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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

Free H&r Block Efile

File State Tax Only1040 Easy FormH&r Block Federal FreeFiling A Tax AmmendmentAmended Tax Return InstructionsIrs Short FormTax Forms OnlineMilitary Hr BlockFile Taxes 20071040 Short FormTaxact Amended Return2010 Form 1040ez InstructionsAmmended Return2012 Free1040x File OnlineAmmend TaxesIrs Income Tax Forms 2010Tax Form 1040xHow To Refile Your TaxesIrs Efile Form 4868File Taxes If UnemployedHow To Fill Out An Amended Tax ReturnMilitary Turbo TaxHow Do I File A 2010 Tax ReturnEz FormFree Tax FilingTax Act Free 2012Myfreetaxes ComFree Tax 2011File State Return OnlyHow Can I File 2012 Taxes2006 Taxes OnlineTurbotax Login Tax Return 2012H&rblockFree Federal And State Tax Filing OnlineI Need To File My 2010 Tax ReturnIncome Tax Return1040nr EfileFree 1040x Tax Forms2012 990 Tax Forms2012 Irs Form 1040

Free H&r Block Efile

Free h&r block efile 1. Free h&r block efile   Filing Information Table of Contents What's New Reminders Introduction Do I Have To File a Return?Individuals—In General Dependents Certain Children Under Age 19 or Full-Time Students Self-Employed Persons Aliens Who Should File Which Form Should I Use?Form 1040EZ Form 1040A Form 1040 Does My Return Have To Be on Paper?IRS e-file When Do I Have To File?Private delivery services. Free h&r block efile Extensions of Time To File How Do I Prepare My Return?When Do I Report My Income and Expenses? Social Security Number (SSN) Presidential Election Campaign Fund Computations Attachments Third Party Designee Signatures Paid Preparer Refunds Amount You Owe Gift To Reduce Debt Held by the Public Name and Address Where Do I File? What Happens After I File?What Records Should I Keep? Why Keep Records? Kinds of Records to Keep Basic Records How Long to Keep Records Refund Information Interest on Refunds Change of Address What If I Made a Mistake?Amended Returns and Claims for Refund Penalties Identity Theft What's New Filing status for same-sex married couple. Free h&r block efile   If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free h&r block efile See Publication 501 for more information. Free h&r block efile Additional Medicare Tax. Free h&r block efile  Beginning in 2013, a 0. Free h&r block efile 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income over a threshold amount based on your filing status. Free h&r block efile For more information, see the Instructions for Form 1040, line 60, and Form 8959. Free h&r block efile Net Investment Income Tax. Free h&r block efile  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Free h&r block efile NIIT is a 3. Free h&r block efile 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income over a threshold amount. Free h&r block efile For more information, see the Instructions for Form 1040, line 60, and Form 8960. Free h&r block efile Refundable credit for prior year minimum tax. Free h&r block efile  The refundable portion of the credit for prior year minimum tax is no longer available. Free h&r block efile Who must file. Free h&r block efile  Generally, the amount of income you can receive before you must file a return has been increased. Free h&r block efile See Table 1-1, Table 1-2, and Table 1-3 for the specific amounts. Free h&r block efile Reminders File online. Free h&r block efile  Rather than filing a return on paper, you may be able to file electronically using IRS e-file. Free h&r block efile Create your own personal identification number (PIN) and file a completely paperless tax return. Free h&r block efile For more information, see Does My Return Have To Be on Paper , later. Free h&r block efile Change of address. Free h&r block efile  If you change your address, you should notify the IRS. Free h&r block efile You can use Form 8822 to notify the IRS of the change. Free h&r block efile See Change of Address , later, under What Happens After I File. Free h&r block efile Enter your social security number. Free h&r block efile  You must enter your social security number (SSN) in the spaces provided on your tax return. Free h&r block efile If you file a joint return, enter the SSNs in the same order as the names. Free h&r block efile Direct deposit of refund. Free h&r block efile  Instead of getting a paper check, you may be able to have your refund deposited directly into your account at a bank or other financial institution. Free h&r block efile See Direct Deposit under Refunds, later. Free h&r block efile If you choose direct deposit of your refund, you may be able to split the refund among two or three accounts. Free h&r block efile Pay online or by phone. Free h&r block efile  If you owe additional tax, you may be able to pay online or by phone. Free h&r block efile See How To Pay , later. Free h&r block efile Installment agreement. Free h&r block efile  If you cannot pay the full amount due with your return, you may ask to make monthly installment payments. Free h&r block efile See Installment Agreement , later, under Amount You Owe. Free h&r block efile You may be able to apply online for a payment agreement if you owe federal tax, interest, and penalties. Free h&r block efile Automatic 6-month extension. Free h&r block efile  You can get an automatic 6-month extension to file your tax return if, no later than the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Free h&r block efile S. Free h&r block efile Individual Income Tax Return. Free h&r block efile See Automatic Extension , later. Free h&r block efile Service in combat zone. Free h&r block efile  You are allowed extra time to take care of your tax matters if you are a member of the Armed Forces who served in a combat zone, or if you served in the combat zone in support of the Armed Forces. Free h&r block efile See Individuals Serving in Combat Zone , later, under When Do I Have To File. Free h&r block efile Adoption taxpayer identification number. Free h&r block efile  If a child has been placed in your home for purposes of legal adoption and you will not be able to get a social security number for the child in time to file your return, you may be able to get an adoption taxpayer identification number (ATIN). Free h&r block efile For more information, see Social Security Number (SSN) , later. Free h&r block efile Taxpayer identification number for aliens. Free h&r block efile  If you or your dependent is a nonresident or resident alien who does not have and is not eligible to get a social security number, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Free h&r block efile For more information, see Social Security Number (SSN) , later. Free h&r block efile Frivolous tax submissions. Free h&r block efile  The IRS has published a list of positions that are identified as frivolous. Free h&r block efile The penalty for filing a frivolous tax return is $5,000. Free h&r block efile Also, the $5,000 penalty will apply to other specified frivolous submissions. Free h&r block efile For more information, see Civil Penalties , later. Free h&r block efile Introduction This chapter discusses the following topics. Free h&r block efile Whether you have to file a return. Free h&r block efile Which form to use. Free h&r block efile How to file electronically. Free h&r block efile When, how, and where to file your return. Free h&r block efile What happens if you pay too little or too much tax. Free h&r block efile What records you should keep and how long you should keep them. Free h&r block efile How you can change a return you have already filed. Free h&r block efile Do I Have To File a Return? You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements for any of the following categories that apply to you. Free h&r block efile Individuals in general. Free h&r block efile (There are special rules for surviving spouses, executors, administrators, legal representatives, U. Free h&r block efile S. Free h&r block efile citizens and residents living outside the United States, residents of Puerto Rico, and individuals with income from U. Free h&r block efile S. Free h&r block efile possessions. Free h&r block efile ) Dependents. Free h&r block efile Certain children under age 19 or full-time students. Free h&r block efile Self-employed persons. Free h&r block efile Aliens. Free h&r block efile The filing requirements for each category are explained in this chapter. Free h&r block efile The filing requirements apply even if you do not owe tax. Free h&r block efile Even if you do not have to file a return, it may be to your advantage to do so. Free h&r block efile See Who Should File, later. Free h&r block efile File only one federal income tax return for the year regardless of how many jobs you had, how many Forms W-2 you received, or how many states you lived in during the year. Free h&r block efile Do not file more than one original return for the same year, even if you have not gotten your refund or have not heard from the IRS since you filed. Free h&r block efile Individuals—In General If you are a U. Free h&r block efile S. Free h&r block efile citizen or resident, whether you must file a return depends on three factors: Your gross income, Your filing status, and Your age. Free h&r block efile To find out whether you must file, see Table 1-1, Table 1-2, and Table 1-3. Free h&r block efile Even if no table shows that you must file, you may need to file to get money back. Free h&r block efile (See Who Should File , later. Free h&r block efile ) Gross income. Free h&r block efile   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. Free h&r block efile It also includes income from sources outside the United States or from the sale of your main home (even if you can exclude all or part of it). Free h&r block efile Include part of your social security benefits if: You were married, filing a separate return, and you lived with your spouse at any time during 2013; or Half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Free h&r block efile If either (1) or (2) applies, see the instructions for Form 1040 or 1040A, or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the social security benefits you must include in gross income. Free h&r block efile   Common types of income are discussed in Part Two of this publication. Free h&r block efile Community income. Free h&r block efile   If you are married and your permanent home is in a community property state, half of any income described by state law as community income may be considered yours. Free h&r block efile This affects your federal taxes, including whether you must file if you do not file a joint return with your spouse. Free h&r block efile See Publication 555, Community Property, for more information. Free h&r block efile Nevada, Washington, and California domestic partners. Free h&r block efile   A registered domestic partner in Nevada, Washington, or California generally must report half the combined community income of the individual and his or her domestic partner. Free h&r block efile See Publication 555. Free h&r block efile Self-employed individuals. Free h&r block efile   If you are self-employed, your gross income includes the amount on line 7 of Schedule C (Form 1040), Profit or Loss From Business; line 1 of Schedule C-EZ (Form 1040), Net Profit From Business; and line 9 of Schedule F (Form 1040), Profit or Loss From Farming. Free h&r block efile See Self-Employed Persons , later, for more information about your filing requirements. Free h&r block efile    If you do not report all of your self-employment income, your social security benefits may be lower when you retire. Free h&r block efile Filing status. Free h&r block efile   Your filing status depends on whether you are single or married and on your family situation. Free h&r block efile Your filing status is determined on the last day of your tax year, which is December 31 for most taxpayers. Free h&r block efile See chapter 2 for an explanation of each filing status. Free h&r block efile Age. Free h&r block efile   If you are 65 or older at the end of the year, you generally can have a higher amount of gross income than other taxpayers before you must file. Free h&r block efile See Table 1-1. Free h&r block efile You are considered 65 on the day before your 65th birthday. Free h&r block efile For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. Free h&r block efile Table 1-1. Free h&r block efile 2013 Filing Requirements for Most Taxpayers IF your filing status is. Free h&r block efile . Free h&r block efile . Free h&r block efile AND at the end of 2013 you  were. Free h&r block efile . Free h&r block efile . Free h&r block efile * THEN file a return if  your gross income  was at least. Free h&r block efile . Free h&r block efile . Free h&r block efile ** single under 65 $10,000     65 or older $11,500   married filing jointly*** under 65 (both spouses) $20,000     65 or older (one spouse) $21,200     65 or older (both spouses) $22,400   married filing separately any age $3,900   head of household under 65 $12,850     65 or older $14,350   qualifying widow(er) with dependent child under 65 $16,100   65 or older $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Free h&r block efile ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Free h&r block efile Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Free h&r block efile If (a) or (b) applies, see the Instructions for Form 1040 or 1040A or Publication 915 to figure the taxable part of social security benefits you must include in gross income. Free h&r block efile Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Free h&r block efile Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. Free h&r block efile But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. Free h&r block efile *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Free h&r block efile Surviving Spouses, Executors, Administrators, and Legal Representatives You must file a final return for a decedent (a person who died) if both of the following are true. Free h&r block efile You are the surviving spouse, executor, administrator, or legal representative. Free h&r block efile The decedent met the filing requirements at the date of death. Free h&r block efile For more information on rules for filing a decedent's final return, see Publication 559, Survivors, Executors, and Administrators. Free h&r block efile U. Free h&r block efile S. Free h&r block efile Citizens and Resident Aliens Living Abroad To determine whether you must file a return, include in your gross income any income you received abroad, including any income you can exclude under the foreign earned income exclusion. Free h&r block efile For information on special tax rules that may apply to you, see Publication 54, Tax Guide for U. Free h&r block efile S. Free h&r block efile Citizens and Resident Aliens Abroad. Free h&r block efile It is available online and at most U. Free h&r block efile S. Free h&r block efile embassies and consulates. Free h&r block efile See How To Get Tax Help in the back of this publication. Free h&r block efile Residents of Puerto Rico If you are a U. Free h&r block efile S. Free h&r block efile citizen and also a bona fide resident of Puerto Rico, you generally must file a U. Free h&r block efile S. Free h&r block efile income tax return for any year in which you meet the income requirements. Free h&r block efile This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico. Free h&r block efile If you are a bona fide resident of Puerto Rico for the entire year, your U. Free h&r block efile S. Free h&r block efile gross income does not include income from sources within Puerto Rico. Free h&r block efile It does, however, include any income you received for your services as an employee of the United States or a U. Free h&r block efile S. Free h&r block efile agency. Free h&r block efile If you receive income from Puerto Rican sources that is not subject to U. Free h&r block efile S. Free h&r block efile tax, you must reduce your standard deduction. Free h&r block efile As a result, the amount of income you must have before you are required to file a U. Free h&r block efile S. Free h&r block efile income tax return is lower than the applicable amount in Table 1-1 or Table 1-2. Free h&r block efile For more information, see Publication 570, Tax Guide for Individuals With Income From U. Free h&r block efile S. Free h&r block efile Possessions. Free h&r block efile Individuals With Income From U. Free h&r block efile S. Free h&r block efile Possessions If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. Free h&r block efile S. Free h&r block efile Virgin Islands, special rules may apply when determining whether you must file a U. Free h&r block efile S. Free h&r block efile federal income tax return. Free h&r block efile In addition, you may have to file a return with the individual island government. Free h&r block efile See Publication 570 for more information. Free h&r block efile Dependents If you are a dependent (one who meets the dependency tests in chapter 3), see Table 1-2 to find out whether you must file a return. Free h&r block efile You also must file if your situation is described in Table 1-3. Free h&r block efile Responsibility of parent. Free h&r block efile   Generally, a child is responsible for filing his or her own tax return and for paying any tax on the return. Free h&r block efile If a dependent child must file an income tax return but cannot file due to age or any other reason, then a parent, guardian, or other legally responsible person must file it for the child. Free h&r block efile If the child cannot sign the return, the parent or guardian must sign the child's name followed by the words “By (your signature), parent for minor child. Free h&r block efile ” Child's earnings. Free h&r block efile   Amounts a child earns by performing services are included in his or her gross income and not the gross income of the parent. Free h&r block efile This is true even if under local law the child's parent has the right to the earnings and may actually have received them. Free h&r block efile But if the child does not pay the tax due on this income, the parent is liable for the tax. Free h&r block efile Certain Children Under Age 19 or Full-Time Students If a child's only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was under age 19 at the end of 2013 or was a full-time student under age 24 at the end of 2013, and certain other conditions are met, a parent can elect to include the child's income on the parent's return. Free h&r block efile If this election is made, the child does not have to file a return. Free h&r block efile See Parent's Election To Report Child's Interest and Dividends in chapter 31. Free h&r block efile Self-Employed Persons You are self-employed if you: Carry on a trade or business as a sole proprietor, Are an independent contractor, Are a member of a partnership, or Are in business for yourself in any other way. Free h&r block efile Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. Free h&r block efile You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Free h&r block efile Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if: Your net earnings from self-employment (excluding church employee income) were $400 or more, or You had church employee income of $108. Free h&r block efile 28 or more. Free h&r block efile (See Table 1-3. Free h&r block efile ) Use Schedule SE (Form 1040) to figure your self-employment tax. Free h&r block efile Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. Free h&r block efile For more information about this tax, see Publication 334, Tax Guide for Small Business. Free h&r block efile Employees of foreign governments or international organizations. Free h&r block efile   If you are a U. Free h&r block efile S. Free h&r block efile citizen who works in the United States for an international organization, a foreign government, or a wholly owned instrumentality of a foreign government, and your employer is not required to withhold social security and Medicare taxes from your wages, you must include your earnings from services performed in the United States when figuring your net earnings from self-employment. Free h&r block efile Ministers. Free h&r block efile   You must include income from services you performed as a minister when figuring your net earnings from self-employment, unless you have an exemption from self-employment tax. Free h&r block efile This also applies to Christian Science practitioners and members of a religious order who have not taken a vow of poverty. Free h&r block efile For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free h&r block efile Table 1-2. Free h&r block efile 2013 Filing Requirements for Dependents See chapter 3 to find out if someone can claim you as a dependent. Free h&r block efile If your parents (or someone else) can claim you as a dependent, use this table to see if you must file a return. Free h&r block efile (See Table 1-3 for other situations when you must file. Free h&r block efile ) In this table, earned income includes salaries, wages, tips, and professional fees. Free h&r block efile It also includes taxable scholarship and fellowship grants. Free h&r block efile (See Scholarships and fellowships in chapter 12. Free h&r block efile ) Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. Free h&r block efile It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust. Free h&r block efile Gross income is the total of your earned and unearned income. Free h&r block efile   Single dependents—Were you either age 65 or older or blind? □ No. Free h&r block efile You must file a return if any of the following apply. Free h&r block efile     • Your unearned income was more than $1,000. Free h&r block efile     • Your earned income was more than $6,100. Free h&r block efile     • Your gross income was more than the larger of:       • $1,000, or       • Your earned income (up to $5,750) plus $350. Free h&r block efile □ Yes. Free h&r block efile You must file a return if any of the following apply. Free h&r block efile     • Your unearned income was more than $2,500 ($4,000 if 65 or older and blind). Free h&r block efile     • Your earned income was more than $7,600 ($9,100 if 65 or older and blind). Free h&r block efile     • Your gross income was more than the larger of:       • $2,500 ($4,000 if 65 or older and blind), or       • Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Free h&r block efile Married dependents—Were you either age 65 or older or blind? □ No. Free h&r block efile You must file a return if any of the following apply. Free h&r block efile     • Your unearned income was more than $1,000. Free h&r block efile     • Your earned income was more than $6,100. Free h&r block efile     • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free h&r block efile     • Your gross income was more than the larger of:       • $1,000, or       • Your earned income (up to $5,750) plus $350. Free h&r block efile □ Yes. Free h&r block efile You must file a return if any of the following apply. Free h&r block efile     • Your unearned income was more than $2,200 ($3,400 if 65 or older and blind). Free h&r block efile     • Your earned income was more than $7,300 ($8,500 if 65 or older and blind). Free h&r block efile     • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free h&r block efile     • Your gross income was more than the larger of:       • $2,200 ($3,400 if 65 or older and blind), or       • Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Free h&r block efile Aliens Your status as an alien—resident, nonresident, or dual-status—determines whether and how you must file an income tax return. Free h&r block efile The rules used to determine your alien status are discussed in Publication 519, U. Free h&r block efile S. Free h&r block efile Tax Guide for Aliens. Free h&r block efile Resident alien. Free h&r block efile   If you are a resident alien for the entire year, you must file a tax return following the same rules that apply to U. Free h&r block efile S. Free h&r block efile citizens. Free h&r block efile Use the forms discussed in this publication. Free h&r block efile Nonresident alien. Free h&r block efile   If you are a nonresident alien, the rules and tax forms that apply to you are different from those that apply to U. Free h&r block efile S. Free h&r block efile citizens and resident aliens. Free h&r block efile See Publication 519 to find out if U. Free h&r block efile S. Free h&r block efile income tax laws apply to you and which forms you should file. Free h&r block efile Dual-status taxpayer. Free h&r block efile   If you are a resident alien for part of the tax year and a nonresident alien for the rest of the year, you are a dual-status taxpayer. Free h&r block efile Different rules apply for each part of the year. Free h&r block efile For information on dual-status taxpayers, see Publication 519. Free h&r block efile Table 1-3. Free h&r block efile Other Situations When You Must File a 2013 Return You must file a return if any of the four conditions below apply for 2013. Free h&r block efile 1. Free h&r block efile   You owe any special taxes, including any of the following. Free h&r block efile   a. Free h&r block efile Alternative minimum tax. Free h&r block efile   b. Free h&r block efile Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Free h&r block efile But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. Free h&r block efile   c. Free h&r block efile Household employment taxes. Free h&r block efile But if you are filing a return only because you owe this tax, you can file Schedule H by itself. Free h&r block efile   d. Free h&r block efile Social security and Medicare tax on tips you did not report to your employer or on wages you received from an employer who did not withhold these taxes. Free h&r block efile   e. Free h&r block efile Recapture of first-time homebuyer credit. Free h&r block efile   f. Free h&r block efile Write-in taxes, including uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on group-term life insurance and additional taxes on health savings accounts. Free h&r block efile   g. Free h&r block efile Recapture taxes. Free h&r block efile 2. Free h&r block efile   You (or your spouse, if filing jointly) received HSA, Archer MSA, or Medicare Advantage MSA distributions. Free h&r block efile 3. Free h&r block efile   You had net earnings from self-employment of at least $400. Free h&r block efile 4. Free h&r block efile   You had wages of $108. Free h&r block efile 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Free h&r block efile Who Should File Even if you do not have to file, you should file a federal income tax return to get money back if any of the following conditions apply. Free h&r block efile You had federal income tax withheld or made estimated tax payments. Free h&r block efile You qualify for the earned income credit. Free h&r block efile See chapter 36 for more information. Free h&r block efile You qualify for the additional child tax credit. Free h&r block efile See chapter 34 for more information. Free h&r block efile You qualify for the health coverage tax credit. Free h&r block efile See chapter 37 for more information. Free h&r block efile You qualify for the American opportunity credit. Free h&r block efile See chapter 35 for more information. Free h&r block efile You qualify for the credit for federal tax on fuels. Free h&r block efile See chapter 37 for more information. Free h&r block efile Which Form Should I Use? You must use one of three forms to file your return: Form 1040EZ, Form 1040A, or Form 1040. Free h&r block efile (But also see Does My Return Have To Be on Paper , later. Free h&r block efile ) See the discussion under Form 1040 for when you must use that form. Free h&r block efile Form 1040EZ Form 1040EZ is the simplest form to use. Free h&r block efile You can use Form 1040EZ if all of the following apply. Free h&r block efile    Your filing status is single or married filing jointly. Free h&r block efile If you were a nonresident alien at any time in 2013, your filing status must be married filing jointly. Free h&r block efile You (and your spouse if married filing a joint return) were under age 65 and not blind at the end of 2013. Free h&r block efile If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Free h&r block efile You do not claim any dependents. Free h&r block efile Your taxable income is less than $100,000. Free h&r block efile Your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarship and fellowship grants, and taxable interest of $1,500 or less. Free h&r block efile You do not claim any adjustments to income, such as a deduction for IRA contributions or student loan interest. Free h&r block efile You do not claim any credits other than the earned income credit. Free h&r block efile You do not owe any household employment taxes on wages you paid to a household employee. Free h&r block efile If you earned tips, they are included in boxes 5 and 7 of your Form W-2. Free h&r block efile You are not a debtor in a chapter 11 bankruptcy case filed after October 16, 2005. Free h&r block efile   You must meet all of these requirements to use Form 1040EZ. Free h&r block efile If you do not, you must use Form 1040A or Form 1040. Free h&r block efile Figuring tax. Free h&r block efile   On Form 1040EZ, you can use only the tax table to figure your income tax. Free h&r block efile You cannot use Form 1040EZ to report any other tax. Free h&r block efile Form 1040A If you do not qualify to use Form 1040EZ, you may be able to use Form 1040A. Free h&r block efile You can use Form 1040A if all of the following apply. Free h&r block efile    Your income is only from: Wages, salaries, and tips, Interest, Ordinary dividends (including Alaska Permanent Fund dividends), Capital gain distributions, IRA distributions, Pensions and annuities, Unemployment compensation, Taxable social security and railroad retirement benefits, and Taxable scholarship and fellowship grants. Free h&r block efile If you receive a capital gain distribution that includes unrecaptured section 1250 gain, section 1202 gain, or collectibles (28%) gain, you cannot use Form 1040A. Free h&r block efile You must use Form 1040. Free h&r block efile Your taxable income is less than $100,000. Free h&r block efile Your adjustments to income are for only the following items. Free h&r block efile Educator expenses. Free h&r block efile IRA deduction. Free h&r block efile Student loan interest deduction. Free h&r block efile Tuition and fees. Free h&r block efile You do not itemize your deductions. Free h&r block efile You claim only the following tax credits. Free h&r block efile The credit for child and dependent care expenses. Free h&r block efile (See chapter 32. Free h&r block efile ) The credit for the elderly or the disabled. Free h&r block efile (See chapter 33. Free h&r block efile ) The education credits. Free h&r block efile (See chapter 35. Free h&r block efile ) The retirement savings contribution credit. Free h&r block efile (See chapter 37. Free h&r block efile ) The child tax credit. Free h&r block efile (See chapter 34. Free h&r block efile ) The earned income credit. Free h&r block efile (See chapter 36. Free h&r block efile ) The additional child tax credit. Free h&r block efile (See chapter 34. Free h&r block efile ) You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option. Free h&r block efile (See Publication 525, Taxable and Nontaxable Income. Free h&r block efile )   You can also use Form 1040A if you received employer-provided dependent care benefits or if you owe tax from the recapture of an education credit or the alternative minimum tax. Free h&r block efile   You must meet all these requirements to use Form 1040A. Free h&r block efile If you do not, you must use Form 1040. Free h&r block efile Form 1040 If you cannot use Form 1040EZ or Form 1040A, you must use Form 1040. Free h&r block efile You can use Form 1040 to report all types of income, deductions, and credits. Free h&r block efile You may pay less tax by filing Form 1040 because you can take itemized deductions, some adjustments to income, and credits you cannot take on Form 1040A or Form 1040EZ. Free h&r block efile You must use Form 1040 if any of the following apply. Free h&r block efile    Your taxable income is $100,000 or more. Free h&r block efile You itemize your deductions on Schedule A. Free h&r block efile You had income that cannot be reported on Form 1040EZ or Form 1040A, including tax-exempt interest from private activity bonds issued after August 7, 1986. Free h&r block efile You claim any adjustments to gross income other than the adjustments listed earlier under Form 1040A. Free h&r block efile Your Form W-2, box 12, shows uncollected employee tax (social security and Medicare tax) on tips (see chapter 6) or group-term life insurance (see chapter 5). Free h&r block efile You received $20 or more in tips in any 1 month and did not report all of them to your employer. Free h&r block efile (See chapter 6. Free h&r block efile ) You were a bona fide resident of Puerto Rico and exclude income from sources in Puerto Rico. Free h&r block efile You claim any credits other than the credits listed earlier under Form 1040A. Free h&r block efile You owe the excise tax on insider stock compensation from an expatriated corporation. Free h&r block efile Your Form W-2 shows an amount in box 12 with a code Z. Free h&r block efile You had a qualified health savings account funding distribution from your IRA. Free h&r block efile You are an employee and your employer did not withhold social security and Medicare tax. Free h&r block efile You have to file other forms with your return to report certain exclusions, taxes, or transactions, such as Form 8959 or Form 8960. Free h&r block efile You are a debtor in a bankruptcy case filed after October 16, 2005. Free h&r block efile You must repay the first-time homebuyer credit. Free h&r block efile You have adjusted gross income of more than $150,000 and must reduce the dollar amount of your exemptions. Free h&r block efile Does My Return Have To Be on Paper? You may be able to file a paperless return using IRS e-file (electronic filing). Free h&r block efile If your 2013 adjusted gross income (AGI) is less than a certain amount, you are eligible for Free File. Free h&r block efile See your tax return instructions for details. Free h&r block efile If you do not qualify for Free File, then you should check out IRS. Free h&r block efile gov for low-cost e-file options or Free File Fillable Forms. Free h&r block efile IRS e-file Table 1-4 lists the benefits of IRS e-file. Free h&r block efile IRS e-file uses automation to replace most of the manual steps needed to process paper returns. Free h&r block efile As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. Free h&r block efile However, as with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. Free h&r block efile Using e-file does not affect your chances of an IRS examination of your return. Free h&r block efile Free File Fillable Forms. Free h&r block efile   If you do not need the help of a tax preparer, then Free File Fillable Forms may be for you. Free h&r block efile These forms: Do not have an income requirement so everyone is eligible, Are easy to use, Perform basic math calculations, Are available only at IRS. Free h&r block efile gov, and Apply only to a federal tax return. Free h&r block efile Electronic return signatures. Free h&r block efile   To file your return electronically, you must sign the return electronically using a personal identification number (PIN). Free h&r block efile If you are filing online, you must use a Self-Select PIN. Free h&r block efile If you are filing electronically using a tax practitioner, you can use a Self-Select PIN or a Practitioner PIN. Free h&r block efile Self-Select PIN. Free h&r block efile   The Self-Select PIN method allows you to create your own PIN. Free h&r block efile If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. Free h&r block efile   A PIN is any combination of five digits you choose except five zeros. Free h&r block efile If you use a PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. Free h&r block efile   To verify your identity, you will be prompted to enter your adjusted gross income (AGI) from your originally filed 2012 federal income tax return, if applicable. Free h&r block efile Do not use your AGI from an amended return (Form 1040X) or a math error correction made by the IRS. Free h&r block efile AGI is the amount shown on your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040EZ, line 4. Free h&r block efile If you do not have your 2012 income tax return, you can quickly request a transcript by using our automated self-service tool. Free h&r block efile Visit us at IRS. Free h&r block efile gov and click on Order a Return or Account Transcript or call 1-800-908-9946 to get a free transcript of your return. Free h&r block efile (If you filed electronically last year, you may use your prior year PIN to verify your identity instead of your prior year AGI. Free h&r block efile The prior year PIN is the five digit PIN you used to electronically sign your 2012 return. Free h&r block efile ) You will also be prompted to enter your date of birth. Free h&r block efile Table 1-4. Free h&r block efile Benefits of IRS e-file • Free File allows qualified taxpayers to prepare and e-file their own tax returns for free. Free h&r block efile • Free File is available in English and Spanish. Free h&r block efile • Free File is available online 24 hours a day, 7 days a week. Free h&r block efile • Get your refund faster by e-filing using Direct Deposit. Free h&r block efile • Sign electronically with a secure self-selected PIN and file a completely paperless return. Free h&r block efile • Receive an acknowledgement that your return was received and accepted. Free h&r block efile • If you owe, you can e-file and pay electronically either online or by phone, using your bank account or a credit or debit card. Free h&r block efile You can also file a return early and pay the amount you owe by the due date of your return. Free h&r block efile • Save time by preparing and e-filing federal and state returns together. Free h&r block efile • IRS computers quickly and automatically check for errors or other missing information. Free h&r block efile • Help the environment, use less paper, and save taxpayer money—it costs less to process an e-filed return than a paper return. Free h&r block efile You cannot use the Self-Select PIN method if you are a first-time filer under age 16 at the end of 2013. Free h&r block efile If you cannot locate your prior year AGI or prior year PIN, use the Electronic Filing PIN Request. Free h&r block efile This can be found at IRS. Free h&r block efile gov. Free h&r block efile Click on Request an Electronic Filing PIN. Free h&r block efile Or you can call 1-866-704-7388. Free h&r block efile Practitioner PIN. Free h&r block efile   The Practitioner PIN method allows you to authorize your tax practitioner to enter or generate your PIN. Free h&r block efile The practitioner can provide you with details. Free h&r block efile Form 8453. Free h&r block efile   You must send in a paper Form 8453 if you have to attach certain forms or other documents that cannot be electronically filed. Free h&r block efile For details, see Form 8453. Free h&r block efile For more details, visit www. Free h&r block efile irs. Free h&r block efile gov/efile and click on “ Individuals. Free h&r block efile ” Identity Protection PIN. Free h&r block efile   If the IRS gave you an identity protection personal identification number (PIN) because you were a victim of identity theft, enter it in the spaces provided on your tax form. Free h&r block efile If the IRS has not given you this type of number, leave these spaces blank. Free h&r block efile For more information, see the Instructions for Form 1040A or Form 1040. Free h&r block efile Power of attorney. Free h&r block efile   If an agent is signing your return for you, a power of attorney (POA) must be filed. Free h&r block efile Attach the POA to Form 8453 and file it using that form's instructions. Free h&r block efile See Signatures , later, for more information on POAs. Free h&r block efile State returns. Free h&r block efile   In most states, you can file an electronic state return simultaneously with your federal return. Free h&r block efile For more information, check with your local IRS office, state tax agency, tax professional, or the IRS website at  www. Free h&r block efile irs. Free h&r block efile gov/efile. Free h&r block efile Refunds. Free h&r block efile   You can have a refund check mailed to you, or you can have your refund deposited directly to your checking or savings account or split among two or three accounts. Free h&r block efile With e-file, your refund will be issued faster than if you filed on paper. Free h&r block efile   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain other federal nontax debts, such as student loans. Free h&r block efile See Offset against debts under Refunds, later. Free h&r block efile Refund inquiries. Free h&r block efile   Information about your return will generally be available within 24 hours after the IRS receives your e-filed return. Free h&r block efile See Refund Information , later. Free h&r block efile Amount you owe. Free h&r block efile   To avoid late-payment penalties and interest, pay your taxes in full by April 15, 2014. Free h&r block efile See How To Pay , later, for information on how to pay the amount you owe. Free h&r block efile Using Your Personal Computer You can file your tax return in a fast, easy, and convenient way using your personal computer. Free h&r block efile A computer with Internet access and tax preparation software are all you need. Free h&r block efile Best of all, you can e-file from the comfort of your home 24 hours a day, 7 days a week. Free h&r block efile IRS approved tax preparation software is available for online use on the Internet, for download from the Internet, and in retail stores. Free h&r block efile For information, visit www. Free h&r block efile irs. Free h&r block efile gov/efile. Free h&r block efile Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. Free h&r block efile Others offer it for a fee. Free h&r block efile Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. Free h&r block efile Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. Free h&r block efile The Volunteer Income Tax Assistance (VITA) program is designed to help low to moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. Free h&r block efile Many VITA sites offer free electronic filing and all volunteers will let you know about the credits and deductions you may be entitled to claim. Free h&r block efile To find a site near you, call 1-800-906-9887. Free h&r block efile Or to find the nearest AARP TaxAide site, visit AARP's website at www. Free h&r block efile aarp. Free h&r block efile org/taxaide or call 1-888-227-7669. Free h&r block efile For more information on these programs, go to IRS. Free h&r block efile gov and enter keyword “VITA” in the search box. Free h&r block efile Using a Tax Professional Many tax professionals electronically file tax returns for their clients. Free h&r block efile You may personally enter your PIN or complete Form 8879, IRS e-file Signature Authorization, to authorize the tax professional to enter your PIN on your return. Free h&r block efile Note. Free h&r block efile Tax professionals may charge a fee for IRS e-file. Free h&r block efile Fees can vary depending on the professional and the specific services rendered. Free h&r block efile When Do I Have To File? April 15, 2014, is the due date for filing your 2013 income tax return if you use the calendar year. Free h&r block efile For a quick view of due dates for filing a return with or without an extension of time to file (discussed later), see Table 1-5. Free h&r block efile Table 1-5. Free h&r block efile When To File Your 2013 Return For U. Free h&r block efile S. Free h&r block efile citizens and residents who file returns on a calendar year. Free h&r block efile   For Most Taxpayers For Certain Taxpayers Outside the U. Free h&r block efile S. Free h&r block efile No extension requested April 15, 2014 June 16, 2014 Automatic extension October 15, 2014 October 15, 2014 If you use a fiscal year (a year ending on the last day of any month except December, or a 52-53-week year), your income tax return is due by the 15th day of the 4th month after the close of your fiscal year. Free h&r block efile When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. Free h&r block efile —falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Free h&r block efile Filing paper returns on time. Free h&r block efile   Your paper return is filed on time if it is mailed in an envelope that is properly addressed, has enough postage, and is postmarked by the due date. Free h&r block efile If you send your return by registered mail, the date of the registration is the postmark date. Free h&r block efile The registration is evidence that the return was delivered. Free h&r block efile If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date. Free h&r block efile The postmarked certified mail receipt is evidence that the return was delivered. Free h&r block efile Private delivery services. Free h&r block efile   If you use a private delivery service designated by the IRS to send your return, the postmark date generally is the date the private delivery service records in its database or marks on the mailing label. Free h&r block efile The private delivery service can tell you how to get written proof of this date. Free h&r block efile   For the IRS mailing address to use if you are using a private delivery service, go to IRS. Free h&r block efile gov and enter “private delivery service” in the search box. Free h&r block efile   The following are designated private delivery services. Free h&r block efile DHL Express (DHL): Same Day Service. Free h&r block efile Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Free h&r block efile United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Free h&r block efile M. Free h&r block efile , UPS Worldwide Express Plus, and UPS Worldwide Express. Free h&r block efile Filing electronic returns on time. Free h&r block efile   If you use IRS e-file, your return is considered filed on time if the authorized electronic return transmitter postmarks the transmission by the due date. Free h&r block efile An authorized electronic return transmitter is a participant in the IRS e-file program that transmits electronic tax return information directly to the IRS. Free h&r block efile   The electronic postmark is a record of when the authorized electronic return transmitter received the transmission of your electronically filed return on its host system. Free h&r block efile The date and time in your time zone controls whether your electronically filed return is timely. Free h&r block efile Filing late. Free h&r block efile   If you do not file your return by the due date, you may have to pay a failure-to-file penalty and interest. Free h&r block efile For more information, see Penalties , later. Free h&r block efile Also see Interest under Amount You Owe. Free h&r block efile   If you were due a refund but you did not file a return, you generally must file within 3 years from the date the return was due (including extensions) to get that refund. Free h&r block efile Nonresident alien. Free h&r block efile    If you are a nonresident alien and earn wages subject to U. Free h&r block efile S. Free h&r block efile income tax withholding, your 2013 U. Free h&r block efile S. Free h&r block efile income tax return (Form 1040NR or Form 1040NR-EZ) is due by: April 15, 2014, if you use a calendar year, or The 15th day of the 4th month after the end of your fiscal year if you use a fiscal year. Free h&r block efile   If you do not earn wages subject to U. Free h&r block efile S. Free h&r block efile income tax withholding, your return is due by: June 16, 2014, if you use a calendar year, or The 15th day of the 6th month after the end of your fiscal year, if you use a fiscal year. Free h&r block efile See Publication 519 for more filing information. Free h&r block efile Filing for a decedent. Free h&r block efile   If you must file a final income tax return for a taxpayer who died during the year (a decedent), the return is due by the 15th day of the 4th month after the end of the decedent's normal tax year. Free h&r block efile See Publication 559. Free h&r block efile Extensions of Time To File You may be able to get an extension of time to file your return. Free h&r block efile There are three types of situations where you may qualify for an extension: Automatic extensions, You are outside the United States, or You are serving in a combat zone. Free h&r block efile Automatic Extension If you cannot file your 2013 return by the due date, you may be able to get an automatic 6-month extension of time to file. Free h&r block efile Example. Free h&r block efile If your return is due on April 15, 2014, you will have until October 15, 2014, to file. Free h&r block efile If you do not pay the tax due by the regular due date (generally, April 15), you will owe interest. Free h&r block efile You may also be charged penalties, discussed later. Free h&r block efile How to get the automatic extension. Free h&r block efile   You can get the automatic extension by: Using IRS e-file (electronic filing), or Filing a paper form. Free h&r block efile E-file options. Free h&r block efile   There are two ways you can use e-file to get an extension of time to file. Free h&r block efile Complete Form 4868, Application for Automatic Extension of Time To File U. Free h&r block efile S. Free h&r block efile Individual Income Tax Return, to use as a worksheet. Free h&r block efile If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Free h&r block efile If you e-file Form 4868 to the IRS, do not also send a paper Form 4868. Free h&r block efile E-file using your personal computer or a tax professional. Free h&r block efile    You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Free h&r block efile You will need to provide certain information from your tax return for 2012. Free h&r block efile If you wish to make a payment by direct transfer from your bank account, see Pay online , under How To Pay, later in this chapter. Free h&r block efile E-file and pay by credit or debit card or by direct transfer from your bank account. Free h&r block efile   You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card or by direct transfer from your bank account. Free h&r block efile You can do this by phone or over the Internet. Free h&r block efile You do not file Form 4868. Free h&r block efile See Pay online , under How To Pay, later in this chapter. Free h&r block efile Filing a paper Form 4868. Free h&r block efile   You can get an extension of time to file by filing a paper Form 4868. Free h&r block efile Mail it to the address shown in the form instructions. Free h&r block efile   If you want to make a payment with the form, make your check or money order payable to “United States Treasury. Free h&r block efile ” Write your SSN, daytime phone number, and “2013 Form 4868” on your check or money order. Free h&r block efile When to file. Free h&r block efile   You must request the automatic extension by the due date for your return. Free h&r block efile You can file your return any time before the 6-month extension period ends. Free h&r block efile When you file your return. Free h&r block efile   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Free h&r block efile If you file Form 1040EZ or Form 1040A, include that payment in your total payments on Form 1040EZ, line 9, or Form 1040A, line 41. Free h&r block efile Also enter “Form 4868” and the amount paid in the space to the left of line 9 or line 41. Free h&r block efile Individuals Outside the United States You are allowed an automatic 2-month extension, without filing Form 4868, (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Free h&r block efile S. Free h&r block efile citizen or resident, and On the due date of your return: You are living outside the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and  Puerto Rico. Free h&r block efile However, if you pay the tax due after the regular due date (generally, April 15), interest will be charged from that date until the date the tax is paid. Free h&r block efile If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Free h&r block efile See Individuals Serving in Combat Zone , later, for special rules that apply to you. Free h&r block efile Married taxpayers. Free h&r block efile   If you file a joint return, only one spouse has to qualify for this automatic extension. Free h&r block efile If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Free h&r block efile How to get the extension. Free h&r block efile   To use this automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Free h&r block efile (See the situations listed under (2), earlier. Free h&r block efile ) Extensions beyond 2 months. Free h&r block efile   If you cannot file your return within the automatic 2-month extension period, you may be able to get an additional 4-month extension, for a total of 6 months. Free h&r block efile File Form 4868 and check the box on line 8. Free h&r block efile No further extension. Free h&r block efile   An extension of more than 6 months will generally not be granted. Free h&r block efile However, if you are outside the United States and meet certain tests, you may be granted a longer extension. Free h&r block efile For more information, see When To File and Pay in Publication 54. Free h&r block efile Individuals Serving in Combat Zone The deadline for filing your tax return, paying any tax you may owe, and filing a claim for refund is automatically extended if you serve in a combat zone. Free h&r block efile This applies to members of the Armed Forces, as well as merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces in support of the Armed Forces. Free h&r block efile Combat zone. Free h&r block efile   For purposes of the automatic extension, the term “combat zone” includes the following areas. Free h&r block efile The Arabian peninsula area, effective January 17, 1991. Free h&r block efile The Kosovo area, effective March 24, 1999. Free h&r block efile Afghanistan area, effective September 19, 2001. Free h&r block efile   See Publication 3, Armed Forces' Tax Guide, for more detailed information on the locations comprising each combat zone. Free h&r block efile The publication also has information about other tax benefits available to military personnel serving in a combat zone. Free h&r block efile Extension period. Free h&r block efile   The deadline for filing your return, paying any tax due, and filing a claim for refund is extended for at least 180 days after the later of: The last day you are in a combat zone or the last day the area qualifies as a combat zone, or The last day of any continuous qualified hospitalization for injury from service in the combat zone. Free h&r block efile   In addition to the 180 days, your deadline is also extended by the number of days you had left to take action with the IRS when you entered the combat zone. Free h&r block efile For example, you have 3½ months (January 1 – April 15) to file your tax return. Free h&r block efile Any days left in this period when you entered the combat zone (or the entire 3½ months if you entered it before the beginning of the year) are added to the 180 days. Free h&r block efile See Extension of Deadlines in Publication 3 for more information. Free h&r block efile   The rules on the extension for filing your return also apply when you are deployed outside the United States (away from your permanent duty station) while participating in a designated contingency operation. Free h&r block efile How Do I Prepare My Return? This section explains how to get ready to fill in your tax return and when to report your income and expenses. Free h&r block efile It also explains how to complete certain sections of the form. Free h&r block efile You may find Table 1-6 helpful when you prepare your paper return. Free h&r block efile Table 1-6. Free h&r block efile Six Steps for Preparing Your Paper Return 1 — Get your records together for income and expenses. Free h&r block efile 2 — Get the forms, schedules, and publications you need. Free h&r block efile 3 — Fill in your return. Free h&r block efile 4 — Check your return to make sure it is correct. Free h&r block efile 5 — Sign and date your return. Free h&r block efile 6 — Attach all required forms and schedules. Free h&r block efile Electronic returns. Free h&r block efile   For information you may find useful in preparing a paperless return, see Does My Return Have To Be on Paper , earlier. Free h&r block efile Substitute tax forms. Free h&r block efile   You cannot use your own version of a tax form unless it meets the requirements explained in Publication 1167, General Rules and Specifications for Substitute Forms and Schedules. Free h&r block efile Form W-2. Free h&r block efile   If you were an employee, you should receive Form W-2 from your employer. Free h&r block efile You will need the information from this form to prepare your return. Free h&r block efile See Form W-2 under Credit for Withholding and Estimated Tax in chapter 4. Free h&r block efile   Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Free h&r block efile If it is mailed, you should allow adequate time to receive it before contacting your employer. Free h&r block efile If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. Free h&r block efile When you request IRS help, be prepared to provide the following information. Free h&r block efile Your name, address (including ZIP code), and phone number. Free h&r block efile Your SSN. Free h&r block efile Your dates of employment. Free h&r block efile Your employer's name, address (including ZIP code), and phone number. Free h&r block efile Form 1099. Free h&r block efile   If you received certain types of income, you may receive a Form 1099. Free h&r block efile For example, if you received taxable interest of $10 or more, the payer is required to provide or send Form 1099 to you no later than January 31, 2014 (or by February 18, 2014, if furnished by a broker). Free h&r block efile If it is mailed, you should allow adequate time to receive it before contacting the payer. Free h&r block efile If you still do not get the form by February 18 (or by March 5, 2014, if furnished by a broker), call the IRS for help. Free h&r block efile When Do I Report My Income and Expenses? You must figure your taxable income on the basis of a tax year. Free h&r block efile A “tax year” is an annual accounting period used for keeping records and reporting income and expenses. Free h&r block efile You must account for your income and expenses in a way that clearly shows your taxable income. Free h&r block efile The way you do this is called an accounting method. Free h&r block efile This section explains which accounting periods and methods you can use. Free h&r block efile Accounting Periods Most individual tax returns cover a calendar year—the 12 months from January 1 through December 31. Free h&r block efile If you do not use a calendar year, your accounting period is a fiscal year. Free h&r block efile A regular fiscal year is a 12-month period that ends on the last day of any month except December. Free h&r block efile A 52-53-week fiscal year varies from 52 to 53 weeks and always ends on the same day of the week. Free h&r block efile You choose your accounting period (tax year) when you file your first income tax return. Free h&r block efile It cannot be longer than 12 months. Free h&r block efile More information. Free h&r block efile   For more information on accounting periods, including how to change your accounting period, see Publication 538, Accounting Periods and Methods. Free h&r block efile Accounting Methods Your accounting method is the way you account for your income and expenses. Free h&r block efile Most taxpayers use either the cash method or an accrual method. Free h&r block efile You choose a method when you file your first income tax return. Free h&r block efile If you want to change your accounting method after that, you generally must get IRS approval. Free h&r block efile Cash method. Free h&r block efile   If you use this method, report all items of income in the year in which you actually or constructively receive them. Free h&r block efile Generally, you deduct all expenses in the year you actually pay them. Free h&r block efile This is the method most individual taxpayers use. Free h&r block efile Constructive receipt. Free h&r block efile   Generally, you constructively receive income when it is credited to your account or set apart in any way that makes it available to you. Free h&r block efile You do not need to have physical possession of it. Free h&r block efile For example, interest credited to your bank account on December 31, 2013, is taxable income to you in 2013 if you could have withdrawn it in 2013 (even if the amount is not entered in your records or withdrawn until 2014). Free h&r block efile Garnisheed wages. Free h&r block efile   If your employer uses your wages to pay your debts, or if your wages are attached or garnisheed, the full amount is constructively received by you. Free h&r block efile You must include these wages in income for the year you would have received them. Free h&r block efile Debts paid for you. Free h&r block efile   If another person cancels or pays your debts (but not as a gift or loan), you have constructively received the amount and generally must include it in your gross income for the year. Free h&r block efile See Canceled Debts in chapter 12 for more information. Free h&r block efile Payment to third party. Free h&r block efile   If a third party is paid income from property you own, you have constructively received the income. Free h&r block efile It is the same as if you had actually received the income and paid it to the third party. Free h&r block efile Payment to an agent. Free h&r block efile   Income an agent receives for you is income you constructively received in the year the agent receives it. Free h&r block efile If you indicate in a contract that your income is to be paid to another person, you must include the amount in your gross income when the other person receives it. Free h&r block efile Check received or available. Free h&r block efile   A valid check that was made available to you before the end of the tax year is constructively received by you in that year. Free h&r block efile A check that was “made available to you” includes a check you have already received, but not cashed or deposited. Free h&r block efile It also includes, for example, your last paycheck of the year that your employer made available for you to pick up at the office before the end of the year. Free h&r block efile It is constructively received by you in that year whether or not you pick it up before the end of the year or wait to receive it by mail after the end of the year. Free h&r block efile No constructive receipt. Free h&r block efile   There may be facts to show that you did not constructively receive income. Free h&r block efile Example. Free h&r block efile Alice Johnson, a teacher, agreed to her school board's condition that, in her absence, she would receive only the difference between her regular salary and the salary of a substitute teacher hired by the school board. Free h&r block efile Therefore, Alice did not constructively receive the amount by which her salary was reduced to pay the substitute teacher. Free h&r block efile Accrual method. Free h&r block efile   If you use an accrual method, you generally report income when you earn it, rather than when you receive it. Free h&r block efile You generally deduct your expenses when you incur them, rather than when you pay them. Free h&r block efile Income paid in advance. Free h&r block efile   An advance payment of income is generally included in gross income in the year you receive it. Free h&r block efile Your method of accounting does not matter as long as the income is available to you. Free h&r block efile An advance payment may include rent or interest you receive in advance and pay for services you will perform later. Free h&r block efile   A limited deferral until the next tax year may be allowed for certain advance payments. Free h&r block efile See Publication 538 for specific information. Free h&r block efile Additional information. Free h&r block efile   For more information on accounting methods, including how to change your accounting method, see Publication 538. Free h&r block efile Social Security Number (SSN) You must enter your SSN on your return. Free h&r block efile If you are married, enter the SSNs for both you and your spouse, whether you file jointly or separately. Free h&r block efile If you are filing a joint return, include the SSNs in the same order as the names. Free h&r block efile Use this same order in submitting other forms and documents to the IRS. Free h&r block efile Check that both the name and SSN on your Form 1040, W-2, and 1099 agree with your social security card. Free h&r block efile If they do not, certain deductions and credits on your Form 1040 may be reduced or disallowed and you may not receive credit for your social security earnings. Free h&r block efile If your Form W-2 shows an incorrect SSN or name, notify your employer or the form-issuing agent as soon as possible to make sure your earnings are credited to your social security record. Free h&r block efile If the name or SSN on your social security card is incorrect, call the SSA at 1-800-772-1213. Free h&r block efile Name change. Free h&r block efile   If you changed your name because of marriage, divorce, etc. Free h&r block efile , be sure to report the change to your local Social Security Administration (SSA) office before filing your return. Free h&r block efile This prevents delays in processing your return and issuing refunds. Free h&r block efile It also safeguards your future social security benefits. Free h&r block efile Dependent's SSN. Free h&r block efile   You must provide the SSN of each dependent you claim, regardless of the dependent's age. Free h&r block efile This requirement applies to all dependents (not just your children) claimed on your tax return. Free h&r block efile Exception. Free h&r block efile    If your child was born and died in 2013 and did not have an SSN, enter “DIED” in column (2) of line 6c (Form 1040 or 1040A) and include a copy of the child's birth certificate, death certificate, or hospital records. Free h&r block efile The document must show that the child was born alive. Free h&r block efile No SSN. Free h&r block efile   File Form SS-5, Application for a Social Security Card, with your local SSA office to get an SSN for yourself or your dependent. Free h&r block efile It usually takes about 2 weeks to get an SSN. Free h&r block efile If you or your dependent is not eligible for an SSN, see Individual taxpayer identification number (ITIN) , later. Free h&r block efile   If you are a U. Free h&r block efile S. Free h&r block efile citizen or resident alien, you must show proof of age, identity, and citizenship or alien status with your Form SS-5. Free h&r block efile If you are 12 or older and have never been assigned an SSN, you must appear in person with this proof at an SSA office. Free h&r block efile   Form SS-5 is available at any SSA office, on the Internet at www. Free h&r block efile socialsecurity. Free h&r block efile gov, or by calling 1-800-772-1213. Free h&r block efile If you have any questions about which documents you can use as proof of age, identity, or citizenship, contact your SSA office. Free h&r block efile   If your dependent does not have an SSN by the time your return is due, you may want to ask for an extension of time to file, as explained earlier under When Do I Have To File . Free h&r block efile   If you do not provide a required SSN or if you provide an incorrect SSN, your tax may be increased and any refund may be reduced. Free h&r block efile Adoption taxpayer identification number (ATIN). Free h&r block efile   If you are in the process of adopting a child who is a U. Free h&r block efile S. Free h&r block efile citizen or resident and cannot get an SSN for the child until the adoption is final, you can apply for an ATIN to use instead of an SSN. Free h&r block efile    File Form W-7A, Application for Taxpayer Identification Number for Pending U. Free h&r block efile S. Free h&r block efile Adoptions, with the IRS to get an ATIN if all of the following are true. Free h&r block efile You have a child living with you who was placed in your home for legal adoption. Free h&r block efile You cannot get the child's existing SSN even though you have made a reasonable attempt to get it from the birth parents, the placement agency, and other persons. Free h&r block efile You cannot get an SSN for the child from the SSA because, for example, the adoption is not final. Free h&r block efile You are eligible to claim the child as a dependent on your tax return. Free h&r block efile After the adoption is final, you must apply for an SSN for the child. Free h&r block efile You cannot continue using the ATIN. Free h&r block efile   See Form W-7A for more information. Free h&r block efile Nonresident alien spouse. Free h&r block efile   If your spouse is a nonresident alien, your spouse must have either an SSN or an ITIN if: You file a joint return, You file a separate return and claim an exemption for your spouse, or Your spouse is filing a separate return. Free h&r block efile If your spouse is not eligible for an SSN, see the following discussion on ITINs. Free h&r block efile Individual taxpayer identification number (ITIN). Free h&r block efile   The IRS will issue you an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. Free h&r block efile This also applies to an alien spouse or dependent. Free h&r block efile To apply for an ITIN, file Form W-7 with the IRS. Free h&r block efile It usually takes about 6 to 10 weeks to get an ITIN. Free h&r block efile Enter the ITIN on your tax return wherever an SSN is requested. Free h&r block efile    If you are applying for an ITIN for yourself, your spouse, or a dependent in order to file your tax return, attach your completed tax return to your Form W-7. Free h&r block efile See the Form W-7 instructions for how and where to file. Free h&r block efile You cannot e-file a return using an ITIN in the calendar year the ITIN is issued; however, you can e-file returns in the following years. Free h&r block efile ITIN for tax use only. Free h&r block efile   An ITIN is for tax use only. Free h&r block efile It does not entitle you or your dependent to social security benefits or change the employment or immigration status of either of you under U. Free h&r block efile S. Free h&r block efile law. Free h&r block efile Penalty for not providing social security number. Free h&r block efile   If you do not include your SSN or the SSN of your spouse or dependent as required, you may have to pay a penalty. Free h&r block efile See the discussion on Penalties , later, for more information. Free h&r block efile SSN on correspondence. Free h&r block efile   If you write to the IRS about your tax account, be sure to include your SSN (and the name and SSN of your spouse, if you filed a joint return) in your correspondence. Free h&r block efile Because your SSN is used to identify your account, this helps the IRS respond to your correspondence promptly. Free h&r block efile Presidential Election Campaign Fund This fund helps pay for Presidential election campaigns. Free h&r block efile If you want $3 to go to this fund, check the box. Free h&r block efile If you are filing a joint return, your spouse can also have $3 go to the fund. Free h&r block efile If you check a box, your tax or refund will not change. Free h&r block efile Computations The following information may be useful in making the return easier to complete. Free h&r block efile Rounding off dollars. Free h&r block efile   You can round off cents to whole dollars on your return and schedules. Free h&r block efile If you do round to whole dollars, you must round all amounts. Free h&r block efile To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. Free h&r block efile For example, $1. Free h&r block efile 39 becomes $1 and $2. Free h&r block efile 50 becomes $3. Free h&r block efile   If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total. Free h&r block efile Example. Free h&r block efile You receive two Forms W-2: one showing wages of $5,000. Free h&r block efile 55 and one showing wages of $18,500. Free h&r block efile 73. Free h&r block efile On Form 1040, line 7, you would enter $23,501 ($5,000. Free h&r block efile 55 + $18,500. Free h&r block efile 73 = $23,501. Free h&r block efile 28), not $23,502 ($5,001 + $18,501). Free h&r block efile Equal amounts. Free h&r block efile   If you are asked to enter the smaller or larger of two equal amounts, enter that amount. Free h&r block efile Example. Free h&r block efile Line 1 is $500. Free h&r block efile Line 3 is $500. Free h&r block efile Line 5 asks you to enter the smaller of line 1 or 3. Free h&r block efile Enter $500 on line 5. Free h&r block efile Negative amounts. Free h&r block efile   If you file a paper return and you need to enter a negative amount, put the amount in parentheses rather than using a minus sign. Free h&r block efile To combine positive and negative amounts, add all the positive amounts together and then subtract the negative amounts. Free h&r block efile Attachments Depending on the form you file and the items reported on your return, you may have to complete additional schedules and forms and attach them to your paper return. Free h&r block efile You may be able to file a paperless return using IRS e-file. Free h&r block efile There's nothing to attach or mail, not even your Forms W-2. Free h&r block efile See Does My Return Have To Be on Paper, earlier. Free h&r block efile Form W-2. Free h&r block efile   Form W-2 is a statement from your employer of wages and other compensation paid to you and taxes withheld from your pay. Free h&r block efile You should have a Form W-2 from each employer. Free h&r block efile If you file a paper return, be sure to attach a copy of Form W-2 in the place indicated on the front page of your return. Free h&r block efile Attach it to the front page of your paper return, not to any attachments. Free h&r block efile For more information, see Form W-2 in chapter 4. Free h&r block efile   If you received a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free h&r block efile , showing federal income tax withheld, and you file a paper return, attach a copy of that form in the place indicated on the front page of your return. Free h&r block efile Form 1040EZ. Free h&r block efile   There are no additional schedules to file with Form 1040EZ. Free h&r block efile Form 1040A. Free h&r block efile   If you file a paper return, attach any forms and schedules behind Form 1040A in order of the “Attachment Sequence Number” shown in the upper right corner of the form or schedule. Free h&r block efile Then arrange all other statements or attachments in the same order as the forms and schedules they relate to and attach them last. Free h&r block efile Do not attach items unless required to do so. Free h&r block efile Form 1040. Free h&r block efile   If you file a paper return, attach any forms and schedules behind Form 1040 in order of the “Attachment Sequence Number” shown in the upper right corner of the form or schedule. Free h&r block efile Then arrange all other statements or attachments in the same order as the forms and schedules they relate to and attach them last. Free h&r block efile Do not attach items unless required to do so. Free h&r block efile Third Party Designee You can authorize the IRS to discuss your return with your preparer, a friend, family member, or any other person you choose. Free h&r block efile If you check the “Yes” box in the Third party designee area of your 2013 tax return and provide the information required, you are authorizing: The IRS to call the designee to answer any questions that arise during the processing of your return, and The designee to: Give information that is missing from your return to the IRS, Call the IRS for information about th
Español

Prisoner of War/Missing Personnel Office

The Department of Defense's Prisoner of War/Missing Personnel Office works to recover service members who became missing during their service.

Contact the Agency or Department

Website: Prisoner of War/Missing Personnel Office

E-mail:

Address: 2600 Defense Pentagon
Attn: External Affairs

Washington, DC 20301-2600

Phone Number: (703) 699-1420

The Free H&r Block Efile

Free h&r block efile 2. Free h&r block efile   Depreciation of Rental Property Table of Contents The BasicsWhat Rental Property Can Be Depreciated? When Does Depreciation Begin and End? Depreciation Methods Basis of Depreciable Property Claiming the Special Depreciation Allowance MACRS DepreciationDepreciation Systems Property Classes Under GDS Recovery Periods Under GDS Conventions Figuring Your Depreciation Deduction Figuring MACRS Depreciation Under ADS Claiming the Correct Amount of Depreciation You recover the cost of income producing property through yearly tax deductions. Free h&r block efile You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Free h&r block efile Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Free h&r block efile You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. Free h&r block efile You can deduct depreciation only on the part of your property used for rental purposes. Free h&r block efile Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Free h&r block efile You may have to use Form 4562 to figure and report your depreciation. Free h&r block efile See Which Forms To Use in chapter 3. Free h&r block efile Also see Publication 946. Free h&r block efile Section 179 deduction. Free h&r block efile   The section 179 deduction is a means of recovering part or all of the cost of certain qualifying property in the year you place the property in service. Free h&r block efile This deduction is not allowed for property used in connection with residential rental property. Free h&r block efile See chapter 2 of Publication 946. Free h&r block efile Alternative minimum tax (AMT). Free h&r block efile   If you use accelerated depreciation, you may be subject to the AMT. Free h&r block efile Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Free h&r block efile   The prescribed depreciation methods for rental real estate are not accelerated, so the depreciation deduction is not adjusted for the AMT. Free h&r block efile However, accelerated methods are generally used for other property connected with rental activities (for example, appliances and wall-to-wall carpeting). Free h&r block efile   To find out if you are subject to the AMT, see the Instructions for Form 6251. Free h&r block efile The Basics The following section discusses the information you will need to have about the rental property and the decisions to be made before figuring your depreciation deduction. Free h&r block efile What Rental Property Can Be Depreciated? You can depreciate your property if it meets all the following requirements. Free h&r block efile You own the property. Free h&r block efile You use the property in your business or income-producing activity (such as rental property). Free h&r block efile The property has a determinable useful life. Free h&r block efile The property is expected to last more than one year. Free h&r block efile Property you own. Free h&r block efile   To claim depreciation, you usually must be the owner of the property. Free h&r block efile You are considered as owning property even if it is subject to a debt. Free h&r block efile Rented property. Free h&r block efile   Generally, if you pay rent for property, you cannot depreciate that property. Free h&r block efile Usually, only the owner can depreciate it. Free h&r block efile However, if you make permanent improvements to leased property, you may be able to depreciate the improvements. Free h&r block efile See Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Free h&r block efile Cooperative apartments. Free h&r block efile   If you are a tenant-stockholder in a cooperative housing corporation and rent your cooperative apartment to others, you can deduct depreciation on your stock in the corporation. Free h&r block efile See chapter 4, Special Situations. Free h&r block efile Property having a determinable useful life. Free h&r block efile   To be depreciable, your property must have a determinable useful life. Free h&r block efile This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Free h&r block efile What Rental Property Cannot Be Depreciated? Certain property cannot be depreciated. Free h&r block efile This includes land and certain excepted property. Free h&r block efile Land. Free h&r block efile   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Free h&r block efile But if it does, the loss is accounted for upon disposition. Free h&r block efile The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Free h&r block efile   Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. Free h&r block efile These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. Free h&r block efile Example. Free h&r block efile You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. Free h&r block efile Some of the bushes and trees were planted right next to the house, while others were planted around the outer border of the lot. Free h&r block efile If you replace the house, you would have to destroy the bushes and trees right next to it. Free h&r block efile These bushes and trees are closely associated with the house, so they have a determinable useful life. Free h&r block efile Therefore, you can depreciate them. Free h&r block efile Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. Free h&r block efile Excepted property. Free h&r block efile   Even if the property meets all the requirements listed earlier under What Rental Property Can Be Depreciated , you cannot depreciate the following property. Free h&r block efile Property placed in service and disposed of (or taken out of business use) in the same year. Free h&r block efile Equipment used to build capital improvements. Free h&r block efile You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Free h&r block efile For more information, see chapter 1 of Publication 946. Free h&r block efile When Does Depreciation Begin and End? You begin to depreciate your rental property when you place it in service for the production of income. Free h&r block efile You stop depreciating it either when you have fully recovered your cost or other basis, or when you retire it from service, whichever happens first. Free h&r block efile Placed in Service You place property in service in a rental activity when it is ready and available for a specific use in that activity. Free h&r block efile Even if you are not using the property, it is in service when it is ready and available for its specific use. Free h&r block efile Example 1. Free h&r block efile On November 22 of last year, you purchased a dishwasher for your rental property. Free h&r block efile The appliance was delivered on December 7, but was not installed and ready for use until January 3 of this year. Free h&r block efile Because the dishwasher was not ready for use last year, it is not considered placed in service until this year. Free h&r block efile If the appliance had been installed and ready for use when it was delivered in December of last year, it would have been considered placed in service in December, even if it was not actually used until this year. Free h&r block efile Example 2. Free h&r block efile On April 6, you purchased a house to use as residential rental property. Free h&r block efile You made extensive repairs to the house and had it ready for rent on July 5. Free h&r block efile You began to advertise the house for rent in July and actually rented it beginning September 1. Free h&r block efile The house is considered placed in service in July when it was ready and available for rent. Free h&r block efile You can begin to depreciate the house in July. Free h&r block efile Example 3. Free h&r block efile You moved from your home in July. Free h&r block efile During August and September you made several repairs to the house. Free h&r block efile On October 1, you listed the property for rent with a real estate company, which rented it on December 1. Free h&r block efile The property is considered placed in service on October 1, the date when it was available for rent. Free h&r block efile Conversion to business use. Free h&r block efile   If you place property in service in a personal activity, you cannot claim depreciation. Free h&r block efile However, if you change the property's use to business or the production of income, you can begin to depreciate it at the time of the change. Free h&r block efile You place the property in service for business or income-producing use on the date of the change. Free h&r block efile Example. Free h&r block efile You bought a house and used it as your personal home several years before you converted it to rental property. Free h&r block efile Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. Free h&r block efile You can begin to claim depreciation in the year you converted it to rental property because at that time its use changed to the production of income. Free h&r block efile Idle Property Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). Free h&r block efile For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it is not available for rent. Free h&r block efile Cost or Other Basis Fully Recovered You must stop depreciating property when the total of your yearly depreciation deductions equals your cost or other basis of your property. Free h&r block efile For this purpose, your yearly depreciation deductions include any depreciation that you were allowed to claim, even if you did not claim it. Free h&r block efile See Basis of Depreciable Property , later. Free h&r block efile Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Free h&r block efile You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Free h&r block efile You sell or exchange the property. Free h&r block efile You convert the property to personal use. Free h&r block efile You abandon the property. Free h&r block efile The property is destroyed. Free h&r block efile Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. Free h&r block efile If you placed rental property in service before 1987, you are using one of the following methods. Free h&r block efile ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987. Free h&r block efile Straight line or declining balance method over the useful life of property placed in service before 1981. Free h&r block efile See MACRS Depreciation , later, for more information. Free h&r block efile Rental property placed in service before 2013. Free h&r block efile   Continue to use the same method of figuring depreciation that you used in the past. Free h&r block efile Use of real property changed. Free h&r block efile   Generally, you must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. Free h&r block efile This includes your residence that you changed to rental use. Free h&r block efile See Property Owned or Used in 1986 in Publication 946, chapter 1, for those situations in which MACRS is not allowed. Free h&r block efile Improvements made after 1986. Free h&r block efile   Treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. Free h&r block efile As a result, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. Free h&r block efile For more information about improvements, see Additions or improvements to property , later in this chapter under Recovery Periods Under GDS. Free h&r block efile This publication discusses MACRS depreciation only. Free h&r block efile If you need information about depreciating property placed in service before 1987, see Publication 534. Free h&r block efile Basis of Depreciable Property The basis of property used in a rental activity is generally its adjusted basis when you place it in service in that activity. Free h&r block efile This is its cost or other basis when you acquired it, adjusted for certain items occurring before you place it in service in the rental activity. Free h&r block efile If you depreciate your property under MACRS, you may also have to reduce your basis by certain deductions and credits with respect to the property. Free h&r block efile Basis and adjusted basis are explained in the following discussions. Free h&r block efile If you used the property for personal purposes before changing it to rental use, its basis for depreciation is the lesser of its adjusted basis or its fair market value when you change it to rental use. Free h&r block efile See Basis of Property Changed to Rental Use in chapter 4. Free h&r block efile Cost Basis The basis of property you buy is usually its cost. Free h&r block efile The cost is the amount you pay for it in cash, in debt obligation, in other property, or in services. Free h&r block efile Your cost also includes amounts you pay for: Sales tax charged on the purchase (but see Exception next), Freight charges to obtain the property, and Installation and testing charges. Free h&r block efile Exception. Free h&r block efile   If you deducted state and local general sales taxes as an itemized deduction on Schedule A (Form 1040), do not include those sales taxes as part of your cost basis. Free h&r block efile Such taxes were deductible before 1987 and after 2003. Free h&r block efile Loans with low or no interest. Free h&r block efile   If you buy property on any time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, less the amount considered to be unstated interest. Free h&r block efile See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Free h&r block efile Real property. Free h&r block efile   If you buy real property, such as a building and land, certain fees and other expenses you pay are part of your cost basis in the property. Free h&r block efile Real estate taxes. Free h&r block efile   If you buy real property and agree to pay real estate taxes on it that were owed by the seller and the seller does not reimburse you, the taxes you pay are treated as part of your basis in the property. Free h&r block efile You cannot deduct them as taxes paid. Free h&r block efile   If you reimburse the seller for real estate taxes the seller paid for you, you can usually deduct that amount. Free h&r block efile Do not include that amount in your basis in the property. Free h&r block efile Settlement fees and other costs. Free h&r block efile   The following settlement fees and closing costs for buying the property are part of your basis in the property. Free h&r block efile Abstract fees. Free h&r block efile Charges for installing utility services. Free h&r block efile Legal fees. Free h&r block efile Recording fees. Free h&r block efile Surveys. Free h&r block efile Transfer taxes. Free h&r block efile Title insurance. Free h&r block efile Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Free h&r block efile   The following are settlement fees and closing costs you cannot include in your basis in the property. Free h&r block efile Fire insurance premiums. Free h&r block efile Rent or other charges relating to occupancy of the property before closing. Free h&r block efile Charges connected with getting or refinancing a loan, such as: Points (discount points, loan origination fees), Mortgage insurance premiums, Loan assumption fees, Cost of a credit report, and Fees for an appraisal required by a lender. Free h&r block efile   Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Free h&r block efile Assumption of a mortgage. Free h&r block efile   If you buy property and become liable for an existing mortgage on the property, your basis is the amount you pay for the property plus the amount remaining to be paid on the mortgage. Free h&r block efile Example. Free h&r block efile You buy a building for $60,000 cash and assume a mortgage of $240,000 on it. Free h&r block efile Your basis is $300,000. Free h&r block efile Separating cost of land and buildings. Free h&r block efile   If you buy buildings and your cost includes the cost of the land on which they stand, you must divide the cost between the land and the buildings to figure the basis for depreciation of the buildings. Free h&r block efile The part of the cost that you allocate to each asset is the ratio of the fair market value of that asset to the fair market value of the whole property at the time you buy it. Free h&r block efile   If you are not certain of the fair market values of the land and the buildings, you can divide the cost between them based on their assessed values for real estate tax purposes. Free h&r block efile Example. Free h&r block efile You buy a house and land for $200,000. Free h&r block efile The purchase contract does not specify how much of the purchase price is for the house and how much is for the land. Free h&r block efile The latest real estate tax assessment on the property was based on an assessed value of $160,000, of which $136,000 was for the house and $24,000 was for the land. Free h&r block efile You can allocate 85% ($136,000 ÷ $160,000) of the purchase price to the house and 15% ($24,000 ÷ $160,000) of the purchase price to the land. Free h&r block efile Your basis in the house is $170,000 (85% of $200,000) and your basis in the land is $30,000 (15% of $200,000). Free h&r block efile Basis Other Than Cost You cannot use cost as a basis for property that you received: In return for services you performed; In an exchange for other property; As a gift; From your spouse, or from your former spouse as the result of a divorce; or As an inheritance. Free h&r block efile If you received property in one of these ways, see Publication 551 for information on how to figure your basis. Free h&r block efile Adjusted Basis To figure your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the production of income. Free h&r block efile The result of these adjustments to the basis is the adjusted basis. Free h&r block efile Increases to basis. Free h&r block efile   You must increase the basis of any property by the cost of all items properly added to a capital account. Free h&r block efile These include the following. Free h&r block efile The cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year. Free h&r block efile Amounts spent after a casualty to restore the damaged property. Free h&r block efile The cost of extending utility service lines to the property. Free h&r block efile Legal fees, such as the cost of defending and perfecting title, or settling zoning issues. Free h&r block efile Additions or improvements. Free h&r block efile   Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. Free h&r block efile This includes all direct costs, such as material and labor, but does not include your own labor. Free h&r block efile It also includes all expenses related to the addition or improvement. Free h&r block efile   For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Free h&r block efile Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Free h&r block efile   Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. Free h&r block efile For information on depreciating additions or improvements, see Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Free h&r block efile    The cost of landscaping improvements is usually treated as an addition to the basis of the land, which is not depreciable. Free h&r block efile However, see What Rental Property Cannot Be Depreciated, earlier. Free h&r block efile Assessments for local improvements. Free h&r block efile   Assessments for items which tend to increase the value of property, such as streets and sidewalks, must be added to the basis of the property. Free h&r block efile For example, if your city installs curbing on the street in front of your house, and assesses you and your neighbors for its cost, you must add the assessment to the basis of your property. Free h&r block efile Also add the cost of legal fees paid to obtain a decrease in an assessment levied against property to pay for local improvements. Free h&r block efile You cannot deduct these items as taxes or depreciate them. Free h&r block efile    However, you can deduct as taxes, charges or assessments for maintenance, repairs, or interest charges related to the improvements. Free h&r block efile Do not add them to your basis in the property. Free h&r block efile Deducting vs. Free h&r block efile capitalizing costs. Free h&r block efile   Do not add to your basis costs you can deduct as current expenses. Free h&r block efile However, there are certain costs you can choose either to deduct or to capitalize. Free h&r block efile If you capitalize these costs, include them in your basis. Free h&r block efile If you deduct them, do not include them in your basis. Free h&r block efile   The costs you may choose to deduct or capitalize include carrying charges, such as interest and taxes, that you must pay to own property. Free h&r block efile   For more information about deducting or capitalizing costs and how to make the election, see Carrying Charges in Publication 535, chapter 7. Free h&r block efile Decreases to basis. Free h&r block efile   You must decrease the basis of your property by any items that represent a return of your cost. Free h&r block efile These include the following. Free h&r block efile Insurance or other payment you receive as the result of a casualty or theft loss. Free h&r block efile Casualty loss not covered by insurance for which you took a deduction. Free h&r block efile Amount(s) you receive for granting an easement. Free h&r block efile Residential energy credits you were allowed before 1986, or after 2005, if you added the cost of the energy items to the basis of your home. Free h&r block efile Exclusion from income of subsidies for energy conservation measures. Free h&r block efile Special depreciation allowance claimed on qualified property. Free h&r block efile Depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Free h&r block efile If you did not deduct enough or deducted too much in any year, see Depreciation under Decreases to Basis in Publication 551. Free h&r block efile   If your rental property was previously used as your main home, you must also decrease the basis by the following. Free h&r block efile Gain you postponed from the sale of your main home before May 7, 1997, if the replacement home was converted to your rental property. Free h&r block efile District of Columbia first-time homebuyer credit allowed on the purchase of your main home after August 4, 1997 and before January 1, 2012. Free h&r block efile Amount of qualified principal residence indebtedness discharged on or after January 1, 2007. Free h&r block efile Claiming the Special Depreciation Allowance For 2013, your residential rental property may qualify for a special depreciation allowance. Free h&r block efile This allowance is figured before you figure your regular depreciation deduction. Free h&r block efile See Publication 946, chapter 3, for details. Free h&r block efile Also see the Instructions for Form 4562, Line 14. Free h&r block efile If you qualify for, but choose not to take, a special depreciation allowance, you must attach a statement to your return. Free h&r block efile The details of this election are in Publication 946, chapter 3, and the Instructions for Form 4562, Line 14. Free h&r block efile MACRS Depreciation Most business and investment property placed in service after 1986 is depreciated using MACRS. Free h&r block efile This section explains how to determine which MACRS depreciation system applies to your property. Free h&r block efile It also discusses other information you need to know before you can figure depreciation under MACRS. Free h&r block efile This information includes the property's: Recovery class, Applicable recovery period, Convention, Placed-in-service date, Basis for depreciation, and Depreciation method. Free h&r block efile Depreciation Systems MACRS consists of two systems that determine how you depreciate your property—the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Free h&r block efile You must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Free h&r block efile Excluded Property You cannot use MACRS for certain personal property (such as furniture or appliances) placed in service in your rental property in 2013 if it had been previously placed in service before 1987 when MACRS became effective. Free h&r block efile In most cases, personal property is excluded from MACRS if you (or a person related to you) owned or used it in 1986 or if your tenant is a person (or someone related to the person) who owned or used it in 1986. Free h&r block efile However, the property is not excluded if your 2013 deduction under MACRS (using a half-year convention) is less than the deduction you would have under ACRS. Free h&r block efile For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1. Free h&r block efile Electing ADS If you choose, you can use the ADS method for most property. Free h&r block efile Under ADS, you use the straight line method of depreciation. Free h&r block efile The election of ADS for one item in a class of property generally applies to all property in that class that is placed in service during the tax year of the election. Free h&r block efile However, the election applies on a property-by-property basis for residential rental property and nonresidential real property. Free h&r block efile If you choose to use ADS for your residential rental property, the election must be made in the first year the property is placed in service. Free h&r block efile Once you make this election, you can never revoke it. Free h&r block efile For property placed in service during 2013, you make the election to use ADS by entering the depreciation on Form 4562, Part III, Section C, line 20c. Free h&r block efile Property Classes Under GDS Each item of property that can be depreciated under MACRS is assigned to a property class, determined by its class life. Free h&r block efile The property class generally determines the depreciation method, recovery period, and convention. Free h&r block efile The property classes under GDS are: 3-year property, 5-year property, 7-year property, 10-year property, 15-year property, 20-year property, Nonresidential real property, and Residential rental property. Free h&r block efile Under MACRS, property that you placed in service during 2013 in your rental activities generally falls into one of the following classes. Free h&r block efile 5-year property. Free h&r block efile This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc. Free h&r block efile ), automobiles, and light trucks. Free h&r block efile This class also includes appliances, carpeting, furniture, etc. Free h&r block efile , used in a residential rental real estate activity. Free h&r block efile Depreciation on automobiles, other property used for transportation, computers and related peripheral equipment, and property of a type generally used for entertainment, recreation, or amusement is limited. Free h&r block efile See chapter 5 of Publication 946. Free h&r block efile 7-year property. Free h&r block efile This class includes office furniture and equipment (desks, file cabinets, etc. Free h&r block efile ). Free h&r block efile This class also includes any property that does not have a class life and that has not been designated by law as being in any other class. Free h&r block efile 15-year property. Free h&r block efile This class includes roads, fences, and shrubbery (if depreciable). Free h&r block efile Residential rental property. Free h&r block efile This class includes any real property that is a rental building or structure (including a mobile home) for which 80% or more of the gross rental income for the tax year is from dwelling units. Free h&r block efile It does not include a unit in a hotel, motel, inn, or other establishment where more than half of the units are used on a transient basis. Free h&r block efile If you live in any part of the building or structure, the gross rental income includes the fair rental value of the part you live in. Free h&r block efile The other property classes do not generally apply to property used in rental activities. Free h&r block efile These classes are not discussed in this publication. Free h&r block efile See Publication 946 for more information. Free h&r block efile Recovery Periods Under GDS The recovery period of property is the number of years over which you recover its cost or other basis. Free h&r block efile The recovery periods are generally longer under ADS than GDS. Free h&r block efile The recovery period of property depends on its property class. Free h&r block efile Under GDS, the recovery period of an asset is generally the same as its property class. Free h&r block efile Class lives and recovery periods for most assets are listed in Appendix B of Publication 946. Free h&r block efile See Table 2-1 for recovery periods of property commonly used in residential rental activities. Free h&r block efile Qualified Indian reservation property. Free h&r block efile   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations. Free h&r block efile For more information, see chapter 4 of Publication 946. Free h&r block efile Additions or improvements to property. Free h&r block efile   Treat additions or improvements you make to your depreciable rental property as separate property items for depreciation purposes. Free h&r block efile   The property class and recovery period of the addition or improvement is the one that would apply to the original property if you had placed it in service at the same time as the addition or improvement. Free h&r block efile   The recovery period for an addition or improvement to property begins on the later of: The date the addition or improvement is placed in service, or The date the property to which the addition or improvement was made is placed in service. Free h&r block efile Example. Free h&r block efile You own a residential rental house that you have been renting since 1986 and depreciating under ACRS. Free h&r block efile You built an addition onto the house and placed it in service in 2013. Free h&r block efile You must use MACRS for the addition. Free h&r block efile Under GDS, the addition is depreciated as residential rental property over 27. Free h&r block efile 5 years. Free h&r block efile Table 2-1. Free h&r block efile MACRS Recovery Periods for Property Used in Rental Activities   MACRS Recovery Period   Type of Property General Depreciation System Alternative Depreciation System   Computers and their peripheral equipment 5 years 5 years   Office machinery, such as: Typewriters Calculators Copiers 5 years 6 years   Automobiles 5 years 5 years   Light trucks 5 years 5 years   Appliances, such as: Stoves Refrigerators 5 years 9 years   Carpets 5 years 9 years   Furniture used in rental property 5 years 9 years   Office furniture and equipment, such as: Desks Files 7 years 10 years   Any property that does not have a class life and that has not been designated by law as being in any other class 7 years 12 years   Roads 15 years 20 years   Shrubbery 15 years 20 years   Fences 15 years 20 years   Residential rental property (buildings or structures) and structural components such as furnaces, waterpipes, venting, etc. Free h&r block efile 27. Free h&r block efile 5 years 40 years   Additions and improvements, such as a new roof The same recovery period as that of the property to which the addition or improvement is made, determined as if the property were placed in service at the same time as the addition or improvement. Free h&r block efile   Conventions A convention is a method established under MACRS to set the beginning and end of the recovery period. Free h&r block efile The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Free h&r block efile Mid-month convention. Free h&r block efile    A mid-month convention is used for all residential rental property and nonresidential real property. Free h&r block efile Under this convention, you treat all property placed in service, or disposed of, during any month as placed in service, or disposed of, at the midpoint of that month. Free h&r block efile Mid-quarter convention. Free h&r block efile   A mid-quarter convention must be used if the mid-month convention does not apply and the total depreciable basis of MACRS property placed in service in the last 3 months of a tax year (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) is more than 40% of the total basis of all such property you place in service during the year. Free h&r block efile   Under this convention, you treat all property placed in service, or disposed of, during any quarter of a tax year as placed in service, or disposed of, at the midpoint of the quarter. Free h&r block efile Example. Free h&r block efile During the tax year, Tom Martin purchased the following items to use in his rental property. Free h&r block efile He elects not to claim the special depreciation allowance discussed earlier. Free h&r block efile A dishwasher for $400 that he placed in service in January. Free h&r block efile Used furniture for $100 that he placed in service in September. Free h&r block efile A refrigerator for $800 that he placed in service in October. Free h&r block efile Tom uses the calendar year as his tax year. Free h&r block efile The total basis of all property placed in service that year is $1,300. Free h&r block efile The $800 basis of the refrigerator placed in service during the last 3 months of his tax year exceeds $520 (40% × $1,300). Free h&r block efile Tom must use the mid-quarter convention instead of the half-year convention for all three items. Free h&r block efile Half-year convention. Free h&r block efile    The half-year convention is used if neither the mid-quarter convention nor the mid-month convention applies. Free h&r block efile Under this convention, you treat all property placed in service, or disposed of, during a tax year as placed in service, or disposed of, at the midpoint of that tax year. Free h&r block efile   If this convention applies, you deduct a half year of depreciation for the first year and the last year that you depreciate the property. Free h&r block efile You deduct a full year of depreciation for any other year during the recovery period. Free h&r block efile Figuring Your Depreciation Deduction You can figure your MACRS depreciation deduction in one of two ways. Free h&r block efile The deduction is substantially the same both ways. Free h&r block efile You can either: Actually compute the deduction using the depreciation method and convention that apply over the recovery period of the property, or Use the percentage from the MACRS percentage tables. Free h&r block efile In this publication we will use the percentage tables. Free h&r block efile For instructions on how to compute the deduction, see chapter 4 of Publication 946. Free h&r block efile Residential rental property. Free h&r block efile   You must use the straight line method and a mid-month convention for residential rental property. Free h&r block efile In the first year that you claim depreciation for residential rental property, you can claim depreciation only for the number of months the property is in use, and you must use the mid-month convention (explained under Conventions , earlier). Free h&r block efile 5-, 7-, or 15-year property. Free h&r block efile   For property in the 5- or 7-year class, use the 200% declining balance method and a half-year convention. Free h&r block efile However, in limited cases you must use the mid-quarter convention, if it applies. Free h&r block efile For property in the 15-year class, use the 150% declining balance method and a half-year convention. Free h&r block efile   You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. Free h&r block efile The choice to use the 150% method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Free h&r block efile You make this election on Form 4562. Free h&r block efile In Part III, column (f), enter “150 DB. Free h&r block efile ” Once you make this election, you cannot change to another method. Free h&r block efile   If you use either the 200% or 150% declining balance method, you figure your deduction using the straight line method in the first tax year that the straight line method gives you an equal or larger deduction. Free h&r block efile   You can also choose to use the straight line method with a half-year or mid-quarter convention for 5-, 7-, or 15-year property. Free h&r block efile The choice to use the straight line method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Free h&r block efile You elect the straight line method on Form 4562. Free h&r block efile In Part III, column (f), enter “S/L. Free h&r block efile ” Once you make this election, you cannot change to another method. Free h&r block efile MACRS Percentage Tables You can use the percentages in Table 2-2, earlier, to compute annual depreciation under MACRS. Free h&r block efile The tables show the percentages for the first few years or until the change to the straight line method is made. Free h&r block efile See Appendix A of Publication 946 for complete tables. Free h&r block efile The percentages in Tables 2-2a, 2-2b, and 2-2c make the change from declining balance to straight line in the year that straight line will give a larger deduction. Free h&r block efile If you elect to use the straight line method for 5-, 7-, or 15-year property, or the 150% declining balance method for 5- or 7-year property, use the tables in Appendix A of Publication 946. Free h&r block efile How to use the percentage tables. Free h&r block efile   You must apply the table rates to your property's unadjusted basis (defined below) each year of the recovery period. Free h&r block efile   Once you begin using a percentage table to figure depreciation, you must continue to use it for the entire recovery period unless there is an adjustment to the basis of your property for a reason other than: Depreciation allowed or allowable, or An addition or improvement that is depreciated as a separate item of property. Free h&r block efile   If there is an adjustment for any reason other than (1) or (2), for example, because of a deductible casualty loss, you can no longer use the table. Free h&r block efile For the year of the adjustment and for the remaining recovery period, figure depreciation using the property's adjusted basis at the end of the year and the appropriate depreciation method, as explained earlier under Figuring Your Depreciation Deduction . Free h&r block efile See Figuring the Deduction Without Using the Tables in Publication 946, chapter 4. Free h&r block efile Unadjusted basis. Free h&r block efile   This is the same basis you would use to figure gain on a sale (see Basis of Depreciable Property , earlier), but without reducing your original basis by any MACRS depreciation taken in earlier years. Free h&r block efile   However, you do reduce your original basis by other amounts claimed on the property, including: Any amortization, Any section 179 deduction, and Any special depreciation allowance. Free h&r block efile For more information, see chapter 4 of Publication 946. Free h&r block efile Please click here for the text description of the image. Free h&r block efile Table 2-2 Tables 2-2a, 2-2b, and 2-2c. Free h&r block efile   The percentages in these tables take into account the half-year and mid-quarter conventions. Free h&r block efile Use Table 2-2a for 5-year property, Table 2-2b for 7-year property, and Table 2-2c for 15-year property. Free h&r block efile Use the percentage in the second column (half-year convention) unless you are required to use the mid-quarter convention (explained earlier). Free h&r block efile If you must use the mid-quarter convention, use the column that corresponds to the calendar year quarter in which you placed the property in service. Free h&r block efile Example 1. Free h&r block efile You purchased a stove and refrigerator and placed them in service in June. Free h&r block efile Your basis in the stove is $600 and your basis in the refrigerator is $1,000. Free h&r block efile Both are 5-year property. Free h&r block efile Using the half-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. Free h&r block efile For that year your depreciation deduction is $120 ($600 × . Free h&r block efile 20) for the stove and $200 ($1,000 × . Free h&r block efile 20) for the refrigerator. Free h&r block efile For Year 2, the depreciation percentage is 32%. Free h&r block efile That year's depreciation deduction will be $192 ($600 × . Free h&r block efile 32) for the stove and $320 ($1,000 × . Free h&r block efile 32) for the refrigerator. Free h&r block efile Example 2. Free h&r block efile Assume the same facts as in Example 1, except you buy the refrigerator in October instead of June. Free h&r block efile Since the refrigerator was placed in service in the last 3 months of the tax year, and its basis ($1,000) is more than 40% of the total basis of all property placed in service during the year ($1,600 × . Free h&r block efile 40 = $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. Free h&r block efile Because you placed the refrigerator in service in October, you use the fourth quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 5%. Free h&r block efile Your depreciation deduction for the refrigerator is $50 ($1,000 x . Free h&r block efile 05). Free h&r block efile Because you placed the stove in service in June, you use the second quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 25%. Free h&r block efile For that year, your depreciation deduction for the stove is $150 ($600 x . Free h&r block efile 25). Free h&r block efile Table 2-2d. Free h&r block efile    Use this table when you are using the GDS 27. Free h&r block efile 5 year option for residential rental property. Free h&r block efile Find the row for the month that you placed the property in service. Free h&r block efile Use the percentages listed for that month to figure your depreciation deduction. Free h&r block efile The mid-month convention is taken into account in the percentages shown in the table. Free h&r block efile Continue to use the same row (month) under the column for the appropriate year. Free h&r block efile Example. Free h&r block efile You purchased a single family rental house for $185,000 and placed it in service on February 8. Free h&r block efile The sales contract showed that the building cost $160,000 and the land cost $25,000. Free h&r block efile Your basis for depreciation is its original cost, $160,000. Free h&r block efile This is the first year of service for your residential rental property and you decide to use GDS which has a recovery period of 27. Free h&r block efile 5 years. Free h&r block efile Using Table 2-2d, you find that the percentage for property placed in service in February of Year 1 is 3. Free h&r block efile 182%. Free h&r block efile That year's depreciation deduction is $5,091 ($160,000 x . Free h&r block efile 03182). Free h&r block efile Figuring MACRS Depreciation Under ADS Table 2–1, earlier, shows the ADS recovery periods for property used in rental activities. Free h&r block efile See Appendix B in Publication 946 for other property. Free h&r block efile If your property is not listed in Appendix B, it is considered to have no class life. Free h&r block efile Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. Free h&r block efile Use the mid-month convention for residential rental property and nonresidential real property. Free h&r block efile For all other property, use the half-year or mid-quarter convention, as appropriate. Free h&r block efile See Publication 946 for ADS depreciation tables. Free h&r block efile Claiming the Correct Amount of Depreciation You should claim the correct amount of depreciation each tax year. Free h&r block efile If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Free h&r block efile For more information, see Depreciation under Decreases to Basis in Publication 551. Free h&r block efile If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Free h&r block efile S. Free h&r block efile Individual Income Tax Return. Free h&r block efile If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Free h&r block efile Filing an amended return. Free h&r block efile   You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Free h&r block efile You claimed the incorrect amount because of a mathematical error made in any year. Free h&r block efile You claimed the incorrect amount because of a posting error made in any year. Free h&r block efile You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. Free h&r block efile You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Free h&r block efile   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return for the property used in your rental activity. Free h&r block efile This also occurs when you use the same impermissible method of determining depreciation (for example, using the wrong MACRS recovery period) in two or more consecutively filed tax returns. Free h&r block efile   If an amended return is allowed, you must file it by the later of the following dates. Free h&r block efile 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Free h&r block efile A return filed before an unextended due date is considered filed on that due date. Free h&r block efile 2 years from the time you paid your tax for that year. Free h&r block efile Changing your accounting method. Free h&r block efile   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Free h&r block efile In some instances, that consent is automatic. Free h&r block efile For more information, see Changing Your Accounting Method in Publication 946,  chapter 1. Free h&r block efile Prev  Up  Next   Home   More Online Publications