Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File 1040nr Online Free

1040 Long FormTax Slayer 2011File Taxes1040 Ez Form2011 1040ez Tax Form1040ez GovAmending 2012 Tax ReturnFile 2012 Taxes H&r BlockState Tax Return Free1040ez 2011 FormHave Not Filed 2011 TaxesAmend My Tax Return Online2011 1040 FormFile Only My State TaxesFree Tax SoftwareWww Hr BlockFiling State ReturnsIrs 1040ez2012 Tax Preparation Software FreeOhio Tax Form 1040ezIrs Gov FormsForm 1040aFree Tax UsaEz 1040 Form 2011H&r Block Online 1040xH & R Block Free Taxes2011 Taxact OnlineFederal Tax Form 941 2012Irs Forms 1040ezH&r Free Federal Tax Filing10 40 Ez Tax FormFree State Tax PreparationHow To File Taxes While UnemployedHow Soon Can I File My 2012 Taxes In 2013Irs1040Ny State Tax Forms 2011Irs Tax FormsTax Planning Us State Income TaxesFile For An ExtensionWww Irs Gov Freefile Com

File 1040nr Online Free

File 1040nr online free Publication 15-B - Main Content Table of Contents 1. File 1040nr online free Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. File 1040nr online free Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. File 1040nr online free Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. File 1040nr online free Rules for Withholding, Depositing, and ReportingTransfer of property. File 1040nr online free Amount of deposit. File 1040nr online free Limitation. File 1040nr online free Conformity rules. File 1040nr online free Election not to withhold income tax. File 1040nr online free How To Get Tax Help 1. File 1040nr online free Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. File 1040nr online free For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. File 1040nr online free Performance of services. File 1040nr online free   A person who performs services for you does not have to be your employee. File 1040nr online free A person may perform services for you as an independent contractor, partner, or director. File 1040nr online free Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. File 1040nr online free Provider of benefit. File 1040nr online free   You are the provider of a fringe benefit if it is provided for services performed for you. File 1040nr online free You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. File 1040nr online free For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. File 1040nr online free Recipient of benefit. File 1040nr online free   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. File 1040nr online free That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. File 1040nr online free For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. File 1040nr online free Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. File 1040nr online free Section 2 discusses the exclusions that apply to certain fringe benefits. File 1040nr online free Any benefit not excluded under the rules discussed in section 2 is taxable. File 1040nr online free Including taxable benefits in pay. File 1040nr online free   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. File 1040nr online free Any amount the law excludes from pay. File 1040nr online free Any amount the recipient paid for the benefit. File 1040nr online free The rules used to determine the value of a fringe benefit are discussed in section 3. File 1040nr online free   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. File 1040nr online free However, you can use special rules to withhold, deposit, and report the employment taxes. File 1040nr online free These rules are discussed in section 4. File 1040nr online free   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. File 1040nr online free However, you may have to report the benefit on one of the following information returns. File 1040nr online free If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File 1040nr online free For more information, see the instructions for the forms listed above. File 1040nr online free Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. File 1040nr online free If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. File 1040nr online free Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. File 1040nr online free However, a cafeteria plan can include a qualified 401(k) plan as a benefit. File 1040nr online free Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. File 1040nr online free Qualified benefits. File 1040nr online free   A cafeteria plan can include the following benefits discussed in section 2. File 1040nr online free Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). File 1040nr online free Adoption assistance. File 1040nr online free Dependent care assistance. File 1040nr online free Group-term life insurance coverage (including costs that cannot be excluded from wages). File 1040nr online free Health savings accounts (HSAs). File 1040nr online free Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. File 1040nr online free Benefits not allowed. File 1040nr online free   A cafeteria plan cannot include the following benefits discussed in section 2. File 1040nr online free Archer MSAs. File 1040nr online free See Accident and Health Benefits in section 2. File 1040nr online free Athletic facilities. File 1040nr online free De minimis (minimal) benefits. File 1040nr online free Educational assistance. File 1040nr online free Employee discounts. File 1040nr online free Employer-provided cell phones. File 1040nr online free Lodging on your business premises. File 1040nr online free Meals. File 1040nr online free Moving expense reimbursements. File 1040nr online free No-additional-cost services. File 1040nr online free Transportation (commuting) benefits. File 1040nr online free Tuition reduction. File 1040nr online free Working condition benefits. File 1040nr online free It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). File 1040nr online free $2,500 limit on a health flexible spending arrangement (FSA). File 1040nr online free   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. File 1040nr online free For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. File 1040nr online free   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). File 1040nr online free While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. File 1040nr online free A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. File 1040nr online free   For more information, see Notice 2012-40, 2012-26 I. File 1040nr online free R. File 1040nr online free B. File 1040nr online free 1046, available at www. File 1040nr online free irs. File 1040nr online free gov/irb/2012-26_IRB/ar09. File 1040nr online free html. File 1040nr online free Employee. File 1040nr online free   For these plans, treat the following individuals as employees. File 1040nr online free A current common-law employee. File 1040nr online free See section 2 in Publication 15 (Circular E) for more information. File 1040nr online free A full-time life insurance agent who is a current statutory employee. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free Exception for S corporation shareholders. File 1040nr online free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 1040nr online free A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free Plans that favor highly compensated employees. File 1040nr online free   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. File 1040nr online free A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. File 1040nr online free   A highly compensated employee for this purpose is any of the following employees. File 1040nr online free An officer. File 1040nr online free A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. File 1040nr online free An employee who is highly compensated based on the facts and circumstances. File 1040nr online free A spouse or dependent of a person described in (1), (2), or (3). File 1040nr online free Plans that favor key employees. File 1040nr online free   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. File 1040nr online free A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. File 1040nr online free However, a plan you maintain under a collective bargaining agreement does not favor key employees. File 1040nr online free   A key employee during 2014 is generally an employee who is either of the following. File 1040nr online free An officer having annual pay of more than $170,000. File 1040nr online free An employee who for 2014 is either of the following. File 1040nr online free A 5% owner of your business. File 1040nr online free A 1% owner of your business whose annual pay was more than $150,000. File 1040nr online free Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. File 1040nr online free Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. File 1040nr online free Eligible employer. File 1040nr online free   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. File 1040nr online free If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. File 1040nr online free If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. File 1040nr online free Eligibility and participation requirements. File 1040nr online free   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. File 1040nr online free You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. File 1040nr online free S. File 1040nr online free source. File 1040nr online free Contribution requirements. File 1040nr online free   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. File 1040nr online free If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. File 1040nr online free More information. File 1040nr online free   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. File 1040nr online free 2. File 1040nr online free Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. File 1040nr online free These rules exclude all or part of the value of certain benefits from the recipient's pay. File 1040nr online free The excluded benefits are not subject to federal income tax withholding. File 1040nr online free Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. File 1040nr online free This section discusses the exclusion rules for the following fringe benefits. File 1040nr online free Accident and health benefits. File 1040nr online free Achievement awards. File 1040nr online free Adoption assistance. File 1040nr online free Athletic facilities. File 1040nr online free De minimis (minimal) benefits. File 1040nr online free Dependent care assistance. File 1040nr online free Educational assistance. File 1040nr online free Employee discounts. File 1040nr online free Employee stock options. File 1040nr online free Employer-provided cell phones. File 1040nr online free Group-term life insurance coverage. File 1040nr online free Health savings accounts (HSAs). File 1040nr online free Lodging on your business premises. File 1040nr online free Meals. File 1040nr online free Moving expense reimbursements. File 1040nr online free No-additional-cost services. File 1040nr online free Retirement planning services. File 1040nr online free Transportation (commuting) benefits. File 1040nr online free Tuition reduction. File 1040nr online free Working condition benefits. File 1040nr online free See Table 2-1, later, for an overview of the employment tax treatment of these benefits. File 1040nr online free Table 2-1. File 1040nr online free Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. File 1040nr online free ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. File 1040nr online free Exempt, except for certain payments to S corporation employees who are 2% shareholders. File 1040nr online free Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). File 1040nr online free Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. File 1040nr online free De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). File 1040nr online free Educational assistance Exempt up to $5,250 of benefits each year. File 1040nr online free (See Educational Assistance , later in this section. File 1040nr online free ) Employee discounts Exempt3 up to certain limits. File 1040nr online free (See Employee Discounts , later in this section. File 1040nr online free ) Employee stock options See Employee Stock Options , later in this section. File 1040nr online free Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. File 1040nr online free Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. File 1040nr online free (Special rules apply to former employees. File 1040nr online free ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. File 1040nr online free (See Health Savings Accounts , later in this section. File 1040nr online free ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. File 1040nr online free Meals Exempt if furnished on your business premises for your convenience. File 1040nr online free Exempt if de minimis. File 1040nr online free Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. File 1040nr online free No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). File 1040nr online free (See Transportation (Commuting) Benefits , later in this section. File 1040nr online free ) Exempt if de minimis. File 1040nr online free Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). File 1040nr online free Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. File 1040nr online free 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. File 1040nr online free 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. File 1040nr online free 4 Exemption does not apply to certain key employees under a plan that favors those employees. File 1040nr online free 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. File 1040nr online free 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. File 1040nr online free 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. File 1040nr online free Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File 1040nr online free Also, show it in box 12 with code “C. File 1040nr online free ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File 1040nr online free Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. File 1040nr online free Contributions to the cost of accident or health insurance including qualified long-term care insurance. File 1040nr online free Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. File 1040nr online free Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). File 1040nr online free This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. File 1040nr online free Payments or reimbursements of medical expenses. File 1040nr online free Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). File 1040nr online free The payments must be figured without regard to any period of absence from work. File 1040nr online free Accident or health plan. File 1040nr online free   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. File 1040nr online free The plan may be insured or noninsured and does not need to be in writing. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current common-law employee. File 1040nr online free A full-time life insurance agent who is a current statutory employee. File 1040nr online free A retired employee. File 1040nr online free A former employee you maintain coverage for based on the employment relationship. File 1040nr online free A widow or widower of an individual who died while an employee. File 1040nr online free A widow or widower of a retired employee. File 1040nr online free For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free Special rule for certain government plans. File 1040nr online free   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. File 1040nr online free See section 105(j) for details. File 1040nr online free Exception for S corporation shareholders. File 1040nr online free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 1040nr online free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free Exclusion from wages. File 1040nr online free   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. File 1040nr online free Exception for certain long-term care benefits. File 1040nr online free   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. File 1040nr online free This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. File 1040nr online free However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File 1040nr online free S corporation shareholders. File 1040nr online free   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. File 1040nr online free However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. File 1040nr online free Exception for highly compensated employees. File 1040nr online free   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. File 1040nr online free However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. File 1040nr online free   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. File 1040nr online free   A highly compensated employee for this exception is any of the following individuals. File 1040nr online free One of the five highest paid officers. File 1040nr online free An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. File 1040nr online free An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). File 1040nr online free   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. File 1040nr online free COBRA premiums. File 1040nr online free   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). File 1040nr online free The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. File 1040nr online free Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. File 1040nr online free The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. File 1040nr online free The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current employee. File 1040nr online free A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free Exception for S corporation shareholders. File 1040nr online free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 1040nr online free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free Exclusion from wages. File 1040nr online free   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. File 1040nr online free The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). File 1040nr online free See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. File 1040nr online free    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. File 1040nr online free   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. File 1040nr online free The part of the cost that is more than your allowable deduction (up to the value of the awards). File 1040nr online free The amount by which the value of the awards exceeds your allowable deduction. File 1040nr online free Exclude the remaining value of the awards from the employee's wages. File 1040nr online free Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. File 1040nr online free It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. File 1040nr online free To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. File 1040nr online free It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). File 1040nr online free A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. File 1040nr online free You give reasonable notice of the plan to eligible employees. File 1040nr online free Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. File 1040nr online free For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 1040nr online free The employee was a 5% owner at any time during the year or the preceding year. File 1040nr online free The employee received more than $115,000 in pay for the preceding year. File 1040nr online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 1040nr online free You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. File 1040nr online free However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. File 1040nr online free For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. File 1040nr online free You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. File 1040nr online free Use code “T” to identify this amount. File 1040nr online free Exception for S corporation shareholders. File 1040nr online free   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File 1040nr online free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. File 1040nr online free For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. File 1040nr online free On-premises facility. File 1040nr online free   The athletic facility must be located on premises you own or lease. File 1040nr online free It does not have to be located on your business premises. File 1040nr online free However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current employee. File 1040nr online free A former employee who retired or left on disability. File 1040nr online free A widow or widower of an individual who died while an employee. File 1040nr online free A widow or widower of a former employee who retired or left on disability. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free A partner who performs services for a partnership. File 1040nr online free De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. File 1040nr online free A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. File 1040nr online free Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. File 1040nr online free Examples of de minimis benefits include the following. File 1040nr online free Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. File 1040nr online free See Employer-Provided Cell Phones , later in this section, for details. File 1040nr online free Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. File 1040nr online free Holiday gifts, other than cash, with a low fair market value. File 1040nr online free Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. File 1040nr online free Meals. File 1040nr online free See Meals , later in this section, for details. File 1040nr online free Occasional parties or picnics for employees and their guests. File 1040nr online free Occasional tickets for theater or sporting events. File 1040nr online free Transportation fare. File 1040nr online free See Transportation (Commuting) Benefits , later in this section, for details. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat any recipient of a de minimis benefit as an employee. File 1040nr online free Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. File 1040nr online free The services must be for a qualifying person's care and must be provided to allow the employee to work. File 1040nr online free These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. File 1040nr online free For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current employee. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free Yourself (if you are a sole proprietor). File 1040nr online free A partner who performs services for a partnership. File 1040nr online free Exclusion from wages. File 1040nr online free   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. File 1040nr online free   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. File 1040nr online free This limit is reduced to $2,500 for married employees filing separate returns. File 1040nr online free   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. File 1040nr online free Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. File 1040nr online free For more information on the earned income limit, see Publication 503. File 1040nr online free Exception for highly compensated employees. File 1040nr online free   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. File 1040nr online free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 1040nr online free The employee was a 5% owner at any time during the year or the preceding year. File 1040nr online free The employee received more than $115,000 in pay for the preceding year. File 1040nr online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 1040nr online free Form W-2. File 1040nr online free   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. File 1040nr online free Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. File 1040nr online free Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. File 1040nr online free Example. File 1040nr online free   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. File 1040nr online free In addition, it provides occasional on-site dependent care to its employees at no cost. File 1040nr online free Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. File 1040nr online free In addition, Emily used the on-site dependent care several times. File 1040nr online free The fair market value of the on-site care was $700. File 1040nr online free Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). File 1040nr online free Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. File 1040nr online free Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. File 1040nr online free The exclusion also applies to graduate level courses. File 1040nr online free Educational assistance means amounts you pay or incur for your employees' education expenses. File 1040nr online free These expenses generally include the cost of books, equipment, fees, supplies, and tuition. File 1040nr online free However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. File 1040nr online free Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. File 1040nr online free Nor do they include the cost of lodging, meals, or transportation. File 1040nr online free Educational assistance program. File 1040nr online free   An educational assistance program is a separate written plan that provides educational assistance only to your employees. File 1040nr online free The program qualifies only if all of the following tests are met. File 1040nr online free The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. File 1040nr online free To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. File 1040nr online free The program does not provide more than 5% of its benefits during the year for shareholders or owners. File 1040nr online free A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. File 1040nr online free The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. File 1040nr online free You give reasonable notice of the program to eligible employees. File 1040nr online free Your program can cover former employees if their employment is the reason for the coverage. File 1040nr online free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 1040nr online free The employee was a 5% owner at any time during the year or the preceding year. File 1040nr online free The employee received more than $115,000 in pay for the preceding year. File 1040nr online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current employee. File 1040nr online free A former employee who retired, left on disability, or was laid off. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free Yourself (if you are a sole proprietor). File 1040nr online free A partner who performs services for a partnership. File 1040nr online free Exclusion from wages. File 1040nr online free   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. File 1040nr online free Assistance over $5,250. File 1040nr online free   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. File 1040nr online free Working condition benefits may be excluded from wages. File 1040nr online free Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. File 1040nr online free See Working Condition Benefits , later, in this section. File 1040nr online free Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. File 1040nr online free However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current employee. File 1040nr online free A former employee who retired or left on disability. File 1040nr online free A widow or widower of an individual who died while an employee. File 1040nr online free A widow or widower of an employee who retired or left on disability. File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. File 1040nr online free A partner who performs services for a partnership. File 1040nr online free Exclusion from wages. File 1040nr online free   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. File 1040nr online free For a discount on services, 20% of the price you charge nonemployee customers for the service. File 1040nr online free For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. File 1040nr online free   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. File 1040nr online free To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. File 1040nr online free Exception for highly compensated employees. File 1040nr online free   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. File 1040nr online free All of your employees. File 1040nr online free A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. File 1040nr online free   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. File 1040nr online free The employee was a 5% owner at any time during the year or the preceding year. File 1040nr online free The employee received more than $115,000 in pay for the preceding year. File 1040nr online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 1040nr online free Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. File 1040nr online free Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. File 1040nr online free The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. File 1040nr online free Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. File 1040nr online free The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. File 1040nr online free However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. File 1040nr online free An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. File 1040nr online free ” See Regulations section 1. File 1040nr online free 83-7. File 1040nr online free An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. File 1040nr online free The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. File 1040nr online free See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. File 1040nr online free You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. File 1040nr online free irs. File 1040nr online free gov/pub/irs-irbs/irb02-19. File 1040nr online free pdf. File 1040nr online free See Revenue Ruling 2004-60, 2004-24 I. File 1040nr online free R. File 1040nr online free B. File 1040nr online free 1051, available at www. File 1040nr online free irs. File 1040nr online free gov/irb/2004-24_IRB/ar13. File 1040nr online free html. File 1040nr online free For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. File 1040nr online free Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. File 1040nr online free Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. File 1040nr online free For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. File 1040nr online free Noncompensatory business purposes. File 1040nr online free   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. File 1040nr online free Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. File 1040nr online free Cell phones provided to promote goodwill, boost morale, or attract prospective employees. File 1040nr online free   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. File 1040nr online free Additional information. File 1040nr online free   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. File 1040nr online free R. File 1040nr online free B. File 1040nr online free 407, available at  www. File 1040nr online free irs. File 1040nr online free gov/irb/2011-38_IRB/ar07. File 1040nr online free html. File 1040nr online free Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. File 1040nr online free It provides a general death benefit that is not included in income. File 1040nr online free You provide it to a group of employees. File 1040nr online free See The 10-employee rule , later. File 1040nr online free It provides an amount of insurance to each employee based on a formula that prevents individual selection. File 1040nr online free This formula must use factors such as the employee's age, years of service, pay, or position. File 1040nr online free You provide it under a policy you directly or indirectly carry. File 1040nr online free Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. File 1040nr online free Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. File 1040nr online free Group-term life insurance does not include the following insurance. File 1040nr online free Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. File 1040nr online free Life insurance on the life of your employee's spouse or dependent. File 1040nr online free However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. File 1040nr online free See De Minimis (Minimal) Benefits , earlier in this section. File 1040nr online free Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. File 1040nr online free See Regulations section 1. File 1040nr online free 79-1 for details. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat the following individuals as employees. File 1040nr online free A current common-law employee. File 1040nr online free A full-time life insurance agent who is a current statutory employee. File 1040nr online free An individual who was formerly your employee under (1) or (2). File 1040nr online free A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. File 1040nr online free Exception for S corporation shareholders. File 1040nr online free   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. File 1040nr online free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free The 10-employee rule. File 1040nr online free   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. File 1040nr online free   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. File 1040nr online free For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. File 1040nr online free However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. File 1040nr online free A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. File 1040nr online free Exceptions. File 1040nr online free   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. File 1040nr online free   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. File 1040nr online free If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. File 1040nr online free You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. File 1040nr online free You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. File 1040nr online free See Regulations section 1. File 1040nr online free 79-1 for details. File 1040nr online free   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. File 1040nr online free You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. File 1040nr online free The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. File 1040nr online free Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. File 1040nr online free   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. File 1040nr online free They were 65 or older. File 1040nr online free They customarily work 20 hours or less a week or 5 months or less in a calendar year. File 1040nr online free They have not been employed for the waiting period given in the policy. File 1040nr online free This waiting period cannot be more than 6 months. File 1040nr online free Exclusion from wages. File 1040nr online free   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. File 1040nr online free You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. File 1040nr online free In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. File 1040nr online free Coverage over the limit. File 1040nr online free   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. File 1040nr online free Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. File 1040nr online free Also, show it in box 12 with code “C. File 1040nr online free ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. File 1040nr online free   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. File 1040nr online free For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. File 1040nr online free You must prorate the cost from the table if less than a full month of coverage is involved. File 1040nr online free Table 2-2. File 1040nr online free Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . File 1040nr online free 05 25 through 29 . File 1040nr online free 06 30 through 34 . File 1040nr online free 08 35 through 39 . File 1040nr online free 09 40 through 44 . File 1040nr online free 10 45 through 49 . File 1040nr online free 15 50 through 54 . File 1040nr online free 23 55 through 59 . File 1040nr online free 43 60 through 64 . File 1040nr online free 66 65 through 69 1. File 1040nr online free 27 70 and older 2. File 1040nr online free 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. File 1040nr online free Example. File 1040nr online free Tom's employer provides him with group-term life insurance coverage of $200,000. File 1040nr online free Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. File 1040nr online free Tom's employer must include $170 in his wages. File 1040nr online free The $200,000 of insurance coverage is reduced by $50,000. File 1040nr online free The yearly cost of $150,000 of coverage is $270 ($. File 1040nr online free 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. File 1040nr online free The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. File 1040nr online free The employer also enters $170 in box 12 with code “C. File 1040nr online free ” Coverage for dependents. File 1040nr online free   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. File 1040nr online free If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. File 1040nr online free The cost of the insurance is determined by using Table 2-2. File 1040nr online free Former employees. File 1040nr online free   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. File 1040nr online free You are not required to collect those taxes. File 1040nr online free Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. File 1040nr online free Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. File 1040nr online free ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. File 1040nr online free Exception for key employees. File 1040nr online free   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. File 1040nr online free This exception generally does not apply to church plans. File 1040nr online free When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. File 1040nr online free Include the cost in boxes 1, 3, and 5 of Form W-2. File 1040nr online free However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. File 1040nr online free   For this purpose, the cost of the insurance is the greater of the following amounts. File 1040nr online free The premiums you pay for the employee's insurance. File 1040nr online free See Regulations section 1. File 1040nr online free 79-4T(Q&A 6) for more information. File 1040nr online free The cost you figure using Table 2-2. File 1040nr online free   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. File 1040nr online free See section 416(i) of the Internal Revenue Code for more information. File 1040nr online free An officer having annual pay of more than $170,000. File 1040nr online free An individual who for 2014 was either of the following. File 1040nr online free A 5% owner of your business. File 1040nr online free A 1% owner of your business whose annual pay was more than $150,000. File 1040nr online free   A former employee who was a key employee upon retirement or separation from service is also a key employee. File 1040nr online free   Your plan does not favor key employees as to participation if at least one of the following is true. File 1040nr online free It benefits at least 70% of your employees. File 1040nr online free At least 85% of the participating employees are not key employees. File 1040nr online free It benefits employees who qualify under a set of rules you set up that do not favor key employees. File 1040nr online free   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. File 1040nr online free   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. File 1040nr online free S. File 1040nr online free source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. File 1040nr online free   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. File 1040nr online free Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. File 1040nr online free S corporation shareholders. File 1040nr online free   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. File 1040nr online free When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. File 1040nr online free Include the cost in boxes 1, 3, and 5 of Form W-2. File 1040nr online free However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. File 1040nr online free Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. File 1040nr online free Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. File 1040nr online free Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. File 1040nr online free The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. File 1040nr online free For more information about HSAs, visit the Department of Treasury's website at www. File 1040nr online free treasury. File 1040nr online free gov and enter “HSA” in the search box. File 1040nr online free Eligibility. File 1040nr online free   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. File 1040nr online free For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. File 1040nr online free   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. File 1040nr online free Exceptions. File 1040nr online free   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. File 1040nr online free Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. File 1040nr online free However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. File 1040nr online free For more information, see Other employee health plans in Publication 969. File 1040nr online free Employer contributions. File 1040nr online free   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. File 1040nr online free For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. File 1040nr online free   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. File 1040nr online free For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. File 1040nr online free No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. File 1040nr online free Nondiscrimination rules. File 1040nr online free    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. File 1040nr online free Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. File 1040nr online free   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. File 1040nr online free 4980G-4. File 1040nr online free Exception. File 1040nr online free   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. File 1040nr online free A highly compensated employee for 2014 is an employee who meets either of the following tests. File 1040nr online free The employee was a 5% owner at any time during the year or the preceding year. File 1040nr online free The employee received more than $115,000 in pay for the preceding year. File 1040nr online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. File 1040nr online free Partnerships and S corporations. File 1040nr online free   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. File 1040nr online free Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. File 1040nr online free Cafeteria plans. File 1040nr online free   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. File 1040nr online free However, cafeteria plan nondiscrimination rules still apply. File 1040nr online free For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. File 1040nr online free Contributions that favor lower-paid employees are not prohibited. File 1040nr online free Reporting requirements. File 1040nr online free   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. File 1040nr online free ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. File 1040nr online free Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. File 1040nr online free It is furnished on your business premises. File 1040nr online free It is furnished for your convenience. File 1040nr online free The employee must accept it as a condition of employment. File 1040nr online free Different tests may apply to lodging furnished by educational institutions. File 1040nr online free See section 119(d) of the Internal Revenue Code for details. File 1040nr online free The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. File 1040nr online free On your business premises. File 1040nr online free   For this exclusion, your business premises is generally your employee's place of work. File 1040nr online free For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. File 1040nr online free For your convenience. File 1040nr online free   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. File 1040nr online free You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. File 1040nr online free This is true even if a law or an employment contract provides that the lodging is furnished as pay. File 1040nr online free However, a written statement that the lodging is furnished for your convenience is not sufficient. File 1040nr online free Condition of employment. File 1040nr online free   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. File 1040nr online free Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. File 1040nr online free   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. File 1040nr online free Example. File 1040nr online free A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. File 1040nr online free If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. File 1040nr online free S corporation shareholders. File 1040nr online free   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. File 1040nr online free A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. File 1040nr online free Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. File 1040nr online free Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. File 1040nr online free De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. File 1040nr online free The exclusion applies, for example, to the following items. File 1040nr online free Coffee, doughnuts, or soft drinks. File 1040nr online free Occasional meals or meal money provided to enable an employee to work overtime. File 1040nr online free However, the exclusion does not apply to meal money figured on the basis of hours worked. File 1040nr online free Occasional parties or picnics for employees and their guests. File 1040nr online free This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. File 1040nr online free For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. File 1040nr online free If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. File 1040nr online free The 50% limit on deductions for the cost of meals does not apply. File 1040nr online free The deduction limit on meals is discussed in chapter 2 of Publication 535. File 1040nr online free Employee. File 1040nr online free   For this exclusion, treat any recipient of a de minimis meal as
Print - Click this link to Print this page

IRS Non-Retaliation Policy

Section 1203 of the IRS Restructuring and Reform Act of 1998 (RRA ’98), created a statutory provision requiring termination of IRS employment for misconduct.  Section 1203(a) provides that the Commissioner of the Internal Revenue shall terminate the employment of any employee of the Internal Revenue Service if there is a final administrative or judicial determination that such employee committed any act or omission described under subsection (b) in the performance of the employee’s official duties. One of the acts described in subsection (b) is retaliation.

Section 1203 (b)(6) provides that:

Violations of the Internal Revenue Code of 1986, Department of Treasury regulations, or policies of the Internal Revenue Service (including the Internal Revenue Manual) for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service.

is an act or omission requiring termination.

IRM Section 6.751.1.1 addresses administrative disciplinary matters.  Exhibit 6.751.1-1 is the Internal Revenue Service Guide for Penalty Determinations. Violations of RRA ’98, Section 1203 (b)(6) is included  in the Guide for Penalty Determinations.  This Exhibit shows that the penalty for a First Offense for an RRA ‘98 1203 (b)(6) offense is removal.

Page Last Reviewed or Updated: 05-Nov-2013

The File 1040nr Online Free

File 1040nr online free 7. File 1040nr online free   Depreciation, Depletion, and Amortization Table of Contents What's New for 2013 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Overview of DepreciationWhat Property Can Be Depreciated? What Property Cannot Be Depreciated? When Does Depreciation Begin and End? Can You Use MACRS To Depreciate Your Property? What Is the Basis of Your Depreciable Property? How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions? Section 179 Expense DeductionWhat Property Qualifies? What Property Does Not Qualify? How Much Can You Deduct? How Do You Elect the Deduction? When Must You Recapture the Deduction? Claiming the Special Depreciation AllowanceWhat is Qualified Property? How Can You Elect Not To Claim the Allowance? When Must You Recapture an Allowance Figuring Depreciation Under MACRSWhich Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS? What Is the Placed-in-Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies? Which Convention Applies? Which Depreciation Method Applies? How Is the Depreciation Deduction Figured? How Do You Use General Asset Accounts? When Do You Recapture MACRS Depreciation? Additional Rules for Listed PropertyWhat Is Listed Property? What Is the Business-Use Requirement? Do the Passenger Automobile Limits Apply? Depletion Who Can Claim Depletion? Figuring Depletion AmortizationBusiness Start-Up Costs Reforestation Costs Section 197 Intangibles What's New for 2013 Increased section 179 expense deduction dollar limits. File 1040nr online free  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. File 1040nr online free This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. File 1040nr online free See Dollar Limits under Section 179 Expense Deduction , later. File 1040nr online free Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. File 1040nr online free . File 1040nr online free  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. File 1040nr online free See Claiming the Special Depreciation Allowance , later. File 1040nr online free Expiration of the 3- year recovery period for certain race horses. File 1040nr online free  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. File 1040nr online free Introduction If you buy or make improvements to farm property such as machinery, equipment, livestock, or a structure with a useful life of more than a year, you generally cannot deduct its entire cost in one year. File 1040nr online free Instead, you must spread the cost over the time you use the property and deduct part of it each year. File 1040nr online free For most types of property, this is called depreciation. File 1040nr online free This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. File 1040nr online free For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. File 1040nr online free Topics - This chapter discusses: Overview of depreciation Section 179 expense deduction Special depreciation allowance Modified Accelerated Cost Recovery System (MACRS) Listed property Basic information on cost depletion (including timber depletion) and percentage depletion Amortization of the costs of going into business, reforestation costs, the costs of pollution control facilities, and the costs of section 197 intangibles Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) T (Timber), Forest Activities Schedule 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. File 1040nr online free It is important to keep good records for property you depreciate. File 1040nr online free Do not file these records with your return. File 1040nr online free Instead, you should keep them as part of the permanent records of the depreciated property. File 1040nr online free They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. File 1040nr online free For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. File 1040nr online free For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. File 1040nr online free Overview of Depreciation This overview discusses basic information on the following. File 1040nr online free What property can be depreciated. File 1040nr online free What property cannot be depreciated. File 1040nr online free When depreciation begins and ends. File 1040nr online free Whether MACRS can be used to figure depreciation. File 1040nr online free What is the basis of your depreciable property. File 1040nr online free How to treat repairs and improvements. File 1040nr online free When you must file Form 4562. File 1040nr online free How you can correct depreciation claimed incorrectly. File 1040nr online free What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, equipment, vehicles, certain livestock, and furniture. File 1040nr online free You can also depreciate certain intangible property, such as copyrights, patents, and computer software. File 1040nr online free To be depreciable, the property must meet all the following requirements. File 1040nr online free It must be property you own. File 1040nr online free It must be used in your business or income-producing activity. File 1040nr online free It must have a determinable useful life. File 1040nr online free It must have a useful life that extends substantially beyond the year you place it in service. File 1040nr online free Property You Own To claim depreciation, you usually must be the owner of the property. File 1040nr online free You are considered as owning property even if it is subject to a debt. File 1040nr online free Leased property. File 1040nr online free   You can depreciate leased property only if you retain the incidents of ownership in the property. File 1040nr online free This means you bear the burden of exhaustion of the capital investment in the property. File 1040nr online free Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. File 1040nr online free You can, however, depreciate any capital improvements you make to the leased property. File 1040nr online free See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. File 1040nr online free   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. File 1040nr online free However, you cannot depreciate the cost of the property if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased. File 1040nr online free Life tenant. File 1040nr online free   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. File 1040nr online free See Certain term interests in property , later, for an exception. File 1040nr online free Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. File 1040nr online free If you use property to produce income (investment use), the income must be taxable. File 1040nr online free You cannot depreciate property that you use solely for personal activities. File 1040nr online free However, if you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the percentage of business or investment use. File 1040nr online free Example 1. File 1040nr online free   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. File 1040nr online free If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. File 1040nr online free Example 2. File 1040nr online free   If you use part of your home for business, you may be able to deduct depreciation on that part based on its business use. File 1040nr online free For more information, see Business Use of Your Home in chapter 4. File 1040nr online free Inventory. File 1040nr online free   You can never depreciate inventory because it is not held for use in your business. File 1040nr online free Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. File 1040nr online free Livestock. File 1040nr online free   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. File 1040nr online free Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis. File 1040nr online free However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. File 1040nr online free Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. File 1040nr online free This means it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. File 1040nr online free Irrigation systems and water wells. File 1040nr online free   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. File 1040nr online free You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. File 1040nr online free In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. File 1040nr online free However, land preparation costs for center pivot irrigation systems are not depreciable. File 1040nr online free Dams, ponds, and terraces. File 1040nr online free   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. File 1040nr online free What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. File 1040nr online free This includes the following. File 1040nr online free Land. File 1040nr online free You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. File 1040nr online free The cost of land generally includes the cost of clearing, grading, planting, and landscaping. File 1040nr online free Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. File 1040nr online free See chapter 1 of Publication 946. File 1040nr online free Property placed in service and disposed of in the same year. File 1040nr online free Determining when property is placed in service is explained later. File 1040nr online free Equipment used to build capital improvements. File 1040nr online free You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. File 1040nr online free Intangible property such as section 197 intangibles. File 1040nr online free This property does not have a determinable useful life and generally cannot be depreciated. File 1040nr online free However, see Amortization , later. File 1040nr online free Special rules apply to computer software (discussed below). File 1040nr online free Certain term interests (discussed below). File 1040nr online free Computer software. File 1040nr online free   Computer software is generally not a section 197 intangible even if acquired in connection with the acquisition of a business, if it meets all of the following tests. File 1040nr online free It is readily available for purchase by the general public. File 1040nr online free It is subject to a nonexclusive license. File 1040nr online free It has not been substantially modified. File 1040nr online free   If the software meets the tests above, it can be depreciated and may qualify for the section 179 expense deduction and the special depreciation allowance (if applicable), discussed later. File 1040nr online free Certain term interests in property. File 1040nr online free   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. File 1040nr online free This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. File 1040nr online free For more information, see chapter 1 of Publication 946. File 1040nr online free When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. File 1040nr online free You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. File 1040nr online free Placed in Service Property is placed in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. File 1040nr online free Even if you are not using the property, it is in service when it is ready and available for its specific use. File 1040nr online free Example. File 1040nr online free You bought a planter for use in your farm business. File 1040nr online free The planter was delivered in December 2012 after harvest was over. File 1040nr online free You begin to depreciate the planter for 2012 because it was ready and available for its specific use in 2012, even though it will not be used until the spring of 2013. File 1040nr online free If your planter comes unassembled in December 2012 and is put together in February 2013, it is not placed in service until 2013. File 1040nr online free You begin to depreciate it in 2013. File 1040nr online free If your planter was delivered and assembled in February 2013 but not used until April 2013, it is placed in service in February 2013, because this is when the planter was ready for its specified use. File 1040nr online free You begin to depreciate it in 2013. File 1040nr online free Fruit or nut trees and vines. File 1040nr online free   If you acquire an orchard, grove, or vineyard before the trees or vines have reached the income-producing stage, and they have a preproductive period of more than 2 years, you must capitalize the preproductive-period costs under the uniform capitalization rules (unless you elect not to use these rules). File 1040nr online free See chapter 6 for information about the uniform capitalization rules. File 1040nr online free Your depreciation begins when the trees and vines reach the income-producing stage (that is, when they bear fruit, nuts, or grapes in quantities sufficient to commercially warrant harvesting). File 1040nr online free Immature livestock. File 1040nr online free   Depreciation for livestock begins when the livestock reaches the age of maturity. File 1040nr online free If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. File 1040nr online free If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. File 1040nr online free If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. File 1040nr online free Your basis for depreciation is your initial cost for the immature livestock. File 1040nr online free Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle. File 1040nr online free For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. File 1040nr online free Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. File 1040nr online free This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. File 1040nr online free Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. File 1040nr online free You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. File 1040nr online free You sell or exchange the property. File 1040nr online free You convert the property to personal use. File 1040nr online free You abandon the property. File 1040nr online free You transfer the property to a supplies or scrap account. File 1040nr online free The property is destroyed. File 1040nr online free For information on abandonment of property, see chapter 8. File 1040nr online free For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. File 1040nr online free Can You Use MACRS To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most business and investment property placed in service after 1986. File 1040nr online free MACRS is explained later under Figuring Depreciation Under MACRS . File 1040nr online free You cannot use MACRS to depreciate the following property. File 1040nr online free Property you placed in service before 1987. File 1040nr online free Use the methods discussed in Publication 534. File 1040nr online free Certain property owned or used in 1986. File 1040nr online free See chapter 1 of Publication 946. File 1040nr online free Intangible property. File 1040nr online free Films, video tapes, and recordings. File 1040nr online free Certain corporate or partnership property acquired in a nontaxable transfer. File 1040nr online free Property you elected to exclude from MACRS. File 1040nr online free For more information, see chapter 1 of Publication 946. File 1040nr online free What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. File 1040nr online free To determine basis, you need to know the cost or other basis of your property. File 1040nr online free Cost or other basis. File 1040nr online free   The basis of property you buy is usually its cost plus amounts you paid for items such as sales tax, freight charges, and installation and testing fees. File 1040nr online free The cost includes the amount you pay in cash, debt obligations, other property, or services. File 1040nr online free   There are times when you cannot use cost as basis. File 1040nr online free In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. File 1040nr online free Adjusted basis. File 1040nr online free   To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. File 1040nr online free Basis adjustment for depreciation allowed or allowable. File 1040nr online free   After you place your property in service, you must reduce the basis of the property by the depreciation allowed or allowable, whichever is greater. File 1040nr online free Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). File 1040nr online free Depreciation allowable is depreciation you are entitled to deduct. File 1040nr online free   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. File 1040nr online free   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). File 1040nr online free   For more information, see chapter 6. File 1040nr online free How Do You Treat Repairs and Improvements? You generally deduct the cost of repairing business property in the same way as any other business expense. File 1040nr online free However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. File 1040nr online free Treat improvements as separate depreciable property. File 1040nr online free See chapter 1 of Publication 946 for more information. File 1040nr online free Example. File 1040nr online free You repair a small section on a corner of the roof of a barn that you rent to others. File 1040nr online free You deduct the cost of the repair as a business expense. File 1040nr online free However, if you replace the entire roof, the new roof is considered to be an improvement because it increases the value and lengthens the life for the property. File 1040nr online free You depreciate the cost of the new roof. File 1040nr online free Improvements to rented property. File 1040nr online free   You can depreciate permanent improvements you make to business property you rent from someone else. File 1040nr online free Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. File 1040nr online free You must complete and attach Form 4562 to your tax return if you are claiming any of the following. File 1040nr online free A section 179 expense deduction for the current year or a section 179 carryover from a prior year. File 1040nr online free Depreciation for property placed in service during the current year. File 1040nr online free Depreciation on any vehicle or other listed property, regardless of when it was placed in service. File 1040nr online free Amortization of costs that began in the current year. File 1040nr online free For more information, see the Instructions for Form 4562. File 1040nr online free How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. File 1040nr online free You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. File 1040nr online free You claimed the incorrect amount because of a mathematical error made in any year. File 1040nr online free You claimed the incorrect amount because of a posting error made in any year, for example, omitting an asset from the depreciation schedule. File 1040nr online free You have not adopted a method of accounting for the property placed in service by you in tax years ending after December 29, 2003. File 1040nr online free You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. File 1040nr online free Note. File 1040nr online free You have adopted a method of accounting if you used the same incorrect method of depreciation for two or more consecutively filed returns. File 1040nr online free If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. File 1040nr online free See the Instructions for Form 3115. File 1040nr online free Section 179 Expense Deduction 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. File 1040nr online free This is the section 179 expense deduction. File 1040nr online free You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. File 1040nr online free This part of the chapter explains the rules for the section 179 expense deduction. File 1040nr online free It explains what property qualifies for the deduction, what property does not qualify for the deduction, the limits that may apply, how to elect the deduction, and when you may have to recapture the deduction. File 1040nr online free For more information, see chapter 2 of Publication 946. File 1040nr online free What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. File 1040nr online free It must be eligible property. File 1040nr online free It must be acquired for business use. File 1040nr online free It must have been acquired by purchase. File 1040nr online free Eligible Property To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property. File 1040nr online free Tangible personal property. File 1040nr online free Qualified real property. File 1040nr online free (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. File 1040nr online free For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. File 1040nr online free ) 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. File 1040nr online free Single purpose agricultural (livestock) or horticultural structures. File 1040nr online free Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. File 1040nr online free Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive lease, and has not been substantially modified. File 1040nr online free Tangible personal property. File 1040nr online free   Tangible personal property is any tangible property that is not real property. File 1040nr online free It includes the following property. File 1040nr online free Machinery and equipment. File 1040nr online free Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment. File 1040nr online free Gasoline storage tanks and pumps at retail service stations. File 1040nr online free Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. File 1040nr online free Facility used for the bulk storage of fungible commodities. File 1040nr online free   A facility used for the bulk storage of fungible commodities is qualifying property for purposes of the section 179 expense deduction if it is used in connection with any of the activities listed earlier in item (3)(a). File 1040nr online free Bulk storage means the storage of a commodity in a large mass before it is used. File 1040nr online free Grain bins. File 1040nr online free   A grain bin is an example of a storage facility that is qualifying section 179 property. File 1040nr online free It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. File 1040nr online free Single purpose agricultural or horticultural structures. File 1040nr online free   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. File 1040nr online free Agricultural structure. File 1040nr online free   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. File 1040nr online free To house, raise, and feed a particular type of livestock and its produce. File 1040nr online free To house the equipment, including any replacements, needed to house, raise, or feed the livestock. File 1040nr online free For this purpose, livestock includes poultry. File 1040nr online free   Single purpose structures are qualifying property if used, for example, to breed chickens or hogs, produce milk from dairy cattle, or produce feeder cattle or pigs, broiler chickens, or eggs. File 1040nr online free The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock. File 1040nr online free Horticultural structure. File 1040nr online free   A single purpose horticultural structure is either of the following. File 1040nr online free A greenhouse specifically designed, constructed, and used for the commercial production of plants. File 1040nr online free A structure specifically designed, constructed, and used for the commercial production of mushrooms. File 1040nr online free Use of structure. File 1040nr online free   A structure must be used only for the purpose that qualified it. File 1040nr online free For example, a hog barn will not be qualifying property if you use it to house poultry. File 1040nr online free Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. File 1040nr online free   If a structure includes work space, the work space can be used only for the following activities. File 1040nr online free Stocking, caring for, or collecting livestock or plants or their produce. File 1040nr online free Maintaining the enclosure or structure. File 1040nr online free Maintaining or replacing the equipment or stock enclosed or housed in the structure. File 1040nr online free Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. File 1040nr online free For example, property acquired by gift or inheritance does not qualify. File 1040nr online free Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. File 1040nr online free Example. File 1040nr online free Ken is a farmer. File 1040nr online free He purchased two tractors, one from his brother and one from his father. File 1040nr online free He placed both tractors in service in the same year he bought them. File 1040nr online free The tractor purchased from his father does not qualify for the section 179 expense deduction because he is a related person (as defined above). File 1040nr online free The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). File 1040nr online free What Property Does Not Qualify? Land and improvements. File 1040nr online free   Land and land improvements, do not qualify as section 179 property. File 1040nr online free Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. File 1040nr online free However, agricultural fences do qualify as section 179 property. File 1040nr online free Similarly, field drainage tile also qualifies as section 179 property. File 1040nr online free Excepted property. File 1040nr online free   Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property. File 1040nr online free Certain property you lease to others (if you are a noncorporate lessor). File 1040nr online free Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. File 1040nr online free Property used by a tax-exempt organization (other than a tax-exempt farmers' cooperative) unless the property is used mainly in a taxable unrelated trade or business. File 1040nr online free Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months). File 1040nr online free How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. File 1040nr online free However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. File 1040nr online free These limits apply to each taxpayer, not to each business. File 1040nr online free However, see Married individuals under Dollar Limits , later. File 1040nr online free See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. File 1040nr online free If you deduct only part of the cost of qualifying property as a section 179 expense deduction, you can generally depreciate the cost you do not deduct. File 1040nr online free Use Part I of Form 4562 to figure your section 179 expense deduction. File 1040nr online free Partial business use. File 1040nr online free   When you use property for business and nonbusiness purposes, you can elect the section 179 expense deduction only if you use it more than 50% for business in the year you place it in service. File 1040nr online free If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. File 1040nr online free Use the resulting business cost to figure your section 179 expense deduction. File 1040nr online free Trade-in of other property. File 1040nr online free   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 expense deduction includes only the cash you paid. File 1040nr online free For example, if you buy (for cash and a trade-in) a new tractor for use in your business, your cost for the section 179 expense deduction is the cash you paid. File 1040nr online free It does not include the adjusted basis of the old tractor you trade for the new tractor. File 1040nr online free Example. File 1040nr online free J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. File 1040nr online free They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. File 1040nr online free J-Bar also traded a used pickup truck with an adjusted basis of $8,000 for a new pickup truck costing $35,000. File 1040nr online free They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. File 1040nr online free Only the cash paid by J-Bar qualifies for the section 179 expense deduction. File 1040nr online free J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). File 1040nr online free Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 is $500,000. File 1040nr online free If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 expense deduction among the items in any way, as long as the total deduction is not more than $500,000. File 1040nr online free Qualified real property that you elect to treat as section 179 property is limited to $250,000 of the maximum section 179 deduction of $500,000 for 2013. File 1040nr online free You do not have to claim the full $500,000. File 1040nr online free For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. File 1040nr online free Reduced dollar limit for cost exceeding $2 million. File 1040nr online free   If the cost of your qualifying section 179 property placed in service in 2013 is over $2 million, you must reduce the dollar limit (but not below zero) by the amount of cost over $2 million. File 1040nr online free 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 expense deduction and you cannot carry over the cost that is more than $2,500,000. File 1040nr online free Example. File 1040nr online free This year, James Smith placed in service machinery costing $2,050,000. File 1040nr online free Because this cost is $50,000 more than $2 million, he must reduce his dollar limit to $450,000 ($500,000 − $50,000). File 1040nr online free Limits for sport utility vehicles. File 1040nr online free   The total amount you can elect to deduct for certain sport utility vehicles and certain other vehicles placed in service in 2013 is $25,000. File 1040nr online free This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, and highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. File 1040nr online free   For more information, see chapter 2 of Publication 946. File 1040nr online free Limits for passenger automobiles. File 1040nr online free   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. File 1040nr online free See Do the Passenger Automobile Limits Apply , later. File 1040nr online free Married individuals. File 1040nr online free   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. File 1040nr online free 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. File 1040nr online free 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 million. File 1040nr online free You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. File 1040nr online free If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. File 1040nr online free Joint return after separate returns. File 1040nr online free   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. File 1040nr online free The dollar limit (after reduction for any cost of section 179 property over $2 million). File 1040nr online free The total cost of section 179 property you and your spouse elected to expense on your separate returns. File 1040nr online free 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. File 1040nr online free 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. File 1040nr online free Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. File 1040nr online free See Carryover of disallowed deduction , later. File 1040nr online free Taxable income. File 1040nr online free   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. File 1040nr online free In addition to net income or loss from a sole proprietorship, partnership, or S corporation, net income or loss derived from a trade or business also includes the following items. File 1040nr online free Section 1231 gains (or losses) as discussed in chapter 9. File 1040nr online free Interest from working capital of your trade or business. File 1040nr online free Wages, salaries, tips, or other pay earned by you (or your spouse if you file a joint return) as an employee of any employer. File 1040nr online free   In addition, figure taxable income without regard to any of the following. File 1040nr online free The section 179 expense deduction. File 1040nr online free The self-employment tax deduction. File 1040nr online free Any net operating loss carryback or carryforward. File 1040nr online free Any unreimbursed employee business expenses. File 1040nr online free Two different taxable income limits. File 1040nr online free   In addition to the business income limit for your section 179 expense deduction, you may have a taxable income limit for some other deduction (for example, charitable contributions). File 1040nr online free You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. File 1040nr online free If so, complete the following steps. File 1040nr online free Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. File 1040nr online free 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. File 1040nr online free 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. File 1040nr online free 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. File 1040nr online free 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. File 1040nr online free 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. File 1040nr online free 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. File 1040nr online free 8 Figure your actual other deduction using the taxable income figured in Step 7. File 1040nr online free Example. File 1040nr online free On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. File 1040nr online free It elects to expense the entire $500,000 cost under section 179. File 1040nr online free In June, the corporation gave a charitable contribution of $10,000. File 1040nr online free A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. File 1040nr online free The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. File 1040nr online free XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. File 1040nr online free XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. File 1040nr online free Step 1. File 1040nr online free Taxable income figured without either deduction is $520,000. File 1040nr online free Step 2. File 1040nr online free Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. File 1040nr online free Step 3. File 1040nr online free $20,000 ($520,000 − $500,000). File 1040nr online free Step 4. File 1040nr online free Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. File 1040nr online free Step 5. File 1040nr online free $518,000 ($520,000 − $2,000). File 1040nr online free Step 6. File 1040nr online free Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. File 1040nr online free Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. File 1040nr online free Step 7. File 1040nr online free $20,000 ($520,000 − $500,000). File 1040nr online free Step 8. File 1040nr online free Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. File 1040nr online free Carryover of disallowed deduction. File 1040nr online free   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. File 1040nr online free   The amount you carry over is used in determining your section 179 expense deduction in the next year. File 1040nr online free However, it is subject to the limits in that year. File 1040nr online free 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 cost will be carried forward. File 1040nr online free Your selections must be shown in your books and records. File 1040nr online free Example. File 1040nr online free Last year, Joyce Jones placed in service a machine that cost $8,000 and elected to deduct all $8,000 under section 179. File 1040nr online free The taxable income from her business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) was $6,000. File 1040nr online free Her section 179 expense deduction was limited to $6,000. File 1040nr online free The $2,000 cost that was not allowed as a section 179 expense deduction (because of the business income limit) is carried to this year. File 1040nr online free This year, Joyce placed another machine in service that cost $9,000. File 1040nr online free Her taxable income from business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) is $10,000. File 1040nr online free Joyce can deduct the full cost of the machine ($9,000) but only $1,000 of the carryover from last year because of the business income limit. File 1040nr online free She can carry over the balance of $1,000 to next year. File 1040nr online free Partnerships and S Corporations The section 179 expense deduction limits apply both to the partnership or S corporation and to each partner or shareholder. File 1040nr online free The partnership or S corporation determines its section 179 expense deduction subject to the limits. File 1040nr online free It then allocates the deduction among its partners or shareholders. File 1040nr online free If you are a partner in a partnership or shareholder of an S corporation, you add the amount allocated from the partnership or S corporation to any section 179 costs not related to the partnership or S corporation and then apply the dollar limit to this total. File 1040nr online free To determine any reduction in the dollar limit for costs over $560,000, you do not include any of the cost of section 179 property placed in service by the partnership or S corporation. File 1040nr online free After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. File 1040nr online free For more information, see chapter 2 of Publication 946. File 1040nr online free Example. File 1040nr online free In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. File 1040nr online free P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). File 1040nr online free Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. File 1040nr online free Because P's taxable income from the active conduct of all its trades or businesses for the year was $400,000, it can deduct the full $340,000. File 1040nr online free P allocates $100,000 of its section 179 expense deduction and $110,000 of its taxable income to John, one of its partners. File 1040nr online free John also conducts a business as a sole proprietor and in 2013, placed in service in that business, section 179 property costing $28,000. File 1040nr online free John's taxable income from that business was $10,000. File 1040nr online free In addition to the $100,000 allocated from P, he elects to expense the $28,000 of his sole proprietorship's section 179 costs. File 1040nr online free However, John's deduction is limited to his business taxable income of $120,000 ($110,000 from P plus $10,000 from his sole proprietorship). File 1040nr online free He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. File 1040nr online free How Do You Elect the Deduction? You elect to take the section 179 expense deduction by completing Part I of Form 4562. File 1040nr online free If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. File 1040nr online free   File Form 4562 with either of the following: Your original tax return (whether or not you filed it timely), or An amended return filed within the time prescribed by law. File 1040nr online free 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. File 1040nr online free The amended return must also include any resulting adjustments to taxable income. File 1040nr online free Revoking an election. File 1040nr online free   An election (or any specification made in the election) to take a section 179 expense deduction for 2013 can be revoked without IRS approval by filing an amended return. File 1040nr online free The amended return must be filed within the time prescribed by law. File 1040nr online free The amended return must also include any resulting adjustments to taxable income (for example, allowable depreciation in that tax year for the item of section 179 property for which the election pertains. File 1040nr online free ) Once made, the revocation is irrevocable. File 1040nr online free When Must You Recapture the Deduction? You may have to recapture the section 179 expense deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. File 1040nr online free In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. File 1040nr online free You also increase the basis of the property by the recapture amount. File 1040nr online free Recovery periods for property are discussed later. File 1040nr online free If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. File 1040nr online free Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. File 1040nr online free   If the property is listed property, do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. File 1040nr online free Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. File 1040nr online free Figuring the recapture amount. File 1040nr online free   To figure the amount to recapture, take the following steps. File 1040nr online free Figure the allowable depreciation for the section 179 expense deduction you claimed. File 1040nr online free Begin with the year you placed the property in service and include the year of recapture. File 1040nr online free Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. File 1040nr online free The result is the amount you must recapture. File 1040nr online free Example. File 1040nr online free In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. File 1040nr online free The property is not listed property. File 1040nr online free He elected a $5,000 section 179 expense deduction for the property and also elected not to claim a special depreciation allowance. File 1040nr online free He used the property only for business in 2011 and 2012. File 1040nr online free During 2013, he used the property 40% for business and 60% for personal use. File 1040nr online free He figures his recapture amount as follows. File 1040nr online free Section 179 expense deduction claimed (2011) $5,000 Minus: Allowable depreciation (instead of section 179 expense deduction):   2011 $1,250   2012 1,875   2013 ($1,250 × 40% (business)) 500 3,625 2013 — Recapture amount $1,375     Paul must include $1,375 in income for 2013. File 1040nr online free Where to report recapture. File 1040nr online free   Report any recapture of the section 179 expense deduction as ordinary income in Part IV of Form 4797 and include it in income on Schedule F (Form 1040). File 1040nr online free Recapture for qualified section 179 GO Zone property. File 1040nr online free   If any qualified section 179 GO Zone property ceases to be used in the GO Zone in a later year, you must recapture the benefit of the increased section 179 expense deduction as “other income. File 1040nr online free ” Claiming the Special Depreciation Allowance For qualified property (defined below) placed in service in 2013, you can take an additional 50% special depreciation allowance. File 1040nr online free The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS. File 1040nr online free Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. File 1040nr online free What is Qualified Property? For farmers, qualified property generally is certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. File 1040nr online free Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. File 1040nr online free   Certain qualified property (defined below) acquired after December 31, 2007, and before January 1, 2014, is eligible for a 50% special depreciation allowance. File 1040nr online free   Qualified property includes the following: Tangible property depreciated under the Modified Accelerated Cost Recovery System (MACRS) with a recovery period of 20 years or less. File 1040nr online free Water utility property. File 1040nr online free Off-the-shelf computer software. File 1040nr online free Qualified leasehold improvement property. File 1040nr online free   Qualified property must also meet all of the following tests: You must have acquired qualified property by purchase after December 31, 2007. File 1040nr online free If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. File 1040nr online free Qualified property must be placed in service after December 31, 2007 and placed in service before January 1, 2014 (before January 1, 2015 for certain property with a long production period and for certain aircraft). File 1040nr online free The original use of the property must begin with you after December 31, 2007. File 1040nr online free For more information, see chapter 3 of Publication 946. File 1040nr online free How Can You Elect Not To Claim the Allowance? You can elect, for any class of property, not to deduct the special depreciation allowance for all property in such class placed in service during the tax year. File 1040nr online free To make the election, attach a statement to your return indicating the class of property for which you are making the election. File 1040nr online free Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. File 1040nr online free However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). File 1040nr online free Attach the election statement to the amended return. File 1040nr online free On the amended return, write “Filed pursuant to section 301. File 1040nr online free 9100-2. File 1040nr online free ” Once made, the election may not be revoked without IRS consent. File 1040nr online free If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. File 1040nr online free When Must You Recapture an Allowance When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. File 1040nr online free For more information, see chapter 3 of Publication 946. File 1040nr online free Figuring Depreciation Under MACRS The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. File 1040nr online free MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). File 1040nr online free Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. File 1040nr online free To be sure you can use MACRS to figure depreciation for your property, see Can You Use MACRS To Depreciate Your Property, earlier. File 1040nr online free This part explains how to determine which MACRS depreciation system applies to your property. File 1040nr online free It also discusses the following information that you need to know before you can figure depreciation under MACRS. File 1040nr online free Property's recovery class. File 1040nr online free Placed-in-service date. File 1040nr online free Basis for depreciation. File 1040nr online free Recovery period. File 1040nr online free Convention. File 1040nr online free Depreciation method. File 1040nr online free Finally, this part explains how to use this information to figure your depreciation deduction. File 1040nr online free Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. File 1040nr online free You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. File 1040nr online free Required use of ADS. File 1040nr online free   You must use ADS for the following property. File 1040nr online free All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. File 1040nr online free Listed property used 50% or less in a qualified business use. File 1040nr online free See Additional Rules for Listed Property , later. File 1040nr online free Any tax-exempt use property. File 1040nr online free Any tax-exempt bond-financed property. File 1040nr online free Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. File 1040nr online free Any tangible property used predominantly outside the United States during the year. File 1040nr online free If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. File 1040nr online free Electing ADS. File 1040nr online free   Although your property may qualify for GDS, you can elect to use ADS. File 1040nr online free The election generally must cover all property in the same property class you placed in service during the year. File 1040nr online free However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. File 1040nr online free Once you make this election, you can never revoke it. File 1040nr online free   You make the election by completing line 20 in Part III of Form 4562. File 1040nr online free Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. File 1040nr online free 3-year property. File 1040nr online free 5-year property. File 1040nr online free 7-year property. File 1040nr online free 10-year property. File 1040nr online free 15-year property. File 1040nr online free 20-year property. File 1040nr online free 25-year property. File 1040nr online free Residential rental property. File 1040nr online free Nonresidential real property. File 1040nr online free See Which Property Class Applies Under GDS in chapter 4 of Publication 946 for examples of the types of property included in each class. File 1040nr online free What Is the Placed-in-Service Date? You begin to claim depreciation when your property is placed in service for use either in a trade or business or for the production of income. File 1040nr online free The placed-in-service date for your property is the date the property is ready and available for a specific use. File 1040nr online free It is therefore not necessarily the date it is first used. File 1040nr online free If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. File 1040nr online free See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. File 1040nr online free What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. File 1040nr online free Reduce that amount by any credits and deductions allocable to the property. File 1040nr online free The following are examples of some of the credits and deductions that reduce basis. File 1040nr online free Any deduction for section 179 property. File 1040nr online free Any deduction for removal of barriers to the disabled and the elderly. File 1040nr online free Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. File 1040nr online free Any special depreciation allowance. File 1040nr online free Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. File 1040nr online free For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property , earlier. File 1040nr online free Also, see chapter 6. File 1040nr online free For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. File 1040nr online free Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. File 1040nr online free It is determined based on the depreciation system (GDS or ADS) used. File 1040nr online free See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. File 1040nr online free For a complete list of recovery periods, see the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. File 1040nr online free House trailers for farm laborers. File 1040nr online free   To depreciate a house trailer you supply as housing for those who work on your farm, use one of the following recovery periods if the house trailer is mobile (it has wheels and a history of movement). File 1040nr online free A 7-year recovery period under GDS. File 1040nr online free A 10-year recovery period under ADS. File 1040nr online free   However, if the house trailer is not mobile (its wheels have been removed and permanent utilities and pipes attached to it), use one of the following recovery periods. File 1040nr online free A 20-year recovery period under GDS. File 1040nr online free A 25-year recovery period under ADS. File 1040nr online free Water wells. File 1040nr online free   Water wells used to provide water for raising poultry and livestock are land improvements. File 1040nr online free If they are depreciable, use one of the following recovery periods. File 1040nr online free A 15-year recovery period under GDS. File 1040nr online free A 20-year recovery period under ADS. File 1040nr online free   The types of water wells that can be depreciated were discussed earlier in Irrigation systems and water wells under Property Having a Determinable Useful Life . File 1040nr online free Table 7-1. File 1040nr online free Farm Property Recovery Periods   Recovery Period in Years Assets GDS ADS Agricultural structures (single purpose) 10 15 Automobiles 5 5 Calculators and copiers 5 6 Cattle (dairy or breeding) 5 7 Communication equipment1 7 10 Computer and peripheral equipment 5 5 Drainage facilities 15 20 Farm buildings2 20 25 Farm machinery and equipment 7 10 Fences (agricultural) 7 10 Goats and sheep (breeding) 5 5 Grain bin 7 10 Hogs (breeding) 3 3 Horses (age when placed in service)     Breeding and working (12 years or less) 7 10 Breeding and working (more than 12 years) 3 10 Racing horses 3 12 Horticultural structures (single purpose) 10 15 Logging machinery and equipment3 5 6 Nonresidential real property 394 40 Office furniture, fixtures, and equipment (not calculators, copiers, or typewriters) 7 10 Paved lots 15 20 Residential rental property 27. File 1040nr online free 5 40 Tractor units (over-the-road) 3 4 Trees or vines bearing fruit or nuts 10 20 Truck (heavy duty, unloaded weight 13,000 lbs. File 1040nr online free or more) 5 6 Truck (actual weight less than 13,000 lbs) 5 5 Water wells 15 20 1 Not including communication equipment listed in other classes. File 1040nr online free 2 Not including single purpose agricultural or horticultural structures. File 1040nr online free 3 Used by logging and sawmill operators for cutting of timber. File 1040nr online free 4 For property placed in service after May 12, 1993; for property placed in service before May 13, 1993,  the recovery period is 31. File 1040nr online free 5 years. File 1040nr online free Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. File 1040nr online free The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. File 1040nr online free Use one of the following conventions. File 1040nr online free The half-year convention. File 1040nr online free The mid-month convention. File 1040nr online free The mid-quarter convention. File 1040nr online free For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. File 1040nr online free Also, see the Instructions for Form 4562. File 1040nr online free Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. File 1040nr online free The 200% declining balance method over a GDS recovery period. File 1040nr online free The 150% declining balance method over a GDS recovery period. File 1040nr online free The straight line method over a GDS recovery period. File 1040nr online free The straight line method over an ADS recovery period. File 1040nr online free Depreciation Table. File 1040nr online free   The following table lists the types of property you can depreciate under each method. File 1040nr online free The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. File 1040nr online free Depreciation Table System/Method   Type of Property GDS using  150% DB • All property used in a farming business (except real property)   • All 15- and 20-year property   • Nonfarm 3-, 5-, 7-, and 10-year property1 GDS using SL • Nonresidential real property   • Residential rental property   • Trees or vines bearing fruit or nuts   • All 3-, 5-, 7-, 10-, 15-, and 20-year property1 ADS using SL • Property used predomi- nantly outside the United States   • Farm property used when an election not to apply the uniform capitalization rules is in effect   • Tax-exempt property   • Tax-exempt bond-financed property   • Imported property2   • Any property for which you elect to use this method1 GDS using  200% DB • Nonfarm 3-, 5-, 7-, and 10-year property 1Elective method 2See section 168(g)(6) of the Internal Revenue  Code Property used in farming business. File 1040nr online free   For personal property placed in service after 1988 in a farming business, you must use the 150% declining balance method over a GDS recovery period or you can elect one of the following methods. File 1040nr online free The straight line method over a GDS recovery period. File 1040nr online free The straight line method over an ADS recovery period. File 1040nr online free For property placed in service before 1999, you could have elected to use the 150% declining balance method using the ADS recovery periods for certain property classes. File 1040nr online free If you made this election, continue to use the same method and recovery period for that property. File 1040nr online free Real property. File 1040nr online free   You can depreciate real property using the straight line method under either GDS or ADS. File 1040nr online free Switching to straight line. File 1040nr online free   If you use a declining balance method, you switch to the straight line method in the year it provides an equal or greater deduction. File 1040nr online free If you use the MACRS percentage tables, discussed later under How Is the Depreciation Deduction Figured , you do not need to determine in which year your deduction is greater using the straight line method. File 1040nr online free The tables have the switch to the straight line method built into their rates. File 1040nr online free Fruit or nut trees and vines. File 1040nr online free   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. File 1040nr online free ADS required for some farmers. File 1040nr online free   If you elect not to apply the uniform capitalization rules to any plant shown in Table 6-1 of chapter 6 and produced in your farming business, you must use ADS for all property you place in service in any year the election is in effect. File 1040nr online free See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. File 1040nr online free Electing a different method. File 1040nr online free   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. File 1040nr online free You must make the election by the due date of the return (including extensions) for the year you placed the property in service. File 1040nr online free However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). File 1040nr online free Attach the election to the amended return and write “Filed pursuant to section 301. File 1040nr online free 9100-2” on the election statement. File 1040nr online free File the amended return at the same address you filed the original return. File 1040nr online free Once you make the election, you cannot change it. File 1040nr online free    If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. File 1040nr online free However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. File 1040nr online free Straight line election. File 1040nr online free   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. File 1040nr online free Make the election by entering “S/L” under column (f) in Part III of Form 4562. File 1040nr online free ADS election. File 1040nr online free   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. File 1040nr online free ADS uses the straight line method of depreciation over the ADS recovery periods, which are generally longer than the GDS recovery periods. File 1040nr online free The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. File 1040nr online free Additional ADS recovery periods for other classes of property may be found in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. File 1040nr online free How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed-in-service date, basis amount, recovery period, convention, and depreciation method that applies to your property. File 1040nr online free Then you are ready to figure your depreciation deduction. File 1040nr online free You can figure it in one of two ways. File 1040nr online free You can use the percentage tables provided by the IRS. File 1040nr online free You can figure your own deduction without using the tables. File 1040nr online free Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. File 1040nr online free Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. File 1040nr online free These percentage tables are in Appendix A of Publication 946. File 1040nr online free Rules for using the tables. File 1040nr online free   The following rules cover the use of the percentage tables. File 1040nr online free You must apply the rates in the percentage tables to your property's unadjusted basis. File 1040nr online free Unadjusted basis is the same basis amount you would use to figure gain on a sale but figured without reducing your original basis by any MACRS depreciation taken in earlier years. File 1040nr online free You cannot use the percentage tables for a short tax year. File 1040nr online free See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. File 1040nr online free You generally must continue to use them for the entire recovery period of the property. File 1040nr online free You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to the property, which is depreciated as a separate property. File 1040nr online free Basis adjustment due to casualty loss. File 1040nr online free   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. File 1040nr online free For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. File 1040nr online free See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. File 1040nr online free Figuring depreciation using the 150% DB method and half-year convention. File 1040nr online free    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. File 1040nr online free The percentages are based on the 150% declining balance method with a change to the straight line method. File 1040nr online free This table covers only the half-year convention and the first 8 years for 20-year property. File 1040nr online free See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. File 1040nr online free   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . File 1040nr online free Example 1. File 1040nr online free During the year, you bought an item of 7-year property for $10,000 and placed it in service. File 1040nr online free You do not elect a section 179 expense deduction for this property. File 1040nr online free In addition, the property is not qualified property for purposes of the special depreciation allowance. File 1040nr online free The unadjusted basis of the property is $10,000. File 1040nr online free You use the percentages in Table 7-2 to figure your deduction. File 1040nr online free Since this is 7-year property, you multiply $10,000 by 10. File 1040nr online free 71% to get this year's depreciation of $1,071. File 1040nr online free For next year, your depreciation will be $1,913 ($10,000 × 19. File 1040nr online free 13%). File 1040nr online free Example 2. File 1040nr online free You had a barn constructed on your farm at a cost of $20,000. File 1040nr online free You placed the barn in service this year. File 1040nr online free You elect not to claim the special depreciation allowance. File 1040nr online free The barn is 20-year property and you use the table percentages to figure your deduction. File 1040nr online free You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. File 1040nr online free 75% to get $750. File 1040nr online free For next year, your depreciation will be $1,443. File 1040nr online free 80 ($20,000 × 7. File 1040nr online free 219%). File 1040nr online free Table 7-2. File 1040nr online free 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. File 1040nr online free 0 % 15. File 1040nr online free 00 % 10. File 1040nr online free 71 % 3. File 1040nr online free 750 % 2 37. File 1040nr online free 5   25. File 1040nr online free 50   19. File 1040nr online free 13   7. File 1040nr online free 219   3 25. File 1040nr online free 0   17. File 1040nr online free 85   15. File 1040nr online free 03   6. File 1040nr online free 677   4 12. File 1040nr online free 5   16. File 1040nr online free 66   12. File 1040nr online free 25   6. File 1040nr online free 177   5     16. File 1040nr online free 66   12. File 1040nr online free 25   5. File 1040nr online free 713   6     8. File 1040nr online free 33   12. File 1040nr online free 25   5. File 1040nr online free 285   7         12. File 1040nr online free 25   4. File 1040nr online free 888   8         6. File 1040nr online free 13   4. File 1040nr online free 522   Figuring depreciation using the straight line method and half-year convention. File 1040nr online free   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. File 1040nr online free The table covers only the first 8 years for 20-year property. File 1040nr online free See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. File 1040nr online free Table 7-3. File 1040nr online free Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. File 1040nr online free 67 % 10 % 7. File 1040nr online free 14 % 2. File 1040nr online free 5 % 2 33. File 1040nr online free 33   20   14. File 1040nr online free 29   5. File 1040nr online free 0   3 33. File 1040nr online free 33   20   14. File 1040nr online free 29   5. File 1040nr online free 0   4 16. File 1040nr online free 67   20   14. File 1040nr online free 28   5. File 1040nr online free 0   5     20   14. File 1040nr online free 29   5. File 1040nr online free 0   6     10   14. File 1040nr online free 28   5. File 1040nr online free 0   7         14. File 1040nr online free 29   5. File 1040nr online free 0   8         7. File 1040nr online free 14   5. File 1040nr online free 0