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File taxes income 5. File taxes income   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. File taxes income Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. File taxes income Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. File taxes income Deduction for employees. File taxes income If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. File taxes income Business-use requirement. File taxes income If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. File taxes income In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. File taxes income You may also have to recapture (include in income) any excess depreciation claimed in previous years. File taxes income A similar inclusion amount applies to certain leased property. File taxes income Passenger automobile limits and rules. File taxes income Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. File taxes income You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. File taxes income This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. File taxes income It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. File taxes income Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. File taxes income What Is Listed Property? Listed property is any of the following. File taxes income Passenger automobiles (as defined later). File taxes income Any other property used for transportation, unless it is an excepted vehicle. File taxes income Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). File taxes income Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. File taxes income A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. File taxes income Improvements to listed property. File taxes income   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. File taxes income The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. File taxes income For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. File taxes income Passenger Automobiles A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans). File taxes income It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. File taxes income The following vehicles are not considered passenger automobiles for these purposes. File taxes income An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. File taxes income A vehicle used directly in the trade or business of transporting persons or property for pay or hire. File taxes income A truck or van that is a qualified nonpersonal use vehicle. File taxes income Qualified nonpersonal use vehicles. File taxes income   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. File taxes income They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. File taxes income They also include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. File taxes income For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. File taxes income Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. File taxes income Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. File taxes income Excepted vehicles. File taxes income   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). File taxes income Clearly marked police and fire vehicles. File taxes income Unmarked vehicles used by law enforcement officers if the use is officially authorized. File taxes income Ambulances used as such and hearses used as such. File taxes income Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. File taxes income Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. File taxes income Combines, cranes and derricks, and forklifts. File taxes income Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. File taxes income Qualified moving vans. File taxes income Qualified specialized utility repair trucks. File taxes income School buses used in transporting students and employees of schools. File taxes income Other buses with a capacity of at least 20 passengers that are used as passenger buses. File taxes income Tractors and other special purpose farm vehicles. File taxes income Clearly marked police and fire vehicle. File taxes income   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. File taxes income It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. File taxes income It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. File taxes income It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. File taxes income It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. File taxes income A marking on a license plate is not a clear marking for these purposes. File taxes income Qualified moving van. File taxes income   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. File taxes income No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. File taxes income Personal use for travel to and from a move site happens no more than five times a month on average. File taxes income Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. File taxes income Qualified specialized utility repair truck. File taxes income   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. File taxes income The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. File taxes income Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. File taxes income The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. File taxes income Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. File taxes income It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. File taxes income Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. File taxes income The following are neither computers nor related peripheral equipment. File taxes income Any equipment that is an integral part of other property that is not a computer. File taxes income Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. File taxes income Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. File taxes income Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. File taxes income The use of your property in performing services as an employee is a business use only if both the following requirements are met. File taxes income The use is for your employer's convenience. File taxes income The use is required as a condition of your employment. File taxes income If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. File taxes income Employer's convenience. File taxes income   Whether the use of listed property is for your employer's convenience must be determined from all the facts. File taxes income The use is for your employer's convenience if it is for a substantial business reason of the employer. File taxes income The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. File taxes income Condition of employment. File taxes income   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. File taxes income The use of property must be required for you to perform your duties properly. File taxes income Your employer does not have to require explicitly that you use the property. File taxes income However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. File taxes income Example 1. File taxes income Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. File taxes income She owns and uses a motorcycle to deliver packages to downtown offices. File taxes income We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. File taxes income Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. File taxes income Example 2. File taxes income Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. File taxes income He must travel to these sites on a regular basis. File taxes income Uplift does not furnish an automobile or explicitly require him to use his own automobile. File taxes income However, it pays him for any costs he incurs in traveling to the various sites. File taxes income The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. File taxes income Example 3. File taxes income Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. File taxes income The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. File taxes income Example 4. File taxes income Marilyn Lee is a pilot for Y Company, a small charter airline. File taxes income Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. File taxes income Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. File taxes income Marilyn owns her own airplane. File taxes income The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. File taxes income Example 5. File taxes income David Rule is employed as an engineer with Zip, an engineering contracting firm. File taxes income He occasionally takes work home at night rather than work late in the office. File taxes income He owns and uses a home computer which is virtually identical to the office model. File taxes income His use of the computer is neither for the convenience of his employer nor required as a condition of employment. File taxes income What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. File taxes income To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. File taxes income If this requirement is not met, the following rules apply. File taxes income Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. File taxes income Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. File taxes income Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. File taxes income This rule applies each year of the recovery period. File taxes income Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. File taxes income A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. File taxes income Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. File taxes income It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. File taxes income Exception for leased property. File taxes income   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. File taxes income   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. File taxes income This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. File taxes income Occasional or incidental leasing activity is insufficient. File taxes income For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. File taxes income An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. File taxes income How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. File taxes income For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. File taxes income You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. File taxes income For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). File taxes income For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. File taxes income Entertainment use. File taxes income   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. File taxes income Commuting use. File taxes income   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. File taxes income For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. File taxes income This is also true for a business meeting held in a car while commuting to work. File taxes income Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. File taxes income The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. File taxes income Use of your automobile by another person. File taxes income   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. File taxes income That use is directly connected with your business. File taxes income You properly report the value of the use as income to the other person and withhold tax on the income where required. File taxes income You are paid a fair market rent. File taxes income Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). File taxes income Employee deductions. File taxes income   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. File taxes income See Can Employees Claim a Deduction , earlier. File taxes income Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. File taxes income However, it does not include the following uses. File taxes income The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). File taxes income The use of property as pay for the services of a 5% owner or related person. File taxes income The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. File taxes income Property does not stop being used predominantly for qualified business use because of a transfer at death. File taxes income Exception for leasing or compensatory use of aircraft. File taxes income   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. File taxes income 5% owner. File taxes income   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. File taxes income   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. File taxes income More than 5% of the outstanding stock of the corporation. File taxes income Stock possessing more than 5% of the total combined voting power of all stock in the corporation. File taxes income Related persons. File taxes income   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . File taxes income For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. File taxes income Examples. File taxes income   The following examples illustrate whether the use of business property is qualified business use. File taxes income Example 1. File taxes income John Maple is the sole proprietor of a plumbing contracting business. File taxes income John employs his brother, Richard, in the business. File taxes income As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. File taxes income The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. File taxes income The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. File taxes income Example 2. File taxes income John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. File taxes income He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. File taxes income This use of company automobiles by employees is not a qualified business use. File taxes income Example 3. File taxes income James Company Inc. File taxes income owns several automobiles that its employees use for business purposes. File taxes income The employees also are allowed to take the automobiles home at night. File taxes income The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. File taxes income This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. File taxes income Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. File taxes income However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. File taxes income Example 1. File taxes income Sarah Bradley uses a home computer 50% of the time to manage her investments. File taxes income She also uses the computer 40% of the time in her part-time consumer research business. File taxes income Sarah's home computer is listed property because it is not used at a regular business establishment. File taxes income She does not use the computer predominantly for qualified business use. File taxes income Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. File taxes income She must depreciate it using the straight line method over the ADS recovery period. File taxes income Her combined business/investment use for determining her depreciation deduction is 90%. File taxes income Example 2. File taxes income If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. File taxes income She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. File taxes income Her combined business/investment use for determining her depreciation deduction is 90%. File taxes income Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. File taxes income You also increase the adjusted basis of your property by the same amount. File taxes income Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. File taxes income To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. File taxes income Example. File taxes income In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. File taxes income She used it only for qualified business use for 2009 through 2012. File taxes income Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. File taxes income She began depreciating it using the 200% DB method over a 5-year GDS recovery period. File taxes income The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. File taxes income During 2013, she used the truck 50% for business and 50% for personal purposes. File taxes income She includes $4,018 excess depreciation in her gross income for 2013. File taxes income The excess depreciation is determined as follows. File taxes income Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. File taxes income (Depreciation is from Table A-1. File taxes income ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. File taxes income The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. File taxes income Where to figure and report recapture. File taxes income   Use Form 4797, Part IV, to figure the recapture amount. File taxes income Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. File taxes income For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. File taxes income If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. File taxes income Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. File taxes income Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). File taxes income For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. File taxes income The inclusion amount is the sum of Amount A and Amount B, described next. File taxes income However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. File taxes income Amount A. File taxes income   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . File taxes income   The fair market value of the property is the value on the first day of the lease term. File taxes income If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. File taxes income Amount B. File taxes income   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . File taxes income Maximum inclusion amount. File taxes income   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. File taxes income Inclusion amount worksheet. File taxes income   The following worksheet is provided to help you figure the inclusion amount for leased listed property. File taxes income Inclusion Amount Worksheet for Leased Listed Property 1. File taxes income Fair market value   2. File taxes income Business/investment use for first year business use is 50% or less   3. File taxes income Multiply line 1 by line 2. File taxes income   4. File taxes income Rate (%) from Table A-19   5. File taxes income Multiply line 3 by line 4. File taxes income This is Amount A. File taxes income   6. File taxes income Fair market value   7. File taxes income Average business/investment use for years property leased before the first year business use is 50% or less . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income . File taxes income   8. File taxes income Multiply line 6 by line 7   9. File taxes income Rate (%) from Table A-20   10. File taxes income Multiply line 8 by line 9. File taxes income This is Amount B. File taxes income   11. File taxes income Add line 5 and line 10. File taxes income This is your inclusion amount. File taxes income Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File taxes income )         Example. File taxes income On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. File taxes income The lease is for a period of 5 years. File taxes income Larry does not use the computer at a regular business establishment, so it is listed property. File taxes income His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. File taxes income He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. File taxes income The computer has a 5-year recovery period under both GDS and ADS. File taxes income 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. File taxes income 8%. File taxes income The applicable percentage from Table A-20 is 22. File taxes income 0%. File taxes income Larry's deductible rent for the computer for 2013 is $800. File taxes income Larry uses the Inclusion amount worksheet. File taxes income to figure the amount he must include in income for 2013. File taxes income His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). File taxes income Inclusion Amount Worksheet for Leased Listed Property 1. File taxes income Fair market value $3,000   2. File taxes income Business/investment use for first year business use is 50% or less 40 % 3. File taxes income Multiply line 1 by line 2. File taxes income 1,200   4. File taxes income Rate (%) from Table A-19 −19. File taxes income 8 % 5. File taxes income Multiply line 3 by line 4. File taxes income This is Amount A. File taxes income −238   6. File taxes income Fair market value 3,000   7. File taxes income Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. File taxes income Multiply line 6 by line 7 2,100   9. File taxes income Rate (%) from Table A-20 22. File taxes income 0 % 10. File taxes income Multiply line 8 by line 9. File taxes income This is Amount B. File taxes income 462   11. File taxes income Add line 5 and line 10. File taxes income This is your inclusion amount. File taxes income Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File taxes income ) $224           Lease beginning in the last 9 months of your tax year. File taxes income    The inclusion amount is subject to a special rule if all the following apply. File taxes income The lease term begins within 9 months before the close of your tax year. File taxes income You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. File taxes income The lease term continues into your next tax year. File taxes income Under this special rule, add the inclusion amount to income in the next tax year. File taxes income Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. File taxes income Skip lines 6 through 9 of the worksheet and enter zero on line 10. File taxes income Example 1. File taxes income On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. File taxes income The property is 5-year property with a fair market value of $10,000. File taxes income Her property has a recovery period of 5 years under ADS. File taxes income The lease is for 5 years. File taxes income Her business use of the property was 50% in 2012 and 90% in 2013. File taxes income She paid rent of $3,600 for 2012, of which $3,240 is deductible. File taxes income She must include $147 in income in 2013. File taxes income The $147 is the sum of Amount A and Amount B. File taxes income Amount A is $147 ($10,000 × 70% × 2. File taxes income 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . File taxes income Amount B is zero. File taxes income Lease for less than one year. File taxes income   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. File taxes income The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. File taxes income The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). File taxes income   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. File taxes income If you have two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property, treat them as one lease. File taxes income Example 2. File taxes income On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. File taxes income This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. File taxes income The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. File taxes income He must include $71 in income in 2013. File taxes income The $71 is the sum of Amount A and Amount B. File taxes income Amount A is $71 ($15,000 × 45% × 2. File taxes income 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. File taxes income Amount B is zero. File taxes income Where to report inclusion amount. File taxes income   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. File taxes income For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. File taxes income If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. File taxes income Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. File taxes income This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. File taxes income Exception for leased cars. File taxes income   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. File taxes income For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . File taxes income Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. File taxes income They are based on the date you placed the automobile in service. File taxes income Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. File taxes income Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 10,9603  4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File taxes income 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. File taxes income 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. File taxes income 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. File taxes income 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. File taxes income If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File taxes income 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File taxes income If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. File taxes income If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. File taxes income The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. File taxes income Example. File taxes income On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. File taxes income She used the car only in her business. File taxes income She files her tax return based on the calendar year. File taxes income She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File taxes income Under MACRS, a car is 5-year property. File taxes income Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. File taxes income Virginia multiplies the $14,500 unadjusted basis of her car by 0. File taxes income 20 to get her MACRS depreciation of $2,900 for 2013. File taxes income This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. File taxes income She can deduct the full $2,900. File taxes income Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. File taxes income The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. File taxes income Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. File taxes income Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. File taxes income 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. File taxes income If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File taxes income 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File taxes income Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. File taxes income The maximum deduction amounts for trucks and vans are shown in the following table. File taxes income Maximum Depreciation Deduction For Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 11,3601 5,300 3,150 1,875 2011 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. File taxes income 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. File taxes income 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File taxes income 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. File taxes income 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. File taxes income 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. File taxes income 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. File taxes income If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File taxes income 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File taxes income Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. File taxes income Then use the information from this worksheet to prepare Form 4562. File taxes income Depreciation Worksheet for Passenger Automobiles   Part I   1. File taxes income MACRS system (GDS or ADS)     2. File taxes income Property class     3. File taxes income Date placed in service     4. File taxes income Recovery period     5. File taxes income Method and convention     6. File taxes income Depreciation rate (from tables)     7. File taxes income Maximum depreciation deduction for this year from the appropriate table       8. File taxes income Business/investment-use percentage       9. File taxes income Multiply line 7 by line 8. File taxes income This is your adjusted maximum depreciation deduction       10. File taxes income Section 179 deduction claimed this year (not more than line 9). File taxes income Enter -0- if this is not the year you placed the car in service. File taxes income         Note. File taxes income  1) If line 10 is equal to line 9, stop here. File taxes income Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. File taxes income  2) If line 10 is less than line 9, complete Part II. File taxes income   Part II   11. File taxes income Subtract line 10 from line 9. File taxes income This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. File taxes income Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. File taxes income Multiply line 12 by line 8. File taxes income This is your business/investment cost       14. File taxes income Section 179 deduction claimed in the year you placed the car in service       15. File taxes income Subtract line 14 from line 13. File taxes income This is your tentative basis for depreciation       16. File taxes income Multiply line 15 by . File taxes income 50 if the 50% special depreciation allowance applies. File taxes income This is your special depreciation allowance. File taxes income Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. File taxes income Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. File taxes income  2) If line 16 is less than line 11, complete Part III. File taxes income   Part III   17. File taxes income Subtract line 16 from 11. File taxes income This is the limit on the amount you can deduct for MACRS depreciation       18. File taxes income Subtract line 16 from line 15. File taxes income This is your basis for depreciation. File taxes income       19. File taxes income Multiply line 18 by line 6. File taxes income This is your tentative MACRS depreciation deduction. File taxes income       20. File taxes income Enter the lesser of line 17 or line 19. File taxes income This is your MACRS depreciation deduction. File taxes income     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. File taxes income 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. File taxes income             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. File taxes income If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. File taxes income You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. File taxes income The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. File taxes income See Maximum Depreciation Deduction , earlier. File taxes income Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. File taxes income You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. File taxes income There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. File taxes income Example. File taxes income In May 2007, you bought and placed in service a car costing $31,500. File taxes income The car was 5-year property under GDS (MACRS). File taxes income You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File taxes income You used the car exclusively for business during the recovery period (2007 through 2012). File taxes income You figured your depreciation as shown below. File taxes income Year Percentage Amount Limit   Allowed 2007 20. File taxes income 0% $6,300 $2,960   $2,960 2008 32. File taxes income 0 10,080 4,800   4,800 2009 19. File taxes income 2 6,048 2,850   2,850 2010 11. File taxes income 52 3,629 1,675   1,675 2011 11. File taxes income 52 3,629 1,675   1,675 2012 5. File taxes income 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). File taxes income If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. File taxes income If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. File taxes income However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. File taxes income For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. File taxes income Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. File taxes income Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. File taxes income This excess basis is the additional cash paid for the new automobile in the trade-in. File taxes income The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. File taxes income Special rules apply in determining the passenger automobile limits. File taxes income These rules and examples are discussed in section 1. File taxes income 168(i)-6(d)(3) of the regulations. File taxes income Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. File taxes income For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. File taxes income 168(i)-6(i) and 1. File taxes income 168(i)-6(j) of the regulations. File taxes income What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. File taxes income For listed property, you must keep records for as long as any recapture can still occur. File taxes income Recapture can occur in any tax year of the recovery period. File taxes income Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. File taxes income You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. File taxes income However, your records should back up your receipts in an orderly manner. File taxes income Elements of expenditure or use. File taxes income   Your records or other documentary evidence must support all the following. File taxes income The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses. File taxes income The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year. File taxes income The date of the expenditure or use. File taxes income The business or investment purpose for the expenditure or use. File taxes income   Written documents of your expenditure or use are generally better evidence than oral statements alone. File taxes income You do not have to keep a daily log. File taxes income However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. File taxes income Timeliness. File taxes income   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. File taxes income An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. File taxes income   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. File taxes income Business purpose supported. File taxes income   Generally, an adequate record of business purpose must be in the form of a written statement. File taxes income However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. File taxes income A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. File taxes income For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. File taxes income Business use supported. File taxes income   An adequate record contains enough information on each element of every business or investment use. File taxes income The amount of detail required to support the use depends on the facts and circumstances. File taxes income For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. File taxes income   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. File taxes income Separate or combined expenditures or uses. File taxes income   Each use by you normally is considered a separate use. File taxes income However, you can combine repeated uses as a single item. File taxes income   Record each expenditure as a separate item. File taxes income Do not combine it with other expenditures. File taxes income If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. File taxes income If you combine these expenses, you do not need to support the business purpose of each expense. File taxes income Instead, you can divide the expenses based on the total business use of the listed property. File taxes income   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. File taxes income For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. File taxes income You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. File taxes income Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. File taxes income Confidential information. File taxes income   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. File taxes income You must keep it elsewhere and make it available as support to the IRS director for your area on request. File taxes income Substantial compliance. File taxes income   If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. File taxes income   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. File taxes income By your own oral or written statement containing detailed information as to the element. File taxes income By other evidence sufficient to establish the element. File taxes income   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. File taxes income If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. File taxes income Sampling. File taxes income   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. File taxes income Example 1. File taxes income Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. File taxes income She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. File taxes income There is no other business use of the automobile, but she and family members also use it for personal purposes. File taxes income She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. File taxes income Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. File taxes income If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File taxes income Example 2. File taxes income Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. File taxes income Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. File taxes income The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File taxes income Example 3. File taxes income Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. File taxes income For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. File taxes income During these weeks, his business use of the automobile does not follow a consistent pattern. File taxes income During the fourth week of each month, he delivers all business orders taken during the previous month. File taxes income The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. File taxes income The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. File taxes income Loss of records. File taxes income   When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. File taxes income How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. File taxes income Any deduction for a vehicle. File taxes income A depreciation deduction for any other listed property. File taxes income If you claim any deduction for a vehicle, you also must provide the information requested in Section B. File taxes income If you provide the vehicle for your employee's use, the employee must give you this information. File taxes income If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. File taxes income Vehicles used by your employees. File taxes income   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. File taxes income You maintain a written policy statement that prohibits one of the following uses of the vehicles. File taxes income All personal use including commuting. File taxes income Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. File taxes income You treat all use of the vehicles by your employees as personal use. File taxes income You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. File taxes income For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. File taxes income Exceptions. File taxes income   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. File taxes income Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. File taxes income Prev  Up  Next   Home   More Online Publications

Topic 203 - Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts

The Department of Treasury's Bureau of Fiscal Service (BFS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program (TOP). Through this program, your refund or overpayment may be reduced by BFS and offset to pay:

  • Past-due child support;
  • Federal agency non-tax debts;
  • State income tax obligations; or
  • Certain unemployment compensation debts owed to a state. (Generally, these are debts for (1) compensation that was paid due to fraud, or (2) for contributions owing to a state fund that were not paid due to fraud).

You can contact the agency with which you have a debt to determine if your debt was submitted for a tax refund offset. You may call BFS' TOP call center at the number below for an agency address and phone number. If your debt was submitted for offset, BFS will take as much of your refund as is needed to pay off the debt and send it to the agency you owe. Any portion of your refund remaining after offset will be issued in a check to you or direct deposited for you.

BFS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund. Contact the agency shown on the notice if you believe you do not owe the debt, or if you are disputing the amount taken from your refund. If a notice is not received, contact BFS' TOP call center at 800-304-3107 or TDD 866-297-0517. The available hours are Monday through Friday 7:30 a.m. to 5 p.m. CST. Contact the IRS only if your original refund amount shown on the BFS offset notice differs from the refund amount shown on your tax return.

If you filed a joint return and you are not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379 (PDF), Injured Spouse Allocation. You may file Form 8379 with your original joint tax return ( Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF)), with your amended joint tax return ( Form 1040X (PDF)), or by itself after you are notified of an offset. If you file a Form 8379 with your joint return, write "INJURED SPOUSE" in the top left corner of the first page of the joint return. The IRS will process your Form 8379 before an offset occurs. If you file Form 8379 with your original or amended joint tax return, it may take 11 weeks for electronically filed returns or 14 weeks if you file a paper return, to process your return.

If you file Form 8379 by itself, it must show both spouses' social security numbers in the same order as they appeared on your joint income tax return. You, the "injured" spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. Do not attach the previously filed joint tax return to the Form 8379. Send Form 8379 to the Service Center where you filed your original return and allow at least 8 weeks for the IRS to process your Form 8379. The IRS will compute the injured spouse's share of the joint return, and if you lived in a community property state during the tax year, the IRS will divide the joint refund based upon state law. Not all debts are subject to a tax refund offset. To determine if a debt is owed (other than federal tax), and whether an offset will occur, contact BFS' TOP call center at 800-304-3107 (for TTY/TDD help, call 866-297-0517).

Page Last Reviewed or Updated: February 24, 2014

The File Taxes Income

File taxes income Publication 534 - Introductory Material Table of Contents Important Change for 1995 Introduction How To Use This Publication Important Change for 1995 Major changes to Publications 534 and 946. File taxes income  This publication, as well as Publication 946,How To Depreciate Property, has been changed. File taxes income Publication 534 has been shortened. File taxes income It no longer contains general information on MACRS and the section 179 deduction. File taxes income It contains a discussion of the accelerated cost recovery system (ACRS), the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property. File taxes income We expanded Publication 946 by adding material taken from Publication 534. File taxes income We added more detail to the discussions of the section 179 deduction, the modified accelerated cost recovery system (MACRS), and listed property. File taxes income We replaced the partialMACRS Percentage Tables with the complete ones from Publication 534. File taxes income We also added the Table of Class Lives and Recovery Periods from Publication 534. File taxes income We made these changes to eliminate most of the duplication that existed in the two publications. File taxes income This will save money and make it easier for you to decide which publication you need. File taxes income Use this publication to figure depreciation on property you placed in service before 1987; use Publication 946 to figure depreciation on property you placed in service after 1986. File taxes income Introduction The law allows you to recover your cost in business or income-producing property through yearly tax deductions. File taxes income You do this by depreciating your property, that is, by deducting some of your cost on your tax return each year. File taxes income You can depreciate both tangible property, such as a car, building, or machinery, and certain intangible property, such as a copyright or a patent. File taxes income The amount you can deduct depends on: How much the property cost, When you began using it, How long it will take to recover your cost, and Which of several depreciation methods you use. File taxes income Depreciation defined. File taxes income   Depreciation is a loss in the value of property over the time the property is being used. File taxes income Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. File taxes income You can get back your cost of certain property, such as equipment you use in your business or property used for the production of income by taking deductions for depreciation. File taxes income Black's Law Dictionary Amortization. File taxes income   Amortization is similar to depreciation. File taxes income Using amortization, you can recover your cost or basis in certain property proportionately over a specific number of years or months. File taxes income Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution control facilities. File taxes income You can find information on amortization inchapter 12 of Publication 535, Business Expenses. File taxes income Alternative minimum tax. File taxes income   If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable for the alternative minimum tax. File taxes income Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight line method. File taxes income For more information, you may wish to see the following: Form 6251, Alternative Minimum Tax-Individuals, and Publication 542, Tax Information on Corporations. File taxes income Ordering publications and forms. File taxes income   To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). File taxes income You can also write to the IRS Forms Distribution Center nearest you. File taxes income Check your income tax package for the address. File taxes income   If you have access to a personal computer and a modem, you can also get many forms and publications electronically. File taxes income See How To Get Forms and Publications in your income tax package for details. File taxes income Telephone help. File taxes income   You can call the IRS with your tax question Monday through Friday during regular business hours. File taxes income Check your telephone book for the local number or you can call1-800-829-1040. File taxes income Telephone help for hearing-impaired persons. File taxes income   If you have access to TDD equipment, you can call 1-800-829-4059 with your tax question or to order forms and publications. File taxes income See your tax package for the hours of operation. File taxes income How To Use This Publication This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property placed in service before 1987. File taxes income It is divided into three chapters and contains an appendix. File taxes income Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS). File taxes income Chapter 2 explains the rules for depreciating property first used before 1981. File taxes income Chapter 3 explains the rules for listed property. File taxes income Also this chapter defines listed property. File taxes income The appendix contains the ACRS Percentage Tables. File taxes income Prev  Up  Next   Home   More Online Publications