2010 Tax Act
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2010 Tax Act
2010 tax act Some employees may be able to deduct certain work-related expenses. The following facts from the IRS can help you determine which expenses are deductible as an employee business expense. You must be itemizing deductions on IRS Schedule A to qualify.
2010 tax act Expenses that qualify for an itemized deduction generally include:
2010 tax act Business travel away from home
2010 tax act Business use of your car
2010 tax act Business meals and entertainment
2010 tax act Travel
2010 tax act Use of your home
2010 tax act Education
2010 tax act Supplies
2010 tax act Tools
2010 tax act Miscellaneous expenses
2010 tax act You must keep records to prove the business expenses you deduct. For general information on recordkeeping, see IRS Publication 552, Recordkeeping for Individuals available on this website, or by calling 1-800-TAX-FORM (800-829-3676).
2010 tax act If your employer reimburses you under an accountable plan, you should not include the payments in your gross income, and you may not deduct any of the reimbursed amounts.
2010 tax act An accountable plan must meet three requirements:
2010 tax act You must have paid or incurred expenses that are deductible while performing services as an employee.
2010 tax act
2010 tax act You must adequately account to your employer for these expenses within a reasonable time period.
2010 tax act
2010 tax act You must return any excess reimbursement or allowance within a reasonable time period.
2010 tax act If the plan under which you are reimbursed by your employer is non-accountable, the payments you receive should be included in the wages shown on your Form W-2. You must report the income and itemize your deductions to deduct these expenses.
2010 tax act Generally, you report unreimbursed expenses on IRS Form 2106 or IRS Form 2106-EZ and attach it to Form 1040. Deductible expenses are then reported on IRS Schedule A, as a miscellaneous itemized deduction subject to a rule that limits your employee business expenses deduction to the amount that exceeds 2 percent of your adjusted gross income.
2010 tax act For more information see IRS Publication 529, Miscellaneous Deductions, which is available on this website, or by calling 1-800-TAX-FORM (800-829-3676).
2010 tax act
Understanding Your CP286 Notice
We send this notice when we approve Form 8716, Election To Have a Tax Year Other Than a Required Tax Year.
What you need to do
You may want to
Answers to Common Questions
What should I do if I want to change my tax year for Form 1065 or Form 1120S to a calendar year filing?
File a final Form 8752, which will terminate your section 444 election. If you have a credit on your account, you must file a final Form 8752 for us to refund the payments to you. You must also file a short period business income tax return with your final Form 8752 (Form 1065 or Form 1120S) ending December 31.
Do I need to file Form 8752 when I don’t owe a payment?
Yes. You must file Form 8752 each year the section 444 election is in effect, even if no payment is due.
What if I am no longer required to file a Form 1065 or Form 1120S? Do I need to ask the IRS to terminate my election?
Yes. You must send a final Form 1065 or Form 1120S, along with a final Form 8752.
Are there any consequences if I don’t file Form 8752 or send in my payment when I file?
Failure to file or failure to pay will result in the termination of your fiscal year election.
Understanding your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.
Notice CP286, Page 1
Page Last Reviewed or Updated: 14-Jan-2014
Printable samples of this notice (PDF)
Tax publications you may find useful
How to get help
- Call the 1-800 number listed on the top right corner of your notice.
- Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
- See if you qualify for help from a Low Income Taxpayer Clinic.
The 2010 Tax Act
2010 tax act Car Expenses Table of Contents Introduction Depreciation of CarSpecial Depreciation Allowance Depreciation Limit Amended Return Election Not To Claim Special Allowance If you purchased a car after September 10, 2001, for use in your business (or as an employee) and figure your deductible expenses using the actual car expense method, new law contains provisions that may affect your depreciation deduction for that car. 2010 tax act Publication 463, Travel, Entertainment, Gift, and Car Expenses, contains information on figuring depreciation on your car. 2010 tax act However, Publication 463 does not contain the new provisions because it was printed before the law was enacted. 2010 tax act The new provisions are in the Supplement to Publication 463, which is reprinted below. 2010 tax act Supplement to Publication 463 Travel, Entertainment, Gift, and Car Expenses Introduction This supplemental publication is for taxpayers who purchased a car for business purposes after September 10, 2001, and figure their deductible expenses, including a deduction for depreciation, using the actual car expense method. 2010 tax act After Publication 463 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. 2010 tax act Certain provisions of this new law may reduce your taxes for 2001. 2010 tax act The new law contains the following provisions. 2010 tax act A new depreciation deduction, the special depreciation allowance. 2010 tax act An increase in the limit on depreciation for any car for which you claim the new special depreciation allowance. 2010 tax act If you have already filed your 2001 return, you may wish to file an amended return to claim any of these benefits. 2010 tax act See Amended Return, later. 2010 tax act Depreciation of Car If you used the actual car expense method to figure your deduction for a car you own and use in your business (or as an employee), you generally can claim a depreciation deduction. 2010 tax act However, there is a limit on the depreciation deduction you can take for your car each year. 2010 tax act See Depreciation Limit later. 2010 tax act Special Depreciation Allowance The new law allows you to claim a special depreciation allowance. 2010 tax act This special allowance is a deduction equal to 30% of the depreciable basis of qualified property. 2010 tax act You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS). 2010 tax act See Depreciation Deduction under Actual Car Expenses in chapter 4 of Publication 463 for information about MACRS. 2010 tax act You can claim the special depreciation allowance only for the year the qualified property is placed in service. 2010 tax act Qualified property. 2010 tax act Qualified property includes a car (any four-wheeled vehicle, including a truck or van not more than 6,000 pounds, that is made primarily for use on public streets, roads, and highways) that meets all of the following requirements. 2010 tax act You bought it new. 2010 tax act You bought it after September 10, 2001. 2010 tax act (But a car is not qualified property if a binding written contract for you to buy the car was in effect before September 11, 2001. 2010 tax act ) You began using it for business after September 10, 2001, and used it more than 50% in a qualified business use. 2010 tax act Example. 2010 tax act Bob bought a new car on October 15, 2001, for $20,000 and placed it in service immediately, using it 75% for business. 2010 tax act Bob's car is qualified property. 2010 tax act Bob chooses not to take a section 179 deduction for the car. 2010 tax act He does claim the new special depreciation allowance. 2010 tax act Bob first must figure the car's depreciable basis, which is $15,000 ($20,000 × . 2010 tax act 75). 2010 tax act He then figures the special depreciation allowance of $4,500 ($15,000 × . 2010 tax act 30). 2010 tax act The remaining depreciable basis of $10,500 ($15,000 - $4,500) is depreciated using MACRS (200% declining balance method, half-year convention) and results in a deduction of $2,100 ($10,500 × . 2010 tax act 20), for a total depreciation deduction for 2001 of $6,600 ($4,500 + $2,100). 2010 tax act However, Bob's depreciation deduction is limited to $5,745 ($7,660 × . 2010 tax act 75), as discussed next. 2010 tax act Depreciation Limit The limit on your depreciation deduction for 2001 is increased to $7,660 for a car that is qualified property (defined above) and for which you claim the special depreciation allowance. 2010 tax act The limit is increased to $23,080 if the car is an electric car. 2010 tax act The section 179 deduction is treated as depreciation for purposes of this limit. 2010 tax act If you use a car less than 100% in your business or work, the limit is $7,660 (or $23,080 for an electric car) multiplied by the percentage of business and investment use during the year. 2010 tax act For cars that do not qualify for (or for which you choose not to claim) the special depreciation allowance, the limit remains $3,060 ($9,280 for electric cars). 2010 tax act Amended Return If you filed your 2001 calendar year return before June 1, 2002, and did not claim the new special depreciation allowance for a qualified car, you can claim it by filing an amended return on Form 1040X, Amended U. 2010 tax act S. 2010 tax act Individual Income Tax Return, by April 15, 2003. 2010 tax act At the top of the Form 1040X, print “Filed pursuant to Revenue Procedure 2002–33. 2010 tax act ” If you are an employee, attach Form 2106, Employee Business Expenses (revised March 2002). 2010 tax act If you are self-employed, attach Form 4562, Depreciation and Amortization (revised March 2002). 2010 tax act Or, you can claim the special depreciation allowance by filing Form 3115, Application for Change in Accounting Method, with your 2002 return. 2010 tax act For details, see Revenue Procedure 2002–33. 2010 tax act (But, filing Form 1040X for 2001 enables you to claim the special allowance earlier than attaching Form 3115 to your 2002 return. 2010 tax act ) You cannot claim the special depreciation allowance on an amended return (or by using Form 3115) if you made, or are treated as having made, the election not to claim it described later. 2010 tax act Example. 2010 tax act The facts are the same as in the previous example except that Bob filed his original 2001 income tax return on April 15, 2002, and claimed a $3,000 ($20,000 x . 2010 tax act 75 x . 2010 tax act 20) depreciation deduction for his new car using MACRS. 2010 tax act Bob now wishes to claim the special depreciation allowance for his new car on an amended 2001 return. 2010 tax act Bob, who is an employee, files Form 1040X, by April 15, 2003, with an updated Form 2106 (revised March 2002) attached, increasing his total depreciation deduction to $5,745, as figured in the earlier example. 2010 tax act Bob's new filled-in Form 2106 is shown later. 2010 tax act Election Not To Claim Special Allowance You can elect not to claim the special depreciation allowance for a car by making a statement attached to, or written on, your return indicating that you are electing not to claim the special depreciation allowance for 5-year property. 2010 tax act As a general rule, you must make this election by the due date (including extensions) of your return. 2010 tax act You can have an automatic extension of 6 months from the due date of your return (excluding extensions) to make the election with an amended return. 2010 tax act To get this extension, you must have filed your original return by the due date (including extensions). 2010 tax act At the top of the statement, print “Filed pursuant to section 301. 2010 tax act 9100–2. 2010 tax act ” If you elect not to claim the special depreciation allowance for a car, you cannot claim it for any other 5-year property placed in service during the same year. 2010 tax act Unless you elect (or are treated as electing) not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. 2010 tax act Deemed election for return filed before June 1, 2002. 2010 tax act If you did not make the election not to claim the special depreciation allowance in the time and manner described above, you will still be treated as electing not to claim it if all of the following apply. 2010 tax act You filed your 2001 return before June 1, 2002. 2010 tax act You claimed depreciation on your return but did not claim the special depreciation allowance. 2010 tax act You did not file an amended 2001 return by April 15, 2003, or a Form 3115 with your 2002 return, to claim the special depreciation allowance. 2010 tax act Form 2106, Page 1, for Bob Smith Form 2106, Page 2, for Bob Smith Prev Up Next Home More Online Publications