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Can I File My 2012 Taxes In 2013

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Can I File My 2012 Taxes In 2013

Can i file my 2012 taxes in 2013 19. Can i file my 2012 taxes in 2013   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Can i file my 2012 taxes in 2013 This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Can i file my 2012 taxes in 2013 Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Can i file my 2012 taxes in 2013 However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Can i file my 2012 taxes in 2013 For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Can i file my 2012 taxes in 2013 This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Can i file my 2012 taxes in 2013 Table 19-1 summarizes the features of the student loan interest deduction. Can i file my 2012 taxes in 2013 Table 19-1. Can i file my 2012 taxes in 2013 Student Loan Interest Deduction at a Glance Do not rely on this table alone. Can i file my 2012 taxes in 2013 Refer to the text for more details. Can i file my 2012 taxes in 2013 Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Can i file my 2012 taxes in 2013 Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. Can i file my 2012 taxes in 2013 Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Can i file my 2012 taxes in 2013 Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Can i file my 2012 taxes in 2013 Phaseout The amount of your deduction depends on your income level. Can i file my 2012 taxes in 2013 Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Can i file my 2012 taxes in 2013 It includes both required and voluntary interest payments. Can i file my 2012 taxes in 2013 Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Can i file my 2012 taxes in 2013 Loans from the following sources are not qualified student loans. Can i file my 2012 taxes in 2013 A related person. Can i file my 2012 taxes in 2013 A qualified employer plan. Can i file my 2012 taxes in 2013 Exceptions. Can i file my 2012 taxes in 2013   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Can i file my 2012 taxes in 2013 An individual can be your dependent even if you are the dependent of another taxpayer. Can i file my 2012 taxes in 2013 An individual can be your dependent even if the individual files a joint return with a spouse. Can i file my 2012 taxes in 2013 An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Can i file my 2012 taxes in 2013    Reasonable period of time. Can i file my 2012 taxes in 2013   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Can i file my 2012 taxes in 2013   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Can i file my 2012 taxes in 2013 The expenses relate to a specific academic period. Can i file my 2012 taxes in 2013 The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Can i file my 2012 taxes in 2013   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Can i file my 2012 taxes in 2013 Academic period. Can i file my 2012 taxes in 2013   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Can i file my 2012 taxes in 2013 In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Can i file my 2012 taxes in 2013 Eligible student. Can i file my 2012 taxes in 2013   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Can i file my 2012 taxes in 2013 Enrolled at least half-time. Can i file my 2012 taxes in 2013   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Can i file my 2012 taxes in 2013   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Can i file my 2012 taxes in 2013 However, the standard may not be lower than any of those established by the U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Department of Education under the Higher Education Act of 1965. Can i file my 2012 taxes in 2013 Related person. Can i file my 2012 taxes in 2013   You cannot deduct interest on a loan you get from a related person. Can i file my 2012 taxes in 2013 Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Can i file my 2012 taxes in 2013 ), Your lineal descendants (children, grandchildren, etc. Can i file my 2012 taxes in 2013 ), and Certain corporations, partnerships, trusts, and exempt organizations. Can i file my 2012 taxes in 2013 Qualified employer plan. Can i file my 2012 taxes in 2013   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Can i file my 2012 taxes in 2013 Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Can i file my 2012 taxes in 2013 They include amounts paid for the following items. Can i file my 2012 taxes in 2013 Tuition and fees. Can i file my 2012 taxes in 2013 Room and board. Can i file my 2012 taxes in 2013 Books, supplies, and equipment. Can i file my 2012 taxes in 2013 Other necessary expenses (such as transportation). Can i file my 2012 taxes in 2013 The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Can i file my 2012 taxes in 2013 Eligible educational institution. Can i file my 2012 taxes in 2013   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Department of Education. Can i file my 2012 taxes in 2013 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Can i file my 2012 taxes in 2013   Certain educational institutions located outside the United States also participate in the U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Department of Education's Federal Student Aid (FSA) programs. Can i file my 2012 taxes in 2013   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Can i file my 2012 taxes in 2013   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Can i file my 2012 taxes in 2013 The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Can i file my 2012 taxes in 2013    The educational institution should be able to tell you if it is an eligible educational institution. Can i file my 2012 taxes in 2013 Adjustments to qualified education expenses. Can i file my 2012 taxes in 2013   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Can i file my 2012 taxes in 2013 See chapter 4 of Publication 970 for details. Can i file my 2012 taxes in 2013 Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Can i file my 2012 taxes in 2013 Loan origination fee. Can i file my 2012 taxes in 2013   In general, this is a one-time fee charged by the lender when a loan is made. Can i file my 2012 taxes in 2013 To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Can i file my 2012 taxes in 2013 A loan origination fee treated as interest accrues over the life of the loan. Can i file my 2012 taxes in 2013 Capitalized interest. Can i file my 2012 taxes in 2013    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Can i file my 2012 taxes in 2013 Interest on revolving lines of credit. Can i file my 2012 taxes in 2013   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Can i file my 2012 taxes in 2013 See Qualified Education Expenses , earlier. Can i file my 2012 taxes in 2013 Interest on refinanced student loans. Can i file my 2012 taxes in 2013   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Can i file my 2012 taxes in 2013 If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Can i file my 2012 taxes in 2013 Voluntary interest payments. Can i file my 2012 taxes in 2013   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Can i file my 2012 taxes in 2013 Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Can i file my 2012 taxes in 2013 Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Can i file my 2012 taxes in 2013 Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Can i file my 2012 taxes in 2013 Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Can i file my 2012 taxes in 2013 For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Can i file my 2012 taxes in 2013 Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Can i file my 2012 taxes in 2013 Your filing status is any filing status except married filing separately. Can i file my 2012 taxes in 2013 No one else is claiming an exemption for you on his or her tax return. Can i file my 2012 taxes in 2013 You are legally obligated to pay interest on a qualified student loan. Can i file my 2012 taxes in 2013 You paid interest on a qualified student loan. Can i file my 2012 taxes in 2013 Interest paid by others. Can i file my 2012 taxes in 2013   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Can i file my 2012 taxes in 2013 See chapter 4 of Publication 970 for more information. Can i file my 2012 taxes in 2013 No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Can i file my 2012 taxes in 2013 How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Can i file my 2012 taxes in 2013 However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Can i file my 2012 taxes in 2013 You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Can i file my 2012 taxes in 2013 For details on figuring your MAGI, see chapter 4 of Publication 970. Can i file my 2012 taxes in 2013 How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Can i file my 2012 taxes in 2013 However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Can i file my 2012 taxes in 2013 To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Can i file my 2012 taxes in 2013 Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Can i file my 2012 taxes in 2013 For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Can i file my 2012 taxes in 2013 Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Can i file my 2012 taxes in 2013 However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Can i file my 2012 taxes in 2013 For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Can i file my 2012 taxes in 2013 To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Can i file my 2012 taxes in 2013 Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Can i file my 2012 taxes in 2013 You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Can i file my 2012 taxes in 2013 The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Can i file my 2012 taxes in 2013 The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Can i file my 2012 taxes in 2013 Table 19-2 summarizes the features of the tuition and fees deduction. Can i file my 2012 taxes in 2013 You may be able to take a credit for your education expenses instead of a deduction. Can i file my 2012 taxes in 2013 You can choose the one that will give you the lower tax. Can i file my 2012 taxes in 2013 See chapter 35, Education Credits, for details about the credits. Can i file my 2012 taxes in 2013 Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Can i file my 2012 taxes in 2013 Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Can i file my 2012 taxes in 2013 You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Can i file my 2012 taxes in 2013 You paid the education expenses for an eligible student. Can i file my 2012 taxes in 2013 The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Can i file my 2012 taxes in 2013 Qualified education expenses are defined under What Expenses Qualify . Can i file my 2012 taxes in 2013 Eligible students are defined later under Who Is an Eligible Student . Can i file my 2012 taxes in 2013 Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Can i file my 2012 taxes in 2013 Your filing status is married filing separately. Can i file my 2012 taxes in 2013 Another person can claim an exemption for you as a dependent on his or her tax return. Can i file my 2012 taxes in 2013 You cannot take the deduction even if the other person does not actually claim that exemption. Can i file my 2012 taxes in 2013 Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Can i file my 2012 taxes in 2013 You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Can i file my 2012 taxes in 2013 More information on nonresident aliens can be found in Publication 519, U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Tax Guide for Aliens. Can i file my 2012 taxes in 2013 You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Can i file my 2012 taxes in 2013 However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Can i file my 2012 taxes in 2013 Table 19-2. Can i file my 2012 taxes in 2013 Tuition and Fees Deduction at a Glance Do not rely on this table alone. Can i file my 2012 taxes in 2013 Refer to the text for more details. Can i file my 2012 taxes in 2013 Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Can i file my 2012 taxes in 2013 Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Can i file my 2012 taxes in 2013 For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Can i file my 2012 taxes in 2013 What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Can i file my 2012 taxes in 2013 What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Can i file my 2012 taxes in 2013 Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Can i file my 2012 taxes in 2013 Payments with borrowed funds. Can i file my 2012 taxes in 2013   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Can i file my 2012 taxes in 2013 Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Can i file my 2012 taxes in 2013 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Can i file my 2012 taxes in 2013 Student withdraws from class(es). Can i file my 2012 taxes in 2013   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Can i file my 2012 taxes in 2013 Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Can i file my 2012 taxes in 2013 Eligible educational institution. Can i file my 2012 taxes in 2013   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Department of Education. Can i file my 2012 taxes in 2013 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Can i file my 2012 taxes in 2013 The educational institution should be able to tell you if it is an eligible educational institution. Can i file my 2012 taxes in 2013   Certain educational institutions located outside the United States also participate in the U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 Department of Education's Federal Student Aid (FSA) programs. Can i file my 2012 taxes in 2013 Academic period. Can i file my 2012 taxes in 2013    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Can i file my 2012 taxes in 2013 If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Can i file my 2012 taxes in 2013 Related expenses. Can i file my 2012 taxes in 2013   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Can i file my 2012 taxes in 2013 Prepaid expenses. Can i file my 2012 taxes in 2013   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Can i file my 2012 taxes in 2013 See Academic period, earlier. Can i file my 2012 taxes in 2013 For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Can i file my 2012 taxes in 2013    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Can i file my 2012 taxes in 2013 No Double Benefit Allowed You cannot do any of the following. Can i file my 2012 taxes in 2013 Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Can i file my 2012 taxes in 2013 Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Can i file my 2012 taxes in 2013 Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Can i file my 2012 taxes in 2013 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Can i file my 2012 taxes in 2013 See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Can i file my 2012 taxes in 2013 Deduct qualified education expenses that have been paid with tax-free interest on U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 savings bonds (Form 8815). Can i file my 2012 taxes in 2013 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Can i file my 2012 taxes in 2013 Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Can i file my 2012 taxes in 2013 See Adjustments to qualified education expenses, later. Can i file my 2012 taxes in 2013 Adjustments to qualified education expenses. Can i file my 2012 taxes in 2013   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Can i file my 2012 taxes in 2013 The result is the amount of adjusted qualified education expenses for each student. Can i file my 2012 taxes in 2013 Tax-free educational assistance. Can i file my 2012 taxes in 2013   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Can i file my 2012 taxes in 2013 See Academic period, earlier. Can i file my 2012 taxes in 2013   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Can i file my 2012 taxes in 2013 Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Can i file my 2012 taxes in 2013 However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Can i file my 2012 taxes in 2013 970, chapter 1. Can i file my 2012 taxes in 2013 The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Can i file my 2012 taxes in 2013 970, chapter 1. Can i file my 2012 taxes in 2013 You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Can i file my 2012 taxes in 2013 For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Can i file my 2012 taxes in 2013 970. Can i file my 2012 taxes in 2013 Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Can i file my 2012 taxes in 2013 This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Can i file my 2012 taxes in 2013 If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Can i file my 2012 taxes in 2013 If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Can i file my 2012 taxes in 2013 Refunds. Can i file my 2012 taxes in 2013   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Can i file my 2012 taxes in 2013 See chapter 6 of Pub. Can i file my 2012 taxes in 2013 970 for more information. Can i file my 2012 taxes in 2013 Some tax-free educational assistance received after 2013 may be treated as a refund. Can i file my 2012 taxes in 2013 See Tax-free educational assistance, earlier. Can i file my 2012 taxes in 2013 Refunds received in 2013. Can i file my 2012 taxes in 2013    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Can i file my 2012 taxes in 2013 Refunds received after 2013 but before your income tax return is filed. Can i file my 2012 taxes in 2013   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Can i file my 2012 taxes in 2013 Refunds received after 2013 and after your income tax return is filed. Can i file my 2012 taxes in 2013   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Can i file my 2012 taxes in 2013 See chapter 6 of Pub. Can i file my 2012 taxes in 2013 970 for more information. Can i file my 2012 taxes in 2013 Coordination with Coverdell education savings accounts and qualified tuition programs. Can i file my 2012 taxes in 2013    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Can i file my 2012 taxes in 2013 For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Can i file my 2012 taxes in 2013 Amounts that do not reduce qualified education expenses. Can i file my 2012 taxes in 2013   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Can i file my 2012 taxes in 2013   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Can i file my 2012 taxes in 2013 The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Can i file my 2012 taxes in 2013 The use of the money is not restricted. Can i file my 2012 taxes in 2013 Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Can i file my 2012 taxes in 2013 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Can i file my 2012 taxes in 2013 Sports, games, hobbies, and noncredit courses. Can i file my 2012 taxes in 2013   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Can i file my 2012 taxes in 2013 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Can i file my 2012 taxes in 2013 Comprehensive or bundled fees. Can i file my 2012 taxes in 2013   Some eligible educational institutions combine all of their fees for an academic period into one amount. Can i file my 2012 taxes in 2013 If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Can i file my 2012 taxes in 2013 The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Can i file my 2012 taxes in 2013 See How Do You Figure the Deduction , later, for more information about Form 1098-T. Can i file my 2012 taxes in 2013 Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Can i file my 2012 taxes in 2013 Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Can i file my 2012 taxes in 2013 Table 19-3 summarizes who can claim the deduction. Can i file my 2012 taxes in 2013 How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Can i file my 2012 taxes in 2013 For details on figuring your MAGI, see chapter 6 of Publication 970. Can i file my 2012 taxes in 2013 How Do You Figure the Deduction Figure the deduction using Form 8917. Can i file my 2012 taxes in 2013 To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Can i file my 2012 taxes in 2013 Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Can i file my 2012 taxes in 2013 To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Can i file my 2012 taxes in 2013 Table 19-3. Can i file my 2012 taxes in 2013 Who Can Claim a Dependent's Expenses Do not rely on this table alone. Can i file my 2012 taxes in 2013 See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Can i file my 2012 taxes in 2013 IF your dependent is an eligible student and you. Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 AND. Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 THEN. Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 . Can i file my 2012 taxes in 2013 claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Can i file my 2012 taxes in 2013 Your dependent cannot take a deduction. Can i file my 2012 taxes in 2013 claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Can i file my 2012 taxes in 2013 do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Can i file my 2012 taxes in 2013 do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Can i file my 2012 taxes in 2013 Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Can i file my 2012 taxes in 2013 If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Can i file my 2012 taxes in 2013 However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Can i file my 2012 taxes in 2013 You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Can i file my 2012 taxes in 2013 Eligible educator. Can i file my 2012 taxes in 2013   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Can i file my 2012 taxes in 2013 Qualified expenses. Can i file my 2012 taxes in 2013   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Can i file my 2012 taxes in 2013 An ordinary expense is one that is common and accepted in your educational field. Can i file my 2012 taxes in 2013 A necessary expense is one that is helpful and appropriate for your profession as an educator. Can i file my 2012 taxes in 2013 An expense does not have to be required to be considered necessary. Can i file my 2012 taxes in 2013   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Can i file my 2012 taxes in 2013   You must reduce your qualified expenses by the following amounts. Can i file my 2012 taxes in 2013 Excludable U. Can i file my 2012 taxes in 2013 S. Can i file my 2012 taxes in 2013 series EE and I savings bond interest from Form 8815. Can i file my 2012 taxes in 2013 See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Can i file my 2012 taxes in 2013 Nontaxable qualified tuition program earnings or distributions. Can i file my 2012 taxes in 2013 See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Can i file my 2012 taxes in 2013 Nontaxable distribution of earnings from a Coverdell education savings account. Can i file my 2012 taxes in 2013 See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Can i file my 2012 taxes in 2013 Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. Can i file my 2012 taxes in 2013 Prev  Up  Next   Home   More Online Publications
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Can i file my 2012 taxes in 2013 2. Can i file my 2012 taxes in 2013   Electing the Section 179 Deduction Table of Contents Introduction Useful Items - You may want to see: What Property Qualifies?Eligible Property Property Acquired for Business Use Property Acquired by Purchase What Property Does Not Qualify?Land and Improvements Excepted Property How Much Can You Deduct?Dollar Limits Business Income Limit Partnerships and Partners S Corporations Other Corporations How Do You Elect the Deduction? When Must You Recapture the Deduction? Introduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Can i file my 2012 taxes in 2013 This is the section 179 deduction. Can i file my 2012 taxes in 2013 You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions. Can i file my 2012 taxes in 2013 Estates and trusts cannot elect the section 179 deduction. Can i file my 2012 taxes in 2013 This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. Can i file my 2012 taxes in 2013 It also explains when and how to recapture the deduction. Can i file my 2012 taxes in 2013 Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 954 Tax Incentives for Distressed Communities Form (and Instructions) 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Can i file my 2012 taxes in 2013 What Property Qualifies? To qualify for the section 179 deduction, your property must meet all the following requirements. Can i file my 2012 taxes in 2013 It must be eligible property. Can i file my 2012 taxes in 2013 It must be acquired for business use. Can i file my 2012 taxes in 2013 It must have been acquired by purchase. Can i file my 2012 taxes in 2013 It must not be property described later under What Property Does Not Qualify . Can i file my 2012 taxes in 2013 The following discussions provide information about these requirements and exceptions. Can i file my 2012 taxes in 2013 Eligible Property To qualify for the section 179 deduction, your property must be one of the following types of depreciable property. Can i file my 2012 taxes in 2013 Tangible personal property. Can i file my 2012 taxes in 2013 Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, A research facility used in connection with any of the activities in (a) above, or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. Can i file my 2012 taxes in 2013 Single purpose agricultural (livestock) or horticultural structures. Can i file my 2012 taxes in 2013 See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. Can i file my 2012 taxes in 2013 Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. Can i file my 2012 taxes in 2013 Off-the-shelf computer software. Can i file my 2012 taxes in 2013 Qualified real property (described below). Can i file my 2012 taxes in 2013 Tangible personal property. Can i file my 2012 taxes in 2013   Tangible personal property is any tangible property that is not real property. Can i file my 2012 taxes in 2013 It includes the following property. Can i file my 2012 taxes in 2013 Machinery and equipment. Can i file my 2012 taxes in 2013 Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs. Can i file my 2012 taxes in 2013 Gasoline storage tanks and pumps at retail service stations. Can i file my 2012 taxes in 2013 Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals. Can i file my 2012 taxes in 2013   The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. Can i file my 2012 taxes in 2013 For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law. Can i file my 2012 taxes in 2013 Off-the-shelf computer software. Can i file my 2012 taxes in 2013   Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction. Can i file my 2012 taxes in 2013 This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Can i file my 2012 taxes in 2013 It includes any program designed to cause a computer to perform a desired function. Can i file my 2012 taxes in 2013 However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software. Can i file my 2012 taxes in 2013 Qualified real property. Can i file my 2012 taxes in 2013   You can elect to treat certain qualified real property you placed in service as section 179 property for tax years beginning in 2013. Can i file my 2012 taxes in 2013 If this election is made, the term “section 179 property” will include any qualified real property that is: Qualified leasehold improvement property, Qualified restaurant property, or Qualified retail improvement property. Can i file my 2012 taxes in 2013 The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 in 2013. Can i file my 2012 taxes in 2013 For more information, see Special rules for qualified section 179 real property, later. Can i file my 2012 taxes in 2013 Also, see Election for certain qualified section 179 real property, later, for information on how to make this election. Can i file my 2012 taxes in 2013 Qualified leasehold improvement property. Can i file my 2012 taxes in 2013   Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Can i file my 2012 taxes in 2013   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Can i file my 2012 taxes in 2013 A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Can i file my 2012 taxes in 2013 Examples include the following. Can i file my 2012 taxes in 2013 A complete liquidation of a subsidiary. Can i file my 2012 taxes in 2013 A transfer to a corporation controlled by the transferor. Can i file my 2012 taxes in 2013 An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Can i file my 2012 taxes in 2013 Qualified restaurant property. Can i file my 2012 taxes in 2013   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2014. Can i file my 2012 taxes in 2013 Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals. Can i file my 2012 taxes in 2013 Qualified retail improvement property. Can i file my 2012 taxes in 2013   Generally, this is any improvement (placed in service after December 31, 2008, and before January 1, 2014) to an interior portion of nonresidential real property if it meets the following requirements. Can i file my 2012 taxes in 2013 The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public. Can i file my 2012 taxes in 2013 The improvement is placed in service more than 3 years after the date the building was first placed in service. Can i file my 2012 taxes in 2013 The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building. Can i file my 2012 taxes in 2013 In addition, an improvement made by the lessor does not qualify as qualified retail improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Can i file my 2012 taxes in 2013 A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Can i file my 2012 taxes in 2013 Examples include the following. Can i file my 2012 taxes in 2013 A complete liquidation of a subsidiary. Can i file my 2012 taxes in 2013 A transfer to a corporation controlled by the transferor. Can i file my 2012 taxes in 2013 An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Can i file my 2012 taxes in 2013 Property Acquired for Business Use To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Can i file my 2012 taxes in 2013 Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify. Can i file my 2012 taxes in 2013 Partial business use. Can i file my 2012 taxes in 2013   When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. Can i file my 2012 taxes in 2013 If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. Can i file my 2012 taxes in 2013 Use the resulting business cost to figure your section 179 deduction. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 May Oak bought and placed in service an item of section 179 property costing $11,000. Can i file my 2012 taxes in 2013 She used the property 80% for her business and 20% for personal purposes. Can i file my 2012 taxes in 2013 The business part of the cost of the property is $8,800 (80% × $11,000). Can i file my 2012 taxes in 2013 Property Acquired by Purchase To qualify for the section 179 deduction, your property must have been acquired by purchase. Can i file my 2012 taxes in 2013 For example, property acquired by gift or inheritance does not qualify. Can i file my 2012 taxes in 2013 Property is not considered acquired by purchase in the following situations. Can i file my 2012 taxes in 2013 It is acquired by one component member of a controlled group from another component member of the same group. Can i file my 2012 taxes in 2013 Its basis is determined either— In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or Under the stepped-up basis rules for property acquired from a decedent. Can i file my 2012 taxes in 2013 It is acquired from a related person. Can i file my 2012 taxes in 2013 Related persons. Can i file my 2012 taxes in 2013   Related persons are described under Related persons earlier. Can i file my 2012 taxes in 2013 However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 Ken Larch is a tailor. Can i file my 2012 taxes in 2013 He bought two industrial sewing machines from his father. Can i file my 2012 taxes in 2013 He placed both machines in service in the same year he bought them. Can i file my 2012 taxes in 2013 They do not qualify as section 179 property because Ken and his father are related persons. Can i file my 2012 taxes in 2013 He cannot claim a section 179 deduction for the cost of these machines. Can i file my 2012 taxes in 2013 What Property Does Not Qualify? Certain property does not qualify for the section 179 deduction. Can i file my 2012 taxes in 2013 This includes the following. Can i file my 2012 taxes in 2013 Land and Improvements Land and land improvements do not qualify as section 179 property. Can i file my 2012 taxes in 2013 Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences. Can i file my 2012 taxes in 2013 Excepted Property Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property. Can i file my 2012 taxes in 2013 Certain property you lease to others (if you are a noncorporate lessor). Can i file my 2012 taxes in 2013 Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. Can i file my 2012 taxes in 2013 Air conditioning or heating units. Can i file my 2012 taxes in 2013 Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code. Can i file my 2012 taxes in 2013 Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income. Can i file my 2012 taxes in 2013 Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months. Can i file my 2012 taxes in 2013 Leased property. Can i file my 2012 taxes in 2013   Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. Can i file my 2012 taxes in 2013 This rule does not apply to corporations. Can i file my 2012 taxes in 2013 However, you can claim a section 179 deduction for the cost of the following property. Can i file my 2012 taxes in 2013 Property you manufacture or produce and lease to others. Can i file my 2012 taxes in 2013 Property you purchase and lease to others if both the following tests are met. Can i file my 2012 taxes in 2013 The term of the lease (including options to renew) is less than 50% of the property's class life. Can i file my 2012 taxes in 2013 For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property. Can i file my 2012 taxes in 2013 Property used for lodging. Can i file my 2012 taxes in 2013   Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging. Can i file my 2012 taxes in 2013 However, this does not apply to the following types of property. Can i file my 2012 taxes in 2013 Nonlodging commercial facilities that are available to those not using the lodging facilities on the same basis as they are available to those using the lodging facilities. Can i file my 2012 taxes in 2013 Property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. Can i file my 2012 taxes in 2013 Any certified historic structure to the extent its basis is due to qualified rehabilitation expenditures. Can i file my 2012 taxes in 2013 Any energy property. Can i file my 2012 taxes in 2013 Energy property. Can i file my 2012 taxes in 2013   Energy property is property that meets the following requirements. Can i file my 2012 taxes in 2013 It is one of the following types of property. Can i file my 2012 taxes in 2013 Equipment that uses solar energy to generate electricity, to heat or cool a structure, to provide hot water for use in a structure, or to provide solar process heat, except for equipment used to generate energy to heat a swimming pool. Can i file my 2012 taxes in 2013 Equipment placed in service after December 31, 2005, and before January 1, 2017, that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. Can i file my 2012 taxes in 2013 Equipment used to produce, distribute, or use energy derived from a geothermal deposit. Can i file my 2012 taxes in 2013 For electricity generated by geothermal power, this includes equipment up to (but not including) the electrical transmission stage. Can i file my 2012 taxes in 2013 Qualified fuel cell property or qualified microturbine property placed in service after December 31, 2005, and before January 1, 2017. Can i file my 2012 taxes in 2013 The construction, reconstruction, or erection of the property must be completed by you. Can i file my 2012 taxes in 2013 For property you acquire, the original use of the property must begin with you. Can i file my 2012 taxes in 2013 The property must meet the performance and quality standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property. Can i file my 2012 taxes in 2013   For periods before February 14, 2008, energy property does not include any property that is public utility property as defined by section 46(f)(5) of the Internal Revenue Code (as in effect on November 4, 1990). Can i file my 2012 taxes in 2013 How Much Can You Deduct? Your section 179 deduction is generally the cost of the qualifying property. Can i file my 2012 taxes in 2013 However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Can i file my 2012 taxes in 2013 These limits apply to each taxpayer, not to each business. Can i file my 2012 taxes in 2013 However, see Married Individuals under Dollar Limits , later. Can i file my 2012 taxes in 2013 For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. Can i file my 2012 taxes in 2013 See Do the Passenger Automobile Limits Apply in chapter 5 . Can i file my 2012 taxes in 2013 If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct. Can i file my 2012 taxes in 2013 Trade-in of other property. Can i file my 2012 taxes in 2013   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. Can i file my 2012 taxes in 2013 They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. Can i file my 2012 taxes in 2013 The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. Can i file my 2012 taxes in 2013 They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van. Can i file my 2012 taxes in 2013 Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. Can i file my 2012 taxes in 2013 Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200). Can i file my 2012 taxes in 2013 Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 generally cannot be more than $500,000. Can i file my 2012 taxes in 2013 If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $500,000. Can i file my 2012 taxes in 2013 You do not have to claim the full $500,000. Can i file my 2012 taxes in 2013 Qualified real property (described earlier) that you elected to treat as section 179 real property is limited to $250,000 of the maximum deduction of $500,000 for 2013. Can i file my 2012 taxes in 2013 The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. Can i file my 2012 taxes in 2013 After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 In 2013, you bought and placed in service $500,000 in machinery and a $25,000 circular saw for your business. Can i file my 2012 taxes in 2013 You elect to deduct $475,000 for the machinery and the entire $25,000 for the saw, a total of $500,000. Can i file my 2012 taxes in 2013 This is the maximum amount you can deduct. Can i file my 2012 taxes in 2013 Your $25,000 deduction for the saw completely recovered its cost. Can i file my 2012 taxes in 2013 Your basis for depreciation is zero. Can i file my 2012 taxes in 2013 The basis for depreciation of your machinery is $25,000. Can i file my 2012 taxes in 2013 You figure this by subtracting your $475,000 section 179 deduction for the machinery from the $500,000 cost of the machinery. Can i file my 2012 taxes in 2013 Situations affecting dollar limit. Can i file my 2012 taxes in 2013   Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. Can i file my 2012 taxes in 2013 The general dollar limit is affected by any of the following situations. Can i file my 2012 taxes in 2013 The cost of your section 179 property placed in service exceeds $2,000,000. Can i file my 2012 taxes in 2013 Your business is an enterprise zone business. Can i file my 2012 taxes in 2013 You placed in service a sport utility or certain other vehicles. Can i file my 2012 taxes in 2013 You are married filing a joint or separate return. Can i file my 2012 taxes in 2013 Costs exceeding $2,000,000 If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. Can i file my 2012 taxes in 2013 If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 In 2013, Jane Ash placed in service machinery costing $2,100,000. Can i file my 2012 taxes in 2013 This cost is $100,000 more than $2,000,000, so she must reduce her dollar limit to $400,000 ($500,000 − $100,000). Can i file my 2012 taxes in 2013 Enterprise Zone Businesses An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. Can i file my 2012 taxes in 2013 For more information including the definitions of “enterprise zone business” and “qualified zone property,” see sections 1397A, 1397C, and 1397D of the Internal Revenue Code. Can i file my 2012 taxes in 2013 The dollar limit on the section 179 deduction is increased by the smaller of: $35,000, or The cost of section 179 property that is also qualified zone property placed in service before January 1, 2014 (including such property placed in service by your spouse, even if you are filing a separate return). Can i file my 2012 taxes in 2013 Note. Can i file my 2012 taxes in 2013   You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,000,000 (explained earlier). Can i file my 2012 taxes in 2013 Sport Utility and Certain Other Vehicles You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. Can i file my 2012 taxes in 2013 This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. Can i file my 2012 taxes in 2013 However, the $25,000 limit does not apply to any vehicle: Designed to seat more than nine passengers behind the driver's seat, Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Can i file my 2012 taxes in 2013 Married Individuals If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. Can i file my 2012 taxes in 2013 If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Can i file my 2012 taxes in 2013 If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,000,000. Can i file my 2012 taxes in 2013 You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. Can i file my 2012 taxes in 2013 If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 Jack Elm is married. Can i file my 2012 taxes in 2013 He and his wife file separate returns. Can i file my 2012 taxes in 2013 Jack bought and placed in service $2,000,000 of qualified farm machinery in 2013. Can i file my 2012 taxes in 2013 His wife has her own business, and she bought and placed in service $30,000 of qualified business equipment. Can i file my 2012 taxes in 2013 Their combined dollar limit is $470,000. Can i file my 2012 taxes in 2013 This is because they must figure the limit as if they were one taxpayer. Can i file my 2012 taxes in 2013 They reduce the $500,000 dollar limit by the $30,000 excess of their costs over $2,000,000. Can i file my 2012 taxes in 2013 They elect to allocate the $470,000 dollar limit as follows. Can i file my 2012 taxes in 2013 $446,500 ($470,000 x 95%) to Mr. Can i file my 2012 taxes in 2013 Elm's machinery. Can i file my 2012 taxes in 2013 $23,500 ($470,000 x 5%) to Mrs. Can i file my 2012 taxes in 2013 Elm's equipment. Can i file my 2012 taxes in 2013 If they did not make an election to allocate their costs in this way, they would have to allocate $235,000 ($470,000 × 50%) to each of them. Can i file my 2012 taxes in 2013 Joint return after filing separate returns. Can i file my 2012 taxes in 2013   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. Can i file my 2012 taxes in 2013 The dollar limit (after reduction for any cost of section 179 property over $2,000,000). Can i file my 2012 taxes in 2013 The total cost of section 179 property you and your spouse elected to expense on your separate returns. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 The facts are the same as in the previous example except that Jack elected to deduct $30,000 of the cost of section 179 property on his separate return and his wife elected to deduct $2,000. Can i file my 2012 taxes in 2013 After the due date of their returns, they file a joint return. Can i file my 2012 taxes in 2013 Their dollar limit for the section 179 deduction is $32,000. Can i file my 2012 taxes in 2013 This is the lesser of the following amounts. Can i file my 2012 taxes in 2013 $470,000—The dollar limit less the cost of section 179 property over $2,000,000. Can i file my 2012 taxes in 2013 $32,000—The total they elected to expense on their separate returns. Can i file my 2012 taxes in 2013 Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Can i file my 2012 taxes in 2013 Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. Can i file my 2012 taxes in 2013 Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. Can i file my 2012 taxes in 2013 Special rules apply to a 2013 deduction of qualified section 179 real property that is disallowed because of the business income limit. Can i file my 2012 taxes in 2013 See Special rules for qualified section 179 property under Carryover of disallowed deduction, later. Can i file my 2012 taxes in 2013 Taxable income. Can i file my 2012 taxes in 2013   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. Can i file my 2012 taxes in 2013 Net income or loss from a trade or business includes the following items. Can i file my 2012 taxes in 2013 Section 1231 gains (or losses). Can i file my 2012 taxes in 2013 Interest from working capital of your trade or business. Can i file my 2012 taxes in 2013 Wages, salaries, tips, or other pay earned as an employee. Can i file my 2012 taxes in 2013 For information about section 1231 gains and losses, see chapter 3 in Publication 544. Can i file my 2012 taxes in 2013   In addition, figure taxable income without regard to any of the following. Can i file my 2012 taxes in 2013 The section 179 deduction. Can i file my 2012 taxes in 2013 The self-employment tax deduction. Can i file my 2012 taxes in 2013 Any net operating loss carryback or carryforward. Can i file my 2012 taxes in 2013 Any unreimbursed employee business expenses. Can i file my 2012 taxes in 2013 Two different taxable income limits. Can i file my 2012 taxes in 2013   In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. Can i file my 2012 taxes in 2013 You may have to figure the limit for this other deduction taking into account the section 179 deduction. Can i file my 2012 taxes in 2013 If so, complete the following steps. Can i file my 2012 taxes in 2013 Step Action 1 Figure taxable income without the section 179 deduction or the other deduction. Can i file my 2012 taxes in 2013 2 Figure a hypothetical section 179 deduction using the taxable income figured in Step 1. Can i file my 2012 taxes in 2013 3 Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1. Can i file my 2012 taxes in 2013 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. Can i file my 2012 taxes in 2013 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1. Can i file my 2012 taxes in 2013 6 Figure your actual section 179 deduction using the taxable income figured in Step 5. Can i file my 2012 taxes in 2013 7 Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1. Can i file my 2012 taxes in 2013 8 Figure your actual other deduction using the taxable income figured in Step 7. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 On February 1, 2013, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $500,000. Can i file my 2012 taxes in 2013 It elects to expense the entire $500,000 cost under section 179. Can i file my 2012 taxes in 2013 In June, the corporation gave a charitable contribution of $10,000. Can i file my 2012 taxes in 2013 A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. Can i file my 2012 taxes in 2013 The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. Can i file my 2012 taxes in 2013 XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $520,000. Can i file my 2012 taxes in 2013 XYZ figures its section 179 deduction and its deduction for charitable contributions as follows. Can i file my 2012 taxes in 2013 Step 1– Taxable income figured without either deduction is $520,000. Can i file my 2012 taxes in 2013 Step 2– Using $520,000 as taxable income, XYZ's hypothetical section 179 deduction is $500,000. Can i file my 2012 taxes in 2013 Step 3– $20,000 ($520,000 − $500,000). Can i file my 2012 taxes in 2013 Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. Can i file my 2012 taxes in 2013 Step 5– $518,000 ($520,000 − $2,000). Can i file my 2012 taxes in 2013 Step 6– Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. Can i file my 2012 taxes in 2013 Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 deduction. Can i file my 2012 taxes in 2013 Step 7– $20,000 ($520,000 − $500,000). Can i file my 2012 taxes in 2013 Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. Can i file my 2012 taxes in 2013 Carryover of disallowed deduction. Can i file my 2012 taxes in 2013   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. Can i file my 2012 taxes in 2013 This disallowed deduction amount is shown on line 13 of Form 4562. Can i file my 2012 taxes in 2013 You use the amount you carry over to determine your section 179 deduction in the next year. Can i file my 2012 taxes in 2013 Enter that amount on line 10 of your Form 4562 for the next year. Can i file my 2012 taxes in 2013   If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. Can i file my 2012 taxes in 2013 Your selections must be shown in your books and records. Can i file my 2012 taxes in 2013 For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. Can i file my 2012 taxes in 2013 If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year. Can i file my 2012 taxes in 2013   If costs from more than one year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first. Can i file my 2012 taxes in 2013 Special rules for qualified section 179 real property. Can i file my 2012 taxes in 2013   You can carry over to 2013 a 2012 deduction attributable to qualified section 179 real property that you elected to expense but were unable to take because of the business income limitation. Can i file my 2012 taxes in 2013 Any such 2012 carryover amounts that are not deducted in 2013, plus any 2013 disallowed section 179 expense deductions attributable to qualified real property, are not carried over to 2014. Can i file my 2012 taxes in 2013 Instead these amounts are treated as property placed in service on the first day of 2013 for purposes of computing depreciation (including the special depreciation allowance, if applicable). Can i file my 2012 taxes in 2013 See section 179(f) of the Internal Revenue Code and Notice 2013-59 for more information. Can i file my 2012 taxes in 2013 If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. Can i file my 2012 taxes in 2013 Instead, you must add it back to the property's basis. Can i file my 2012 taxes in 2013 Partnerships and Partners The section 179 deduction limits apply both to the partnership and to each partner. Can i file my 2012 taxes in 2013 The partnership determines its section 179 deduction subject to the limits. Can i file my 2012 taxes in 2013 It then allocates the deduction among its partners. Can i file my 2012 taxes in 2013 Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Can i file my 2012 taxes in 2013 ) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. Can i file my 2012 taxes in 2013 To determine any reduction in the dollar limit for costs over $2,000,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. Can i file my 2012 taxes in 2013 After the dollar limit (reduced for any nonpartnership section 179 costs over $2,000,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit. Can i file my 2012 taxes in 2013 Partnership's taxable income. Can i file my 2012 taxes in 2013   For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. Can i file my 2012 taxes in 2013 See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). Can i file my 2012 taxes in 2013 However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code. Can i file my 2012 taxes in 2013 Partner's share of partnership's taxable income. Can i file my 2012 taxes in 2013   For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 In 2013, Beech Partnership placed in service section 179 property with a total cost of $2,025,000. Can i file my 2012 taxes in 2013 The partnership must reduce its dollar limit by $25,000 ($2,025,000 − $2,000,000). Can i file my 2012 taxes in 2013 Its maximum section 179 deduction is $475,000 ($500,000 − $25,000), and it elects to expense that amount. Can i file my 2012 taxes in 2013 The partnership's taxable income from the active conduct of all its trades or businesses for the year was $600,000, so it can deduct the full $475,000. Can i file my 2012 taxes in 2013 It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners. Can i file my 2012 taxes in 2013 In addition to being a partner in Beech Partnership, Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. Can i file my 2012 taxes in 2013 He also conducts a business as a sole proprietor and, in 2013, placed in service in that business qualifying section 179 property costing $55,000. Can i file my 2012 taxes in 2013 He had a net loss of $5,000 from that business for the year. Can i file my 2012 taxes in 2013 Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,000,000 and his dollar limit is not reduced. Can i file my 2012 taxes in 2013 His maximum section 179 deduction is $500,000. Can i file my 2012 taxes in 2013 He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. Can i file my 2012 taxes in 2013 However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership minus $5,000 loss from his sole proprietorship). Can i file my 2012 taxes in 2013 He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2014. Can i file my 2012 taxes in 2013 He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records. Can i file my 2012 taxes in 2013 Different tax years. Can i file my 2012 taxes in 2013   For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 John and James Oak are equal partners in Oak Partnership. Can i file my 2012 taxes in 2013 Oak Partnership uses a tax year ending January 31. Can i file my 2012 taxes in 2013 John and James both use a tax year ending December 31. Can i file my 2012 taxes in 2013 For its tax year ending January 31, 2013, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2012. Can i file my 2012 taxes in 2013 John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2013 tax year. Can i file my 2012 taxes in 2013 Adjustment of partner's basis in partnership. Can i file my 2012 taxes in 2013   A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. Can i file my 2012 taxes in 2013 If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership. Can i file my 2012 taxes in 2013 Adjustment of partnership's basis in section 179 property. Can i file my 2012 taxes in 2013   The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. Can i file my 2012 taxes in 2013 This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits. Can i file my 2012 taxes in 2013 S Corporations Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. Can i file my 2012 taxes in 2013 The deduction limits apply to an S corporation and to each shareholder. Can i file my 2012 taxes in 2013 The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits. Can i file my 2012 taxes in 2013 Figuring taxable income for an S corporation. Can i file my 2012 taxes in 2013   To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year. Can i file my 2012 taxes in 2013   To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. Can i file my 2012 taxes in 2013 However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. Can i file my 2012 taxes in 2013 For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. Can i file my 2012 taxes in 2013 In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income. Can i file my 2012 taxes in 2013 Other Corporations A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes. Can i file my 2012 taxes in 2013 It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return). Can i file my 2012 taxes in 2013 It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived from a trade or business actively conducted by the corporation during the tax year. Can i file my 2012 taxes in 2013 How Do You Elect the Deduction? You elect to take the section 179 deduction by completing Part I of Form 4562. Can i file my 2012 taxes in 2013 If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. Can i file my 2012 taxes in 2013 For property placed in service in 2013, file Form 4562 with either of the following. Can i file my 2012 taxes in 2013 Your original 2013 tax return, whether or not you file it timely. Can i file my 2012 taxes in 2013 An amended return for 2013 filed within the time prescribed by law. Can i file my 2012 taxes in 2013 An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Can i file my 2012 taxes in 2013 The amended return must also include any resulting adjustments to taxable income. Can i file my 2012 taxes in 2013 You must keep records that show the specific identification of each piece of qualifying section 179 property. Can i file my 2012 taxes in 2013 These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Can i file my 2012 taxes in 2013 Election for certain qualified section 179 real property. Can i file my 2012 taxes in 2013   You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2013. Can i file my 2012 taxes in 2013 If you elect to treat this property as section 179 property, you must elect the application of the special rules for qualified real property described in section 179(f) of the Internal Revenue Code. Can i file my 2012 taxes in 2013   To make the election, attach a statement indicating you are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following. Can i file my 2012 taxes in 2013 Your original 2013 tax return, whether or not you file it timely. Can i file my 2012 taxes in 2013 An amended return for 2013 filed within the time prescribed by law. Can i file my 2012 taxes in 2013 The amended return must also include any adjustments to taxable income. Can i file my 2012 taxes in 2013   The statement should indicate your election to expense certain qualified real property under section 179(f) on your return. Can i file my 2012 taxes in 2013 It must specify one or more of the three types of qualified property (described under Qualified real property ) to which the election applies, the cost of each such type, and the portion of the cost of each such property to be taken into account. Can i file my 2012 taxes in 2013 Also, report this on line 6 of Form 4562. Can i file my 2012 taxes in 2013    The maximum section 179 expense deduction that can be taken for qualified section 179 real property is limited to $250,000. Can i file my 2012 taxes in 2013 Revoking an election. Can i file my 2012 taxes in 2013   An election (or any specification made in the election) to take a section 179 deduction for 2013 can be revoked without IRS approval by filing an amended return. Can i file my 2012 taxes in 2013 The amended return must be filed within the time prescribed by law. Can i file my 2012 taxes in 2013 The amended return must also include any resulting adjustments to taxable income. Can i file my 2012 taxes in 2013 Once made, the revocation is irrevocable. Can i file my 2012 taxes in 2013 When Must You Recapture the Deduction? You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. Can i file my 2012 taxes in 2013 In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. Can i file my 2012 taxes in 2013 You also increase the basis of the property by the recapture amount. Can i file my 2012 taxes in 2013 Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4 . Can i file my 2012 taxes in 2013 If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Can i file my 2012 taxes in 2013 Instead, use the rules for recapturing depreciation explained in chapter 3 of Publication 544 under Section 1245 Property. Can i file my 2012 taxes in 2013 For qualified real property (described earlier), see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. Can i file my 2012 taxes in 2013 If the property is listed property (described in chapter 5 ), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Can i file my 2012 taxes in 2013 Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. Can i file my 2012 taxes in 2013 Figuring the recapture amount. Can i file my 2012 taxes in 2013   To figure the amount to recapture, take the following steps. Can i file my 2012 taxes in 2013 Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Can i file my 2012 taxes in 2013 Begin with the year you placed the property in service and include the year of recapture. Can i file my 2012 taxes in 2013 Subtract the depreciation figured in (1) from the section 179 deduction you claimed. Can i file my 2012 taxes in 2013 The result is the amount you must recapture. Can i file my 2012 taxes in 2013 Example. Can i file my 2012 taxes in 2013 In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. Can i file my 2012 taxes in 2013 The property is not listed property. Can i file my 2012 taxes in 2013 The property is 3-year property. Can i file my 2012 taxes in 2013 He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. Can i file my 2012 taxes in 2013 He used the property only for business in 2011 and 2012. Can i file my 2012 taxes in 2013 In 2013, he used the property 40% for business and 60% for personal use. Can i file my 2012 taxes in 2013 He figures his recapture amount as follows. Can i file my 2012 taxes in 2013 Section 179 deduction claimed (2011) $5,000. Can i file my 2012 taxes in 2013 00 Minus: Allowable depreciation using Table A-1 (instead of section 179 deduction):   2011 $1,666. Can i file my 2012 taxes in 2013 50   2012 2,222. Can i file my 2012 taxes in 2013 50   2013 ($740. Can i file my 2012 taxes in 2013 50 × 40% (business)) 296. Can i file my 2012 taxes in 2013 20 4,185. Can i file my 2012 taxes in 2013 20 2013 — Recapture amount $ 814. Can i file my 2012 taxes in 2013 80 Paul must include $814. Can i file my 2012 taxes in 2013 80 in income for 2013. Can i file my 2012 taxes in 2013 If any qualified zone property placed in service during the year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. Can i file my 2012 taxes in 2013 Prev  Up  Next   Home   More Online Publications