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Free File For State Income Tax

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Free File For State Income Tax

Free file for state income tax 5. Free file for state income tax   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free file for state income tax Free help with your tax return. Free file for state income tax   You can get free help preparing your return nationwide from IRS-certified volunteers. Free file for state income tax The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free file for state income tax The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free file for state income tax Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free file for state income tax In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free file for state income tax To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free file for state income tax gov, download the IRS2Go app, or call 1-800-906-9887. Free file for state income tax   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free file for state income tax To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free file for state income tax aarp. Free file for state income tax org/money/taxaide or call 1-888-227-7669. Free file for state income tax For more information on these programs, go to IRS. Free file for state income tax gov and enter “VITA” in the search box. Free file for state income tax Internet. Free file for state income tax    IRS. Free file for state income tax gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free file for state income tax Download the free IRS2Go app from the iTunes app store or from Google Play. Free file for state income tax Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free file for state income tax Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free file for state income tax gov or download the IRS2Go app and select the Refund Status option. Free file for state income tax The IRS issues more than 9 out of 10 refunds in less than 21 days. Free file for state income tax Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free file for state income tax You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free file for state income tax The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free file for state income tax Use the Interactive Tax Assistant (ITA) to research your tax questions. Free file for state income tax No need to wait on the phone or stand in line. Free file for state income tax The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free file for state income tax When you reach the response screen, you can print the entire interview and the final response for your records. Free file for state income tax New subject areas are added on a regular basis. Free file for state income tax  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free file for state income tax gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free file for state income tax You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free file for state income tax The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free file for state income tax When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free file for state income tax Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free file for state income tax You can also ask the IRS to mail a return or an account transcript to you. Free file for state income tax Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free file for state income tax gov or by calling 1-800-908-9946. Free file for state income tax Tax return and tax account transcripts are generally available for the current year and the past three years. Free file for state income tax Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free file for state income tax Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free file for state income tax If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free file for state income tax Check the status of your amended return using Where's My Amended Return? Go to IRS. Free file for state income tax gov and enter Where's My Amended Return? in the search box. Free file for state income tax You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free file for state income tax It can take up to 3 weeks from the date you mailed it to show up in our system. Free file for state income tax Make a payment using one of several safe and convenient electronic payment options available on IRS. Free file for state income tax gov. Free file for state income tax Select the Payment tab on the front page of IRS. Free file for state income tax gov for more information. Free file for state income tax Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free file for state income tax Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free file for state income tax gov. Free file for state income tax Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free file for state income tax Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free file for state income tax gov. Free file for state income tax Request an Electronic Filing PIN by going to IRS. Free file for state income tax gov and entering Electronic Filing PIN in the search box. Free file for state income tax Download forms, instructions and publications, including accessible versions for people with disabilities. Free file for state income tax Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free file for state income tax gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free file for state income tax An employee can answer questions about your tax account or help you set up a payment plan. Free file for state income tax Before you visit, check the Office Locator on IRS. Free file for state income tax gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free file for state income tax If you have a special need, such as a disability, you can request an appointment. Free file for state income tax Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free file for state income tax Apply for an Employer Identification Number (EIN). Free file for state income tax Go to IRS. Free file for state income tax gov and enter Apply for an EIN in the search box. Free file for state income tax Read the Internal Revenue Code, regulations, or other official guidance. Free file for state income tax Read Internal Revenue Bulletins. Free file for state income tax Sign up to receive local and national tax news and more by email. Free file for state income tax Just click on “subscriptions” above the search box on IRS. Free file for state income tax gov and choose from a variety of options. Free file for state income tax Phone. Free file for state income tax   You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free file for state income tax Download the free IRS2Go app from the iTunes app store or from Google Play. Free file for state income tax Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Free file for state income tax gov, or download the IRS2Go app. Free file for state income tax Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free file for state income tax The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free file for state income tax Most VITA and TCE sites offer free electronic filing. Free file for state income tax Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free file for state income tax Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free file for state income tax Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Free file for state income tax If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free file for state income tax The IRS issues more than 9 out of 10 refunds in less than 21 days. Free file for state income tax Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free file for state income tax Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Free file for state income tax The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free file for state income tax Note, the above information is for our automated hotline. Free file for state income tax Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Free file for state income tax Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free file for state income tax You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free file for state income tax It can take up to 3 weeks from the date you mailed it to show up in our system. Free file for state income tax Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Free file for state income tax You should receive your order within 10 business days. Free file for state income tax Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Free file for state income tax If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Free file for state income tax Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free file for state income tax The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free file for state income tax These individuals can also contact the IRS through relay services such as the Federal Relay Service. Free file for state income tax Walk-in. Free file for state income tax   You can find a selection of forms, publications and services — in-person. Free file for state income tax Products. Free file for state income tax You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free file for state income tax Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free file for state income tax Services. Free file for state income tax You can walk in to your local TAC for face-to-face tax help. Free file for state income tax An employee can answer questions about your tax account or help you set up a payment plan. Free file for state income tax Before visiting, use the Office Locator tool on IRS. Free file for state income tax gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Free file for state income tax Mail. Free file for state income tax   You can send your order for forms, instructions, and publications to the address below. Free file for state income tax You should receive a response within 10 business days after your request is received. Free file for state income tax Internal Revenue Service 1201 N. Free file for state income tax Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. Free file for state income tax The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free file for state income tax Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free file for state income tax   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Free file for state income tax We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free file for state income tax You face (or your business is facing) an immediate threat of adverse action. Free file for state income tax You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free file for state income tax   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free file for state income tax Here's why we can help: TAS is an independent organization within the IRS. Free file for state income tax Our advocates know how to work with the IRS. Free file for state income tax Our services are free and tailored to meet your needs. Free file for state income tax We have offices in every state, the District of Columbia, and Puerto Rico. Free file for state income tax   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Free file for state income tax   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free file for state income tax If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Free file for state income tax Prev  Up  Next   Home   More Online Publications
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The Free File For State Income Tax

Free file for state income tax 4. Free file for state income tax   Transportation Table of Contents Parking fees. Free file for state income tax Advertising display on car. Free file for state income tax Car pools. Free file for state income tax Hauling tools or instruments. Free file for state income tax Union members' trips from a union hall. Free file for state income tax Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. Free file for state income tax These expenses include the cost of transportation by air, rail, bus, taxi, etc. Free file for state income tax , and the cost of driving and maintaining your car. Free file for state income tax Transportation expenses include the ordinary and necessary costs of all of the following. Free file for state income tax Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Free file for state income tax Tax home is defined in chapter 1. Free file for state income tax Visiting clients or customers. Free file for state income tax Going to a business meeting away from your regular workplace. Free file for state income tax Getting from your home to a temporary workplace when you have one or more regular places of work. Free file for state income tax These temporary workplaces can be either within the area of your tax home or outside that area. Free file for state income tax Transportation expenses do not include expenses you have while traveling away from home overnight. Free file for state income tax Those expenses are travel expenses discussed in chapter 1 . Free file for state income tax However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. Free file for state income tax See Car Expenses , later. Free file for state income tax Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Free file for state income tax However, there may be exceptions to this general rule. Free file for state income tax You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Free file for state income tax Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. Free file for state income tax Illustration of transportation expenses. Free file for state income tax    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. Free file for state income tax You may want to refer to it when deciding whether you can deduct your transportation expenses. Free file for state income tax Temporary work location. Free file for state income tax   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Free file for state income tax   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Free file for state income tax   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Free file for state income tax   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Free file for state income tax It will not be treated as temporary after the date you determine it will last more than 1 year. Free file for state income tax   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Free file for state income tax You may have deductible travel expenses as discussed in chapter 1 . Free file for state income tax No regular place of work. Free file for state income tax   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Free file for state income tax   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Free file for state income tax   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Free file for state income tax These are nondeductible commuting expenses. Free file for state income tax Two places of work. Free file for state income tax   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Free file for state income tax However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Free file for state income tax   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Free file for state income tax You cannot deduct them. Free file for state income tax Armed Forces reservists. Free file for state income tax   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Free file for state income tax You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . Free file for state income tax   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Free file for state income tax In this case, your transportation generally is a nondeductible commuting expense. Free file for state income tax However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Free file for state income tax   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Free file for state income tax   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Free file for state income tax These expenses are discussed in chapter 1 . Free file for state income tax   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. Free file for state income tax For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. Free file for state income tax Commuting expenses. Free file for state income tax   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Free file for state income tax These costs are personal commuting expenses. Free file for state income tax You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Free file for state income tax You cannot deduct commuting expenses even if you work during the commuting trip. Free file for state income tax Example. Free file for state income tax You sometimes use your cell phone to make business calls while commuting to and from work. Free file for state income tax Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Free file for state income tax These activities do not change the trip from personal to business. Free file for state income tax You cannot deduct your commuting expenses. Free file for state income tax Parking fees. Free file for state income tax    Fees you pay to park your car at your place of business are nondeductible commuting expenses. Free file for state income tax You can, however, deduct business-related parking fees when visiting a customer or client. Free file for state income tax Advertising display on car. Free file for state income tax   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Free file for state income tax If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Free file for state income tax Car pools. Free file for state income tax   You cannot deduct the cost of using your car in a nonprofit car pool. Free file for state income tax Do not include payments you receive from the passengers in your income. Free file for state income tax These payments are considered reimbursements of your expenses. Free file for state income tax However, if you operate a car pool for a profit, you must include payments from passengers in your income. Free file for state income tax You can then deduct your car expenses (using the rules in this publication). Free file for state income tax Hauling tools or instruments. Free file for state income tax   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Free file for state income tax However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Free file for state income tax Union members' trips from a union hall. Free file for state income tax   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Free file for state income tax Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Free file for state income tax Office in the home. Free file for state income tax   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Free file for state income tax (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Free file for state income tax ) Examples of deductible transportation. Free file for state income tax   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Free file for state income tax Example 1. Free file for state income tax You regularly work in an office in the city where you live. Free file for state income tax Your employer sends you to a 1-week training session at a different office in the same city. Free file for state income tax You travel directly from your home to the training location and return each day. Free file for state income tax You can deduct the cost of your daily round-trip transportation between your home and the training location. Free file for state income tax Example 2. Free file for state income tax Your principal place of business is in your home. Free file for state income tax You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Free file for state income tax Example 3. Free file for state income tax You have no regular office, and you do not have an office in your home. Free file for state income tax In this case, the location of your first business contact inside the metropolitan area is considered your office. Free file for state income tax Transportation expenses between your home and this first contact are nondeductible commuting expenses. Free file for state income tax Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Free file for state income tax While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. Free file for state income tax Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. Free file for state income tax You generally can use one of the two following methods to figure your deductible expenses. Free file for state income tax Standard mileage rate. Free file for state income tax Actual car expenses. Free file for state income tax If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Free file for state income tax See Leasing a Car , later. Free file for state income tax In this publication, “car” includes a van, pickup, or panel truck. Free file for state income tax For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. Free file for state income tax Rural mail carriers. Free file for state income tax   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. Free file for state income tax Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. Free file for state income tax   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Free file for state income tax You must complete Form 2106 and attach it to your Form 1040, U. Free file for state income tax S. Free file for state income tax Individual Income Tax Return. Free file for state income tax   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Free file for state income tax It is given as an equipment maintenance allowance (EMA) to employees of the U. Free file for state income tax S. Free file for state income tax Postal Service. Free file for state income tax It is at the rate contained in the 1991 collective bargaining agreement. Free file for state income tax Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Free file for state income tax See your employer for information on your reimbursement. Free file for state income tax    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Free file for state income tax Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Free file for state income tax For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Free file for state income tax If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. Free file for state income tax You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. Free file for state income tax See Choosing the standard mileage rate and Standard mileage rate not allowed, later. Free file for state income tax You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Free file for state income tax See chapter 6 for more information on reimbursements . Free file for state income tax Choosing the standard mileage rate. Free file for state income tax   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Free file for state income tax Then, in later years, you can choose to use either the standard mileage rate or actual expenses. Free file for state income tax   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Free file for state income tax For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. Free file for state income tax   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Free file for state income tax You cannot revoke the choice. Free file for state income tax However, in later years, you can switch from the standard mileage rate to the actual expenses method. Free file for state income tax If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Free file for state income tax Example. Free file for state income tax Larry is an employee who occasionally uses his own car for business purposes. Free file for state income tax He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. Free file for state income tax Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. Free file for state income tax   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. Free file for state income tax Standard mileage rate not allowed. Free file for state income tax   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Free file for state income tax (See Rural mail carriers , earlier. Free file for state income tax ) Note. Free file for state income tax You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. Free file for state income tax Five or more cars. Free file for state income tax   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. Free file for state income tax However, you may be able to deduct your actual expenses for operating each of the cars in your business. Free file for state income tax See Actual Car Expenses , later, for information on how to figure your deduction. Free file for state income tax   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. Free file for state income tax   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. Free file for state income tax Example 1. Free file for state income tax Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. Free file for state income tax She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. Free file for state income tax Example 2. Free file for state income tax Tony and his employees use his four pickup trucks in his landscaping business. Free file for state income tax During the year, he traded in two of his old trucks for two newer ones. Free file for state income tax Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. Free file for state income tax Example 3. Free file for state income tax Chris owns a repair shop and an insurance business. Free file for state income tax He and his employees use his two pickup trucks and van for the repair shop. Free file for state income tax Chris alternates using his two cars for the insurance business. Free file for state income tax No one else uses the cars for business purposes. Free file for state income tax Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. Free file for state income tax Example 4. Free file for state income tax Maureen owns a car and four vans that are used in her housecleaning business. Free file for state income tax Her employees use the vans, and she uses the car to travel to various customers. Free file for state income tax Maureen cannot use the standard mileage rate for the car or the vans. Free file for state income tax This is because all five vehicles are used in Maureen's business at the same time. Free file for state income tax She must use actual expenses for all vehicles. Free file for state income tax Interest. Free file for state income tax   If you are an employee, you cannot deduct any interest paid on a car loan. Free file for state income tax This applies even if you use the car 100% for business as an employee. Free file for state income tax   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. Free file for state income tax For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). Free file for state income tax You cannot deduct the part of the interest expense that represents your personal use of the car. Free file for state income tax    If you use a home equity loan to purchase your car, you may be able to deduct the interest. Free file for state income tax See Publication 936, Home Mortgage Interest Deduction, for more information. Free file for state income tax Personal property taxes. Free file for state income tax   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. Free file for state income tax You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. Free file for state income tax   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Free file for state income tax If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). Free file for state income tax Parking fees and tolls. Free file for state income tax   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Free file for state income tax (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Free file for state income tax ) Sale, trade-in, or other disposition. Free file for state income tax   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. Free file for state income tax See Disposition of a Car , later. Free file for state income tax Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. Free file for state income tax If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. Free file for state income tax Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Free file for state income tax Continue to keep records, as explained later in chapter 5 . Free file for state income tax Business and personal use. Free file for state income tax   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. Free file for state income tax You can divide your expense based on the miles driven for each purpose. Free file for state income tax Example. Free file for state income tax You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. Free file for state income tax You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. Free file for state income tax Employer-provided vehicle. Free file for state income tax   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. Free file for state income tax You cannot use the standard mileage rate. Free file for state income tax See Vehicle Provided by Your Employer in chapter 6. Free file for state income tax Interest on car loans. Free file for state income tax   If you are an employee, you cannot deduct any interest paid on a car loan. Free file for state income tax This interest is treated as personal interest and is not deductible. Free file for state income tax If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. Free file for state income tax Taxes paid on your car. Free file for state income tax   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Free file for state income tax Enter the amount paid on line 7 of Schedule A (Form 1040). Free file for state income tax Sales taxes. Free file for state income tax   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. Free file for state income tax Fines and collateral. Free file for state income tax   You cannot deduct fines you pay or collateral you forfeit for traffic violations. Free file for state income tax Casualty and theft losses. Free file for state income tax   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. Free file for state income tax See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. Free file for state income tax Depreciation and section 179 deductions. Free file for state income tax   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Free file for state income tax Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. Free file for state income tax However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Free file for state income tax Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. Free file for state income tax The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. Free file for state income tax   Generally, there are limits on these deductions. Free file for state income tax Special rules apply if you use your car 50% or less in your work or business. Free file for state income tax   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. Free file for state income tax   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. Free file for state income tax Car defined. Free file for state income tax   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Free file for state income tax Its unloaded gross vehicle weight must not be more than 6,000 pounds. Free file for state income tax A car includes any part, component, or other item physically attached to it or usually included in the purchase price. Free file for state income tax   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. Free file for state income tax Qualified nonpersonal use vehicles. Free file for state income tax   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Free file for state income tax They 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. Free file for state income tax Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. Free file for state income tax More information. Free file for state income tax   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. Free file for state income tax Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. Free file for state income tax If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. Free file for state income tax There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. Free file for state income tax See Depreciation Limits, later. Free file for state income tax You can claim the section 179 deduction only in the year you place the car in service. Free file for state income tax For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. Free file for state income tax Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. Free file for state income tax A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. Free file for state income tax Example. Free file for state income tax In 2012, you bought a new car and used it for personal purposes. Free file for state income tax In 2013, you began to use it for business. Free file for state income tax Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. Free file for state income tax However, you can claim a depreciation deduction for the business use of the car starting in 2013. Free file for state income tax See Depreciation Deduction , later. Free file for state income tax More than 50% business use requirement. Free file for state income tax   You must use the property more than 50% for business to claim any section 179 deduction. Free file for state income tax If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Free file for state income tax The result is the cost of the property that can qualify for the section 179 deduction. Free file for state income tax Example. Free file for state income tax Peter purchased a car in April 2013 for $24,500 and used it 60% for business. Free file for state income tax Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). Free file for state income tax But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. Free file for state income tax Limits. Free file for state income tax   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. Free file for state income tax Limit on the amount of the section 179 deduction. Free file for state income tax   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. Free file for state income tax   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. Free file for state income tax If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Free file for state income tax   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. Free file for state income tax   If you are married and 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. Free file for state income tax   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. Free file for state income tax You must allocate the dollar limit (after any reduction) between you. Free file for state income tax   For more information on the above section 179 deduction limits, see Publication 946. Free file for state income tax Limit for sport utility and certain other vehicles. Free file for state income tax   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. Free file for state income tax This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. Free file for state income tax However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Free file for state income tax    Limit on total section 179, special depreciation allowance, and depreciation deduction. Free file for state income tax   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. Free file for state income tax The limit is reduced if your business use of the car is less than 100%. Free file for state income tax See Depreciation Limits , later, for more information. Free file for state income tax Example. Free file for state income tax In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. Free file for state income tax However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). Free file for state income tax Cost of car. Free file for state income tax   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. Free file for state income tax For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. Free file for state income tax Your cost includes only the cash you paid. Free file for state income tax Basis of car for depreciation. Free file for state income tax   The amount of the section 179 deduction reduces your basis in your car. Free file for state income tax If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. Free file for state income tax The resulting amount is the basis in your car you use to figure your depreciation deduction. Free file for state income tax When to choose. Free file for state income tax   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. Free file for state income tax How to choose. Free file for state income tax    Employees use Form 2106 to make this choice and report the section 179 deduction. Free file for state income tax All others use Form 4562. Free file for state income tax   File the appropriate form with either of the following. Free file for state income tax Your original tax return filed for the year the property was placed in service (whether or not you file it timely). Free file for state income tax An amended return filed within the time prescribed by law. Free file for state income tax 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. Free file for state income tax The amended return must also include any resulting adjustments to taxable income. Free file for state income tax    You must keep records that show the specific identification of each piece of qualifying section 179 property. Free file for state income tax These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Free file for state income tax Revoking an election. Free file for state income tax   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. Free file for state income tax Recapture of section 179 deduction. Free file for state income tax   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. Free file for state income tax If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Free file for state income tax Any section 179 deduction claimed on the car is included in calculating the excess depreciation. Free file for state income tax For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. Free file for state income tax Dispositions. Free file for state income tax   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. Free file for state income tax You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). Free file for state income tax For information on the disposition of a car, see Disposition of a Car , later. Free file for state income tax Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. Free file for state income tax The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). Free file for state income tax The special depreciation allowance applies only for the first year the car is placed in service. Free file for state income tax To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). Free file for state income tax Combined depreciation. Free file for state income tax   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Free file for state income tax For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Free file for state income tax See Depreciation Limits , later in this chapter. Free file for state income tax Qualified car. Free file for state income tax   To be a qualified car (including trucks and vans), the car must meet all of the following tests. Free file for state income tax You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. Free file for state income tax Election not to claim the special depreciation allowance. Free file for state income tax   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. Free file for state income tax If you make this election, it applies to all 5-year property placed in service during the year. Free file for state income tax   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. Free file for state income tax    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. Free file for state income tax Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. Free file for state income tax This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. Free file for state income tax You generally need to know the following things about the car you intend to depreciate. Free file for state income tax Your basis in the car. Free file for state income tax The date you place the car in service. Free file for state income tax The method of depreciation and recovery period you will use. Free file for state income tax Basis. Free file for state income tax   Your basis in a car for figuring depreciation is generally its cost. Free file for state income tax This includes any amount you borrow or pay in cash, other property, or services. Free file for state income tax   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). Free file for state income tax However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). Free file for state income tax For one of these situations see Exception under Methods of depreciation, later. Free file for state income tax   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Free file for state income tax Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . Free file for state income tax Placed in service. Free file for state income tax   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Free file for state income tax Depreciation begins when the car is placed in service for use in your work or business or for the production of income. Free file for state income tax   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. Free file for state income tax Car placed in service and disposed of in the same year. Free file for state income tax   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. Free file for state income tax Methods of depreciation. Free file for state income tax   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). Free file for state income tax MACRS is discussed later in this chapter. Free file for state income tax Exception. Free file for state income tax   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. Free file for state income tax You must use straight line depreciation over the estimated remaining useful life of the car. Free file for state income tax   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. Free file for state income tax The rate per mile varies depending on the year(s) you used the standard mileage rate. Free file for state income tax For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. Free file for state income tax   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . Free file for state income tax You must use your adjusted basis in your car to figure your depreciation deduction. Free file for state income tax For additional information on the straight line method of depreciation, see Publication 946. Free file for state income tax More-than-50%-use test. Free file for state income tax   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. Free file for state income tax You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. Free file for state income tax   If your business use is 50% or less, you must use the straight line method to depreciate your car. Free file for state income tax This is explained later under Car Used 50% or Less for Business . Free file for state income tax Qualified business use. Free file for state income tax   A qualified business use is any use in your trade or business. Free file for state income tax It does not include use for the production of income (investment use). Free file for state income tax However, you do combine your business and investment use to compute your depreciation deduction for the tax year. Free file for state income tax Use of your car by another person. Free file for state income tax   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. Free file for state income tax It is directly connected with your business. Free file for state income tax It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). Free file for state income tax It results in a payment of fair market rent. Free file for state income tax This includes any payment to you for the use of your car. Free file for state income tax Business use changes. Free file for state income tax   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. Free file for state income tax See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. Free file for state income tax    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. Free file for state income tax Use for more than one purpose. Free file for state income tax   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. Free file for state income tax You do this on the basis of mileage. Free file for state income tax Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. Free file for state income tax Change from personal to business use. Free file for state income tax   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. Free file for state income tax In this case, you figure the percentage of business use for the year as follows. Free file for state income tax Determine the percentage of business use for the period following the change. Free file for state income tax Do this by dividing business miles by total miles driven during that period. Free file for state income tax Multiply the percentage in (1) by a fraction. Free file for state income tax The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. Free file for state income tax Example. Free file for state income tax You use a car only for personal purposes during the first 6 months of the year. Free file for state income tax During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. Free file for state income tax This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Free file for state income tax Your business use for the year is 40% (80% × 6/12). Free file for state income tax Limits. Free file for state income tax   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. Free file for state income tax The maximum amount you can claim depends on the year in which you placed your car in service. Free file for state income tax You have to reduce the maximum amount if you did not use the car exclusively for business. Free file for state income tax See Depreciation Limits , later. Free file for state income tax Unadjusted basis. Free file for state income tax   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Free file for state income tax Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. Free file for state income tax   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. Free file for state income tax Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Free file for state income tax Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Free file for state income tax Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. Free file for state income tax 1, 2006), and alternative motor vehicle credit. Free file for state income tax   See Form 8910 for information on the alternative motor vehicle credit. Free file for state income tax If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. Free file for state income tax See Car Used 50% or Less for Business, later, for more information. Free file for state income tax If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. Free file for state income tax Improvements. Free file for state income tax   A major improvement to a car is treated as a new item of 5-year recovery property. Free file for state income tax It is treated as placed in service in the year the improvement is made. Free file for state income tax It does not matter how old the car is when the improvement is added. Free file for state income tax Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. Free file for state income tax However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Free file for state income tax Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. Free file for state income tax See Depreciation Limits , later. Free file for state income tax Car trade-in. Free file for state income tax   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. Free file for state income tax You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Free file for state income tax If you make this election, you treat the old car as disposed of at the time of the trade-in. Free file for state income tax The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. Free file for state income tax You then figure your depreciation deduction for the new car beginning with the date you placed it in service. Free file for state income tax You make this election by completing Form 2106, Part II, Section D. Free file for state income tax This method is explained later, beginning at Effect of trade-in on basis . Free file for state income tax If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. Free file for state income tax You must apply two depreciation limits (see Depreciation Limits , later). Free file for state income tax The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. Free file for state income tax The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. Free file for state income tax You must use Form 4562 to compute your depreciation deduction. Free file for state income tax You cannot use Form 2106, Part II, Section D. Free file for state income tax This method is explained in Publication 946. Free file for state income tax   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). Free file for state income tax Otherwise, you must use the method described in (2). Free file for state income tax Effect of trade-in on basis. Free file for state income tax   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Free file for state income tax For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. Free file for state income tax 168(i)-6(d)(3). Free file for state income tax Traded car used only for business. Free file for state income tax   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. Free file for state income tax Example. Free file for state income tax Paul trades in a car that has an adjusted basis of $5,000 for a new car. Free file for state income tax In addition, he pays cash of $20,000 for the new car. Free file for state income tax His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). Free file for state income tax Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. Free file for state income tax Traded car used partly in business. Free file for state income tax   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. Free file for state income tax This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. Free file for state income tax (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. Free file for state income tax See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. Free file for state income tax )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Free file for state income tax Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. Free file for state income tax For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. Free file for state income tax Modified Accelerated Cost Recovery System (MACRS). Free file for state income tax   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Free file for state income tax   The maximum amount you can deduct is limited, depending on the year you placed your car in service. Free file for state income tax See Depreciation Limits , later. Free file for state income tax Recovery period. Free file for state income tax   Under MACRS, cars are classified as 5-year property. Free file for state income tax You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. Free file for state income tax This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. Free file for state income tax Depreciation deduction for certain Indian reservation property. Free file for state income tax   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. Free file for state income tax The recovery that applies for a business-use car is 3 years instead of 5 years. Free file for state income tax However, the depreciation limits, discussed later, will still apply. Free file for state income tax   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. Free file for state income tax Depreciation methods. Free file for state income tax   You can use one of the following methods to depreciate your car. Free file for state income tax The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Free file for state income tax The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Free file for state income tax The straight line method (SL) over a 5-year recovery period. Free file for state income tax    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. Free file for state income tax This is because the chart has the switch to the straight line method built into its rates. Free file for state income tax   Before choosing a method, you may wish to consider the following facts. Free file for state income tax Using the straight line method provides equal yearly deductions throughout the recovery period. Free file for state income tax Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. Free file for state income tax MACRS depreciation chart. Free file for state income tax   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Free file for state income tax Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. Free file for state income tax A similar chart appears in the Instructions for Form 2106. Free file for state income tax    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. Free file for state income tax   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. Free file for state income tax You file your return on a fiscal year basis. Free file for state income tax You file your return for a short tax year (less than 12 months). Free file for state income tax During the year, all of the following conditions apply. Free file for state income tax You placed some property in service from January through September. Free file for state income tax You placed some property in service from October through December. Free file for state income tax Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. Free file for state income tax   You placed qualified property in service on an Indian reservation. Free file for state income tax Depreciation in future years. Free file for state income tax   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. Free file for state income tax However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. Free file for state income tax In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. Free file for state income tax See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Free file for state income tax    In future years, do not use the chart in this edition of the publication. Free file for state income tax Instead, use the chart in the publication or the form instructions for those future years. Free file for state income tax Disposition of car during recovery period. Free file for state income tax   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. Free file for state income tax See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. Free file for state income tax How to use the 2013 chart. Free file for state income tax   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Free file for state income tax Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. Free file for state income tax If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. Free file for state income tax    Your deduction cannot be more than the maximum depreciation limit for cars. Free file for state income tax See Depreciation Limits, later. Free file for state income tax Example. Free file for state income tax Phil bought a used truck in February 2012 to use exclusively in his landscape business. Free file for state income tax He paid $9,200 for the truck with no trade-in. Free file for state income tax Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. Free file for state income tax Phil used the MACRS depreciation chart in 2012 to find his percentage. Free file for state income tax The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. Free file for state income tax He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. Free file for state income tax In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. Free file for state income tax His records show that the business use of his truck was 90% in 2013. Free file for state income tax Phil used Table 4-1 to find his percentage. Free file for state income tax Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. Free file for state income tax He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. Free file for state income tax Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. Free file for state income tax The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. Free file for state income tax The maximum amount you can deduct each year depends on the year you place the car in service. Free file for state income tax These limits are shown in the following tables. Free file for state income tax   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 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 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free file for state income tax 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free file for state income tax 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Free file for state income tax 4$7,660 if you acquired the car before 5/6/2003. Free file for state income tax $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. Free file for state income tax 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. Free file for state income tax Trucks and vans. Free file for state income tax   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. Free file for state income tax A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. Free file for state income tax For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. Free file for state income tax 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 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. Free file for state income tax 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. Free file for state income tax Car used less than full year. Free file for state income tax   The depreciation limits are not reduced if you use a car for less than a full year. Free file for state income tax This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. Free file for state income tax However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. Free file for state income tax See Reduction for personal use , next. Free file for state income tax Reduction for personal use. Free file for state income tax   The depreciation limits are reduced based on your percentage of personal use. Free file for state income tax If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. Free file for state income tax Section 179 deduction. Free file for state income tax   The section 179 deduction is treated as a depreciation deduction. Free file for state income tax If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. Free file for state income tax Example. Free file for state income tax On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. Free file for state income tax He used it 80% for his business, and he chooses to take a section 179 deduction for the car. Free file for state income tax The car is not qualified property for purposes of the special depreciation allowance. Free file for state income tax Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. Free file for state income tax This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). Free file for state income tax Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). Free file for state income tax He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. Free file for state income tax Jack has reached his maximum depreciation deduction for 2013. Free file for state income tax For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. Free file for state income tax Deductions in years after the recovery period. Free file for state income tax   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. Free file for state income tax If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. Free file for state income tax Unrecovered basis. Free file for state income tax   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. Free file for state income tax The recovery period. Free file for state income tax   For 5-year property, your recovery period is 6 calendar years. Free file for state income tax A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. Free file for state income tax   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. Free file for state income tax You determine your unrecovered basis in the 7th year after you placed the car in service. Free file for state income tax How to treat unrecovered basis. Free file for state income tax   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. Free file for state income tax The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. Free file for state income tax For example, no deduction is allowed for a year you use your car 100% for personal purposes. Free file for state income tax Example. Free file for state income tax In April 2007, Bob bought and placed in service a car he used exclusively in his business. Free file for state income tax The car cost $31,500. Free file for state income tax Bob did not claim a section 179 deduction or the special depreciation allowance for the car. Free file for state income tax He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). Free file for state income tax For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. Free file for state income tax Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. Free file for state income tax      MACRS     Deprec. Free file for state income tax Year % Amount Limit Allowed 2007 20. Free file for state income tax 00 $6,300 $3,060 $ 3,060 2008 32. Free file for state income tax 00 10,080 4,900 4,900 2009 19. Free file for state income tax 20 6,048 2,850 2,850 2010 11. Free file for state income tax 52 3,629 1,775 1,775 2011 11. Free file for state income tax 52 3,629 1,775 1,775 2012 5. Free file for state income tax 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. Free file for state income tax   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). Free file for state income tax If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. Free file for state income tax   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. Free file for state income tax However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. Free file for state income tax For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. Free file for state income tax Table 4-1. Free file for state income tax 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Free file for state income tax ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. Free file for state income tax   First, using the left column, find the date you first placed the car in service in 2013. Free file for state income tax Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. Free file for state income tax For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. Free file for state income tax Refer back to the MACRS Depreciation Chart for the year you placed the car in service. Free file for state income tax (See Car Used 50% or Less for Business . Free file for state income tax )  Multiply the unadjusted basis of your car by your business use percentage. Free file for state income tax Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. Free file for state income tax (Also see Depreciation Limits . Free file for state income tax )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. Free file for state income tax 1—Sept. Free file for state income tax 30 percentage instead of the Oct. Free file for state income tax 1—Dec. Free file for state income tax 31 percentage for your car. Free file for state income tax               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. Free file for state income tax If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. Free file for state income tax 1—Sept. Free file for state income tax 30 for figuring depreciation for your car. Free file for state income tax See Which Convention Applies? in chapter 4 of Publication 946 for more details. Free file for state income tax               Example. Free file for state income tax You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. Free file for state income tax You