax preparation software Principal residence (see Home) Profit, property not rented for, Duplex. Tax preparation software Property changed to rental use, Payments added to capital account. Tax preparation software Basis, Basis of Property Changed to Rental Use Publications (see Tax help) R Real estate professionals, Real estate professionals. Tax preparation software Real estate taxes, Real estate taxes. Tax preparation software Real property trades or businesses, Real property trades or businesses. Tax preparation software Recordkeeping requirements Travel and transportation expenses, Local transportation expenses. Tax preparation software , Travel expenses. Tax preparation software Recovery periods, Property Classes Under GDS Rent, Settlement fees and other costs. Tax preparation software Advance rent, Advance rent. Tax preparation software Fair price, Fair rental price. Tax preparation software Rental expenses, Rental Expenses Advertising, Types of Expenses Allocation between rental and personal uses, Dividing Expenses Change of property to rental use, Property Changed to Rental Use Cleaning and maintenance, Types of Expenses Commissions, Types of Expenses Depreciation, Depreciation. Tax preparation software Dwelling unit used as home, Dwelling Unit Used as a Home Equipment rental, Rental of equipment. Tax preparation software Home, property also used as, Rental of property also used as your home. Tax preparation software Improvements, Table 1-1. Tax preparation software Examples of Improvements Insurance, Types of Expenses, Insurance premiums paid in advance. Tax preparation software Interest payments, Types of Expenses, Interest expense. Tax preparation software Local transportation expenses, Types of Expenses, Local transportation expenses. Tax preparation software Part of property rented, Renting Part of Property Points, Types of Expenses, Points Pre-rental expenses, Pre-rental expenses. Tax preparation software Rental payments, Types of Expenses Repairs, Types of Expenses, Repairs and Improvements Sale of property, Vacant while listed for sale. Tax preparation software Tax return preparation fees, Legal and other professional fees. Tax preparation software Taxes, Types of Expenses Tenant, paid by, Expenses paid by tenant. Tax preparation software Travel expenses, Types of Expenses Utilities, Types of Expenses Vacant rental property, Vacant rental property. Tax preparation software Rental income Advance rent, Advance rent. Tax preparation software Cancellation of lease payments, Canceling a lease. Tax preparation software Dwelling unit used as home, Dwelling Unit Used as a Home Lease with option to buy, Lease with option to buy. Tax preparation software Not rented for profit, Not Rented for Profit Part interest, Part interest. Tax preparation software Property received from tenant, Property or services. Tax preparation software Reporting, Accrual method. Tax preparation software , Which Forms To Use Security deposit, Security deposits. Tax preparation software Services received from tenant, Property or services. Tax preparation software Uncollected rent, Uncollected rent. Tax preparation software Used as home, Rental of property also used as your home. Tax preparation software Rental losses, Exception for Rental Real Estate With Active Participation (see also Gains and losses) (see also Passive activity) Repairs, Types of Expenses, Repairs and Improvements (see also Improvements) Assessments for maintenance, Assessments for local improvements. Tax preparation software Personal use of rental property exception for days used for repairs and maintenance, Days used for repairs and maintenance. Tax preparation software S Sale of property Expenses, Vacant while listed for sale. Tax preparation software Gain or loss, Sale or exchange of rental property. Tax preparation software , How to report. Tax preparation software Main home, Sale of main home used as rental property. Tax preparation software Section 179 deductions, Section 179 deduction. Tax preparation software Security deposits, Security deposits. Tax preparation software Settlement fees, Settlement fees and other costs. Tax preparation software Shared equity financing agreements, Shared equity financing agreement. Tax preparation software Special depreciation allowances, Claiming the Special Depreciation Allowance Spouse Material participation, Participating spouse. Tax preparation software Standard mileage rates, Local transportation expenses. Tax preparation software Surveys, Settlement fees and other costs. Tax preparation software T Tables and figures Improvements, examples of (Table 1-1), Table 1-1. Tax preparation software Examples of Improvements MACRS optional tables (Table 2-2d), Table 2-2d. Tax preparation software MACRS optional tables (Tables 2-2a, 2-2b, and 2-2c), Tables 2-2a, 2-2b, and 2-2c. Tax preparation software MACRS recovery periods for property used in rental activities (Table 2-1), Table 2-1. Tax preparation software MACRS Recovery Periods for Property Used in Rental Activities Tax credits Residential energy credits, effect on basis, Decreases to basis. Tax preparation software Tax help, How To Get Tax Help Tax return preparation fees, Legal and other professional fees. Tax preparation software Taxes Deduction of, Types of Expenses Local benefit taxes, Local benefit taxes. Tax preparation software Real estate taxes, Real estate taxes. Tax preparation software Transfer taxes, Settlement fees and other costs. Tax preparation software Theft losses, Theft. Tax preparation software Title insurance, Settlement fees and other costs. Tax preparation software Transfer taxes, Settlement fees and other costs. Tax preparation software Travel and transportation expenses Local transportation expenses, Types of Expenses, Local transportation expenses. Tax preparation software Recordkeeping, Travel expenses. Tax preparation software Rental expenses, Types of Expenses Standard mileage rate, Local transportation expenses. Tax preparation software U Uncollected rent Income, Uncollected rent. Tax preparation software Use of home Before or after renting, Days used as a main home before or after renting. Tax preparation software Change to rental use, Property Changed to Rental Use Days of personal use, What is a day of personal use? Fair rental price, Fair rental price. Tax preparation software Passive activity rules exception, Exception for Personal Use of Dwelling Unit Personal use as dwelling unit, Personal Use of Dwelling Unit (Including Vacation Home) Utilities, Types of Expenses, Increases to basis. Tax preparation software V Vacant rental property, Vacant rental property. Tax preparation software Vacation homes Dwelling unit, Dwelling unit. Tax preparation software Fair rental price, Fair rental price. Tax preparation software Personal use of, Personal Use of Dwelling Unit (Including Vacation Home) Valuation Fair market value, Fair market value. Tax preparation software Prev  Up     Home   More Online Publications