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Free tax returns 2. Free tax returns   Roth IRAs Table of Contents What's New for 2013 What's New for 2014 Reminders Introduction What Is a Roth IRA? When Can a Roth IRA Be Opened? Can You Contribute to a Roth IRA?How Much Can Be Contributed? When Can You Make Contributions? What if You Contribute Too Much? Can You Move Amounts Into a Roth IRA?Conversions Rollover From Employer's Plan Into a Roth IRA Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Rollover From a Roth IRA Rollover of Exxon Valdez Settlement Income Rollover of Airline Payments Are Distributions Taxable?What Are Qualified Distributions? Additional Tax on Early Distributions Ordering Rules for Distributions How Do You Figure the Taxable Part? Must You Withdraw or Use Assets?Minimum distributions. Free tax returns Recognizing Losses on Investments Distributions After Owner's Death What's New for 2013 Roth IRA contribution limit. Free tax returns  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Free tax returns If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Free tax returns However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Free tax returns For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in this chapter. Free tax returns Modified AGI limit for Roth IRA contributions increased. Free tax returns  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Free tax returns Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Free tax returns Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Free tax returns Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Free tax returns See Can You Contribute to a Roth IRA? in this chapter. Free tax returns Net Investment Income Tax. Free tax returns  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Free tax returns However, these distributions are taken into account when determining the modified adjusted gross income threshold. Free tax returns Distributions from a nonqualified retirement plan are included in net investment income. Free tax returns See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Free tax returns What's New for 2014 Modified AGI limit for Roth IRA contributions increased. Free tax returns  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Free tax returns Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Free tax returns Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Free tax returns Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Free tax returns You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Free tax returns Reminders Deemed IRAs. Free tax returns  For plan years beginning after 2002, a qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Free tax returns If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Free tax returns An employee's account can be treated as a traditional IRA or a Roth IRA. Free tax returns For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Free tax returns Designated Roth accounts. Free tax returns  Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions. Free tax returns These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. Free tax returns Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. Free tax returns Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. Free tax returns A contribution to one does not impact your eligibility to contribute to the other. Free tax returns See Publication 575, for more information on designated Roth accounts. Free tax returns Introduction Regardless of your age, you may be able to establish and make nondeductible contributions to an individual retirement plan called a Roth IRA. Free tax returns Contributions not reported. Free tax returns   You do not report Roth IRA contributions on your return. Free tax returns What Is a Roth IRA? A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). Free tax returns It can be either an account or an annuity. Free tax returns Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened. Free tax returns To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. Free tax returns A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. Free tax returns Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. Free tax returns But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. Free tax returns Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live. Free tax returns Traditional IRA. Free tax returns   A traditional IRA is any IRA that is not a Roth IRA or SIMPLE IRA. Free tax returns Traditional IRAs are discussed in chapter 1. Free tax returns When Can a Roth IRA Be Opened? You can open a Roth IRA at any time. Free tax returns However, the time for making contributions for any year is limited. Free tax returns See When Can You Make Contributions , later under Can You Contribute to a Roth IRA. Free tax returns Can You Contribute to a Roth IRA? Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than: $188,000 for married filing jointly or qualifying widow(er), $127,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and $10,000 for married filing separately and you lived with your spouse at any time during the year. Free tax returns You may be able to claim a credit for contributions to your Roth IRA. Free tax returns For more information, see chapter 4. Free tax returns Is there an age limit for contributions?   Contributions can be made to your Roth IRA regardless of your age. Free tax returns Can you contribute to a Roth IRA for your spouse?   You can contribute to a Roth IRA for your spouse provided the contributions satisfy the Kay Bailey Hutchison Spousal IRA limit discussed in chapter 1 under How Much Can Be Contributed, you file jointly, and your modified AGI is less than $188,000. Free tax returns Compensation. Free tax returns   Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. Free tax returns It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments. Free tax returns For more information, see What Is Compensation? under Who Can Open a Traditional IRA? in chapter 1. Free tax returns Modified AGI. Free tax returns   Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjustments. Free tax returns Use Worksheet 2-1 , later, to determine your modified AGI. Free tax returns    Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses. Free tax returns Subtract them from AGI only for the purpose of figuring your modified AGI for Roth IRA purposes. Free tax returns How Much Can Be Contributed? The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. Free tax returns Worksheet 2-1. Free tax returns Modified Adjusted Gross Income for Roth IRA Purposes Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes. Free tax returns 1. Free tax returns Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37 1. Free tax returns   2. Free tax returns Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b) 2. Free tax returns   3. Free tax returns Subtract line 2 from line 1 3. Free tax returns   4. Free tax returns Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 4. Free tax returns   5. Free tax returns Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 5. Free tax returns   6. Free tax returns Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 6. Free tax returns   7. Free tax returns Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 7. Free tax returns   8. Free tax returns Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 8. Free tax returns   9. Free tax returns Enter any foreign housing deduction from Form 2555, line 50 9. Free tax returns   10. Free tax returns Enter any excludable qualified savings bond interest from Form 8815, line 14 10. Free tax returns   11. Free tax returns Enter any excluded employer-provided adoption benefits from Form 8839, line 28 11. Free tax returns   12. Free tax returns Add the amounts on lines 3 through 11 12. Free tax returns   13. Free tax returns Enter: $188,000 if married filing jointly or qualifying widow(er), $10,000 if married filing separately and you lived with your spouse at any time during the year, or $127,000 for all others 13. Free tax returns   Is the amount on line 12 more than the amount on line 13? If yes, see the note below. Free tax returns  If no, the amount on line 12 is your modified adjusted gross income for Roth IRA purposes. Free tax returns       Note. Free tax returns If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes. Free tax returns (If you receive social security benefits, use Worksheet 1 in Appendix B to refigure your AGI. Free tax returns ) Then go to line 3 above in this Worksheet 2-1 to refigure your modified AGI. Free tax returns If you do not have other income or loss items subject to AGI-based phaseouts, your modified adjusted gross income for Roth IRA purposes is the amount on line 12 above. Free tax returns Roth IRAs only. Free tax returns   If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation. Free tax returns   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced . Free tax returns Roth IRAs and traditional IRAs. Free tax returns   If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Free tax returns Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. Free tax returns   This means that your contribution limit is the lesser of: $5,500 ($6,500 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or Your taxable compensation minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs. Free tax returns   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained below under Contribution limit reduced . Free tax returns   Simplified employee pensions (SEPs) are discussed in Publication 560. Free tax returns Savings incentive match plans for employees (SIMPLEs) are discussed in chapter 3. Free tax returns Repayment of reservist distributions. Free tax returns   You can repay qualified reservist distributions even if the repayments would cause your total contributions to the Roth IRA to be more than the general limit on contributions. Free tax returns However, the total repayments cannot be more than the amount of your distribution. Free tax returns Note. Free tax returns If you make repayments of qualified reservist distributions to a Roth IRA, increase your basis in the Roth IRA by the amount of the repayment. Free tax returns For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1. Free tax returns Contribution limit reduced. Free tax returns   If your modified AGI is above a certain amount, your contribution limit is gradually reduced. Free tax returns Use Table 2-1, later, to determine if this reduction applies to you. Free tax returns Table 2-1. Free tax returns Effect of Modified AGI on Roth IRA Contribution This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI). Free tax returns IF you have taxable compensation and your filing status is . Free tax returns . Free tax returns . Free tax returns AND your modified AGI is . Free tax returns . Free tax returns . Free tax returns THEN . Free tax returns . Free tax returns . Free tax returns married filing jointly or  qualifying widow(er) less than $178,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Free tax returns at least $178,000 but less than $188,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Free tax returns $188,000 or more you cannot contribute to a Roth IRA. Free tax returns married filing separately and you lived with your spouse at any time during the year zero (-0-) you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Free tax returns more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Free tax returns $10,000 or more you cannot contribute to a Roth IRA. Free tax returns single, head of household,  or married filing separately and you did not live with your spouse at any time during the year less than $112,000 you can contribute up to $5,500 ($6,500 if you are age 50 or older) as explained under How Much Can Be Contributed . Free tax returns at least $112,000 but less than $127,000 the amount you can contribute is reduced as explained under Contribution limit reduced . Free tax returns $127,000 or more you cannot contribute to a Roth IRA. Free tax returns Figuring the reduction. Free tax returns   If the amount you can contribute must be reduced, use Worksheet 2-2, later, to figure your reduced contribution limit. Free tax returns Worksheet 2-2. Free tax returns Determining Your Reduced Roth IRA Contribution Limit Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Free tax returns If it is, use this worksheet to determine how much it is reduced. Free tax returns 1. Free tax returns Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Free tax returns   2. Free tax returns Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Free tax returns   3. Free tax returns Subtract line 2 from line 1 3. Free tax returns   4. Free tax returns Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Free tax returns   5. Free tax returns Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Free tax returns If the result is 1. Free tax returns 000 or more, enter 1. Free tax returns 000 5. Free tax returns   6. Free tax returns Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Free tax returns   7. Free tax returns Multiply line 5 by line 6 7. Free tax returns   8. Free tax returns Subtract line 7 from line 6. Free tax returns Round the result up to the nearest $10. Free tax returns If the result is less than $200, enter $200 8. Free tax returns   9. Free tax returns Enter contributions for the year to other IRAs 9. Free tax returns   10. Free tax returns Subtract line 9 from line 6 10. Free tax returns   11. Free tax returns Enter the lesser of line 8 or line 10. Free tax returns This is your reduced Roth IRA contribution limit 11. Free tax returns      Round your reduced contribution limit up to the nearest $10. Free tax returns If your reduced contribution limit is more than $0, but less than $200, increase the limit to $200. Free tax returns Example. Free tax returns You are a 45-year-old, single individual with taxable compensation of $113,000. Free tax returns You want to make the maximum allowable contribution to your Roth IRA for 2013. Free tax returns Your modified AGI for 2013 is $113,000. Free tax returns You have not contributed to any traditional IRA, so the maximum contribution limit before the modified AGI reduction is $5,500. Free tax returns You figure your reduced Roth IRA contribution of $5,140 as shown on Worksheet 2-2. Free tax returns Example—Illustrated, later. Free tax returns   Worksheet 2-2. Free tax returns Example—Illustrated Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. Free tax returns If it is, use this worksheet to determine how much it is reduced. Free tax returns 1. Free tax returns Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. Free tax returns 113,000 2. Free tax returns Enter: $178,000 if filing a joint return or qualifying widow(er), $-0- if married filing a separate return and you lived with your spouse at any time in 2013, or $112,000 for all others 2. Free tax returns 112,000 3. Free tax returns Subtract line 2 from line 1 3. Free tax returns 1,000 4. Free tax returns Enter: $10,000 if filing a joint return or qualifying widow(er) or married filing a separate return and you lived with your spouse at any time during the year, or $15,000 for all others 4. Free tax returns 15,000 5. Free tax returns Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). Free tax returns If the result is 1. Free tax returns 000 or more, enter 1. Free tax returns 000 5. Free tax returns . Free tax returns 067 6. Free tax returns Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. Free tax returns 5,500 7. Free tax returns Multiply line 5 by line 6 7. Free tax returns 369 8. Free tax returns Subtract line 7 from line 6. Free tax returns Round the result up to the nearest $10. Free tax returns If the result is less than $200, enter $200 8. Free tax returns 5,140 9. Free tax returns Enter contributions for the year to other IRAs 9. Free tax returns 0 10. Free tax returns Subtract line 9 from line 6 10. Free tax returns 5,500 11. Free tax returns Enter the lesser of line 8 or line 10. Free tax returns This is your reduced Roth IRA contribution limit 11. Free tax returns 5,140 When Can You Make Contributions? You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions). Free tax returns You can make contributions for 2013 by the due date (not including extensions) for filing your 2013 tax return. Free tax returns This means that most people can make contributions for 2013 by April 15, 2014. Free tax returns What if You Contribute Too Much? A 6% excise tax applies to any excess contribution to a Roth IRA. Free tax returns Excess contributions. Free tax returns   These are the contributions to your Roth IRAs for a year that equal the total of: Amounts contributed for the tax year to your Roth IRAs (other than amounts properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, as described later) that are more than your contribution limit for the year (explained earlier under How Much Can Be Contributed? ), plus Any excess contributions for the preceding year, reduced by the total of: Any distributions out of your Roth IRAs for the year, plus Your contribution limit for the year minus your contributions to all your IRAs for the year. Free tax returns Withdrawal of excess contributions. Free tax returns   For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. Free tax returns This treatment only applies if any earnings on the contributions are also withdrawn. Free tax returns The earnings are considered earned and received in the year the excess contribution was made. Free tax returns   If you timely filed your 2013 tax return without withdrawing a contribution that you made in 2013, you can still have the contribution returned to you within 6 months of the due date of your 2013 tax return, excluding extensions. Free tax returns If you do, file an amended return with “Filed pursuant to section 301. Free tax returns 9100-2” written at the top. Free tax returns Report any related earnings on the amended return and include an explanation of the withdrawal. Free tax returns Make any other necessary changes on the amended return. Free tax returns Applying excess contributions. Free tax returns    If contributions to your Roth IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. Free tax returns Can You Move Amounts Into a Roth IRA? You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. Free tax returns You may be able to roll over amounts from a qualified retirement plan to a Roth IRA. Free tax returns You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. Free tax returns You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA. Free tax returns Conversions You can convert a traditional IRA to a Roth IRA. Free tax returns The conversion is treated as a rollover, regardless of the conversion method used. Free tax returns Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. Free tax returns However, the 1-year waiting period does not apply. Free tax returns Conversion methods. Free tax returns   You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways. Free tax returns Rollover. Free tax returns You can receive a distribution from a traditional IRA and roll it over (contribute it) to a Roth IRA within 60 days after the distribution. Free tax returns Trustee-to-trustee transfer. Free tax returns You can direct the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA. Free tax returns Same trustee transfer. Free tax returns If the trustee of the traditional IRA also maintains the Roth IRA, you can direct the trustee to transfer an amount from the traditional IRA to the Roth IRA. Free tax returns Same trustee. Free tax returns   Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than opening a new account or issuing a new contract. Free tax returns Income. Free tax returns   You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA. Free tax returns These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. Free tax returns If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Free tax returns See Publication 505, Tax Withholding and Estimated Tax. Free tax returns More information. Free tax returns   For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1. Free tax returns Rollover From Employer's Plan Into a Roth IRA You can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): Employer's qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan); Annuity plan; Tax-sheltered annuity plan (section 403(b) plan); or Governmental deferred compensation plan (section 457 plan). Free tax returns Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. Free tax returns See Converting From Any Traditional IRA Into a Roth IRA in chapter 1. Free tax returns Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan. Free tax returns Rollover methods. Free tax returns   You can roll over amounts from a qualified retirement plan to a Roth IRA in one of the following ways. Free tax returns Rollover. Free tax returns You can receive a distribution from a qualified retirement plan and roll it over (contribute) to a Roth IRA within 60 days after the distribution. Free tax returns Since the distribution is paid directly to you, the payer generally must withhold 20% of it. Free tax returns Direct rollover option. Free tax returns Your employer's qualified plan must give you the option to have any part of an eligible rollover distribution paid directly to a Roth IRA. Free tax returns Generally, no tax is withheld from any part of the designated distribution that is directly paid to the trustee of the Roth IRA. Free tax returns Rollover by nonspouse beneficiary. Free tax returns   If you are a designated beneficiary (other than a surviving spouse) of a deceased employee, you can roll over all or part of an eligible rollover distribution from one of the types of plans listed above into a Roth IRA. Free tax returns You must make the rollover by a direct trustee-to-trustee transfer into an inherited Roth IRA. Free tax returns   You will determine your required minimum distributions in years after you make the rollover based on whether the employee died before his or her required beginning date for taking distributions from the plan. Free tax returns For more information, see Distributions after the employee’s death under Tax on Excess Accumulation in Publication 575. Free tax returns Income. Free tax returns   You must include in your gross income distributions from a qualified retirement plan that you would have had to include in income if you had not rolled them over into a Roth IRA. Free tax returns You do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions (after-tax contributions) to the plan that were taxable to you when paid. Free tax returns These amounts are normally included in income on your return for the year of the rollover from the qualified employer plan to a Roth IRA. Free tax returns If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. Free tax returns See Publication 505, Tax Withholding and Estimated Tax. Free tax returns For more information on eligible rollover distributions from qualified retirement plans and withholding, see Rollover From Employer's Plan Into an IRA in chapter 1. Free tax returns Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments If you received a military death gratuity or SGLI payment with respect to a death from injury that occurred after October 6, 2001, you can contribute (roll over) all or part of the amount received to your Roth IRA. Free tax returns The contribution is treated as a qualified rollover contribution. Free tax returns The amount you can roll over to your Roth IRA cannot exceed the total amount that you received reduced by any part of that amount that was contributed to a Coverdell ESA or another Roth IRA. Free tax returns Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the 1-year waiting period between rollovers. Free tax returns The rollover must be completed before the end of the 1-year period beginning on the date you received the payment. Free tax returns The amount contributed to your Roth IRA is treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. Free tax returns Rollover From a Roth IRA You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Free tax returns Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. Free tax returns However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers. Free tax returns A rollover from a Roth IRA to an employer retirement plan is not allowed. Free tax returns A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA. Free tax returns If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions does not change. Free tax returns The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. Free tax returns See What are Qualified Distributions , later. Free tax returns Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer (defined in chapter 1, earlier) and you received qualified settlement income (defined in chapter 1, earlier), you can contribute all or part of the amount received to an eligible retirement plan which includes a Roth IRA. Free tax returns The rules for contributing qualified settlement income to a Roth IRA are the same as the rules for contributing qualified settlement income to a traditional IRA with the following exception. Free tax returns Qualified settlement income that is contributed to a Roth IRA, or to a designated Roth account, will be: Included in your taxable income for the year the qualified settlement income was received, and Treated as part of your cost basis (investment in the contract) in the Roth IRA that is not taxable when distributed. Free tax returns For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1. Free tax returns Rollover of Airline Payments If you are a qualified airline employee (defined next), you may contribute any portion of an airline payment (defined below) you receive to a Roth IRA. Free tax returns The contribution must be made within 180 days from the date you received the payment. Free tax returns The contribution will be treated as a qualified rollover contribution. Free tax returns The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. Free tax returns Also, any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can contribute to your Roth IRA. Free tax returns Qualified airline employee. Free tax returns    A current or former employee of a commercial airline carrier who was a participant in a qualified defined benefit plan maintained by the carrier which was terminated or became subject to restrictions under Section 402(b) of the Pension Protection Act of 2006. Free tax returns These provisions also apply to surviving spouses of qualified airline employees. Free tax returns Airline payment. Free tax returns    An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. Free tax returns The payment also must be made both: Under the approval of an order of federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and In respect of the qualified airline employee’s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. Free tax returns Any reduction in the airline payment amount on account of employment taxes shall be disregarded when figuring the amount you can roll over to your traditional IRA. Free tax returns Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. Free tax returns Are Distributions Taxable? You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). Free tax returns You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. Free tax returns You may have to include part of other distributions in your income. Free tax returns See Ordering Rules for Distributions , later. Free tax returns Basis of distributed property. Free tax returns   The basis of property distributed from a Roth IRA is its fair market value (FMV) on the date of distribution, whether or not the distribution is a qualified distribution. Free tax returns Withdrawals of contributions by due date. Free tax returns   If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. Free tax returns If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. Free tax returns The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions. Free tax returns What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. Free tax returns It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and The payment or distribution is: Made on or after the date you reach age 59½, Made because you are disabled (defined earlier), Made to a beneficiary or to your estate after your death, or One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit). Free tax returns Additional Tax on Early Distributions If you receive a distribution that is not a qualified distribution, you may have to pay the 10% additional tax on early distributions as explained in the following paragraphs. Free tax returns Distributions of conversion and certain rollover contributions within 5-year period. Free tax returns   If, within the 5-year period starting with the first day of your tax year in which you convert an amount from a traditional IRA or rollover an amount from a qualified retirement plan to a Roth IRA, you take a distribution from a Roth IRA, you may have to pay the 10% additional tax on early distributions. Free tax returns You generally must pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income (recapture amount). Free tax returns A separate 5-year period applies to each conversion and rollover. Free tax returns See Ordering Rules for Distributions , later, to determine the recapture amount, if any. Free tax returns   The 5-year period used for determining whether the 10% early distribution tax applies to a distribution from a conversion or rollover contribution is separately determined for each conversion and rollover, and is not necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution. Free tax returns See What Are Qualified Distributions , earlier. Free tax returns   For example, if a calendar-year taxpayer makes a conversion contribution on February 25, 2013, and makes a regular contribution for 2012 on the same date, the 5-year period for the conversion begins January 1, 2013, while the 5-year period for the regular contribution begins on January 1, 2012. Free tax returns   Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover. Free tax returns   You must pay the 10% additional tax in the year of the distribution, even if you had included the conversion or rollover contribution in an earlier year. Free tax returns You also must pay the additional tax on any portion of the distribution attributable to earnings on contributions. Free tax returns Other early distributions. Free tax returns   Unless one of the exceptions listed below applies, you must pay the 10% additional tax on the taxable part of any distributions that are not qualified distributions. Free tax returns Exceptions. Free tax returns   You may not have to pay the 10% additional tax in the following situations. Free tax returns You have reached age 59½. Free tax returns You are totally and permanently disabled. Free tax returns You are the beneficiary of a deceased IRA owner. Free tax returns You use the distribution to buy, build, or rebuild a first home. Free tax returns The distributions are part of a series of substantially equal payments. Free tax returns You have unreimbursed medical expenses that are more than 10% (or 7. Free tax returns 5% if you or your spouse was born before January 2, 1949) of your adjusted gross income (defined earlier) for the year. Free tax returns You are paying medical insurance premiums during a period of unemployment. Free tax returns The distributions are not more than your qualified higher education expenses. Free tax returns The distribution is due to an IRS levy of the qualified plan. Free tax returns The distribution is a qualified reservist distribution. Free tax returns Most of these exceptions are discussed earlier in chapter 1 under Early Distributions . Free tax returns Please click here for the text description of the image. Free tax returns Is Roth Distributions a Qualified Distribution? Ordering Rules for Distributions If you receive a distribution from your Roth IRA that is not a qualified distribution, part of it may be taxable. Free tax returns There is a set order in which contributions (including conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. Free tax returns For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed earlier under What if You Contribute Too Much ). Free tax returns Order the distributions as follows. Free tax returns Regular contributions. Free tax returns Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). Free tax returns See Aggregation (grouping and adding) rules, later. Free tax returns Take these conversion and rollover contributions into account as follows: Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first, and then the Nontaxable portion. Free tax returns Earnings on contributions. Free tax returns Disregard rollover contributions from other Roth IRAs for this purpose. Free tax returns Aggregation (grouping and adding) rules. Free tax returns   Determine the taxable amounts distributed (withdrawn), distributions, and contributions by grouping and adding them together as follows. Free tax returns Add all distributions from all your Roth IRAs during the year together. Free tax returns Add all regular contributions made for the year (including contributions made after the close of the year, but before the due date of your return) together. Free tax returns Add this total to the total undistributed regular contributions made in prior years. Free tax returns Add all conversion and rollover contributions made during the year together. Free tax returns For purposes of the ordering rules, in the case of any conversion or rollover in which the conversion or rollover distribution is made in 2013 and the conversion or rollover contribution is made in 2014, treat the conversion or rollover contribution as contributed before any other conversion or rollover contributions made in 2014. Free tax returns Add any recharacterized contributions that end up in a Roth IRA to the appropriate contribution group for the year that the original contribution would have been taken into account if it had been made directly to the Roth IRA. Free tax returns   Disregard any recharacterized contribution that ends up in an IRA other than a Roth IRA for the purpose of grouping (aggregating) both contributions and distributions. Free tax returns Also disregard any amount withdrawn to correct an excess contribution (including the earnings withdrawn) for this purpose. Free tax returns Example. Free tax returns On October 15, 2009, Justin converted all $80,000 in his traditional IRA to his Roth IRA. Free tax returns His Forms 8606 from prior years show that $20,000 of the amount converted is his basis. Free tax returns Justin included $60,000 ($80,000 − $20,000) in his gross income. Free tax returns On February 23, 2013, Justin made a regular contribution of $5,000 to a Roth IRA. Free tax returns On November 8, 2013, at age 60, Justin took a $7,000 distribution from his Roth IRA. Free tax returns The first $5,000 of the distribution is a return of Justin's regular contribution and is not includible in his income. Free tax returns The next $2,000 of the distribution is not includible in income because it was included previously. Free tax returns Figuring your recapture amount. Free tax returns   If you had an early distribution from your Roth IRAs in 2013, you must allocate the early distribution by using the Recapture Amount—Allocation Chart, later. Free tax returns Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19   Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Free tax returns   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Free tax returns The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Free tax returns Note. Free tax returns Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Free tax returns See the Example , earlier. Free tax returns Tax Year Your Form 2013 Form 8606, line 20   Form 8606, line 22   1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18   Form 8606, line 17   2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Free tax returns  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Free tax returns Amount to include on Form 5329, line 1. Free tax returns   Include on line 1 of your 2013 Form 5329 the following four amounts from the Recapture Amount—Allocation Chart that you filled out. Free tax returns The amount you allocated to line 20 of your 2013 Form 8606. Free tax returns The amount(s) allocated to your 2009 through 2013 Forms 8606, line 18, and your 2010 Form 8606, line 23. Free tax returns The amount(s) allocated to your 2009, 2011, 2012, and 2013 Forms 1040, line 16b; Forms 1040A, line 12b; and Forms 1040NR, line 17b. Free tax returns The amount from your 2013 Form 8606, line 25. Free tax returns   Also, include any amount you allocated to line 20 of your 2013 Form 8606 on your 2013 Form 5329, line 2, and enter exception number 09. Free tax returns Example. Free tax returns Ishmael, age 32, opened a Roth IRA in 2000. Free tax returns He made the maximum contributions to it every year. Free tax returns In addition, he made the following transactions into his Roth IRA. Free tax returns In 2005, he converted $10,000 from his traditional IRA into his Roth IRA. Free tax returns He filled out a 2005 Form 8606 and attached it with his 2005 Form 1040. Free tax returns He entered $0 on line 17 of Form 8606 because he took a deduction for all the contributions to the traditional IRA, therefore he has no basis. Free tax returns He entered $10,000 on line 18 of Form 8606. Free tax returns In 2011, he rolled over the entire balance of his qualified retirement plan, $20,000, into a Roth IRA when he changed jobs. Free tax returns He used a 2011 Form 1040 to file his taxes. Free tax returns He entered $20,000 on line 16a of Form 1040 because that was the amount reported in box 1 of his 2011 Form 1099-R. Free tax returns Box 5 of his 2011 Form 1099-R reported $0 since he did not make any after-tax contributions to the qualified retirement plan. Free tax returns He entered $20,000 on line 16b of Form 1040 since that is the taxable amount that was rolled over in 2011. Free tax returns The total balance in his Roth IRA as of January 1, 2013 was $105,000 ($50,000 in contributions from 2000 through 2012 + $10,000 from the 2005 conversion + $20,000 from the 2011 rollover + $25,000 from earnings). Free tax returns He has not taken any early distribution from his Roth IRA before 2013. Free tax returns In 2013, he made the maximum contribution of $5,500 to his Roth IRA. Free tax returns In August of 2013, he took a $85,500 early distribution from his Roth IRA to use as a down payment on the purchase of his first home. Free tax returns See his filled out Illustrated Recapture Amount—Allocation Chart, later, to see how he allocated the amounts from the above transactions. Free tax returns Based on his allocation, he would enter $20,000 on his 2013 Form 5329, line 1 (see Amount to include on Form 5329, line 1 , above). Free tax returns He should also report $10,000 on his 2013 Form 5329, line 2, and enter exception 09 since that amount is not subject to the 10% additional tax on early distributions. Free tax returns Illustrated Recapture Amount—Allocation Chart Enter the amount from your 2013 Form 8606, line 19 $85,500 Before you begin: You will need your prior year Form(s) 8606 and income tax return(s) if you entered an amount on any line(s) as indicated below. Free tax returns   You will now allocate the amount you entered above (2013 Form 8606, line 19) in the order shown, to the amounts on the lines listed below (to the extent a prior year distribution was not allocable to the amount). Free tax returns The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. Free tax returns Note. Free tax returns Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. Free tax returns See the Example , earlier. Free tax returns Tax Year Your Form 2013 Form 8606, line 20 $10,000 Form 8606, line 22 $55,500 1998 Form 8606, line 16   Form 8606, line 15   1999 Form 8606, line 16   Form 8606, line 15   2000 Form 8606, line 16   Form 8606, line 15   2001 Form 8606, line 18   Form 8606, line 17   2002 Form 8606, line 18   Form 8606, line 17   2003 Form 8606, line 18   Form 8606, line 17   2004 Form 8606, line 18   Form 8606, line 17   2005 Form 8606, line 18 $10,000 Form 8606, line 17 $-0- 2006 Form 8606, line 18   Form 8606, line 17   2007 Form 8606, line 18   Form 8606, line 17   2008 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2009 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2010 Form 8606, lines 18 and 23   Form 8606, lines 17 and 22   2011 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b* $10,000 Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2012 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 18  and  Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b*   Form 8606, line 17  and  Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a**   2013 Form 8606, line 25       *Only include those amounts rolled over to a Roth IRA. Free tax returns  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. Free tax returns How Do You Figure the Taxable Part? To figure the taxable part of a distribution that is not a qualified distribution, complete Form 8606, Part III. Free tax returns Must You Withdraw or Use Assets? You are not required to take distributions from your Roth IRA at any age. Free tax returns The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. Free tax returns However, after the death of a Roth IRA owner, certain of the minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs as explained later under Distributions After Owner's Death . Free tax returns Minimum distributions. Free tax returns   You cannot use your Roth IRA to satisfy minimum distribution requirements for your traditional IRA. Free tax returns Nor can you use distributions from traditional IRAs for required distributions from Roth IRAs. Free tax returns See Distributions to beneficiaries , later. Free tax returns Recognizing Losses on Investments If you have a loss on your Roth IRA investment, you can recognize the loss on your income tax return, but only when all the amounts in all of your Roth IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis. Free tax returns Your basis is the total amount of contributions in your Roth IRAs. Free tax returns You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). Free tax returns Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. Free tax returns Distributions After Owner's Death If a Roth IRA owner dies, the minimum distribution rules that apply to traditional IRAs apply to Roth IRAs as though the Roth IRA owner died before his or her required beginning date. Free tax returns See When Can You Withdraw or Use Assets? in chapter 1. Free tax returns Distributions to beneficiaries. Free tax returns   Generally, the entire interest in the Roth IRA must be distributed by the end of the fifth calendar year after the year of the owner's death unless the interest is payable to a designated beneficiary over the life or life expectancy of the designated beneficiary. Free tax returns (See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Free tax returns )   If paid as an annuity, the entire interest must be payable over a period not greater than the designated beneficiary's life expectancy and distributions must begin before the end of the calendar year following the year of death. Free tax returns Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent. Free tax returns   If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 70½ or treat the Roth IRA as his or her own. Free tax returns Combining with other Roth IRAs. Free tax returns   A beneficiary can combine an inherited Roth IRA with another Roth IRA maintained by the beneficiary only if the beneficiary either: Inherited the other Roth IRA from the same decedent, or Was the spouse of the decedent and the sole beneficiary of the Roth IRA and elects to treat it as his or her own IRA. Free tax returns Distributions that are not qualified distributions. Free tax returns   If a distribution to a beneficiary is not a qualified distribution, it is generally includible in the beneficiary's gross income in the same manner as it would have been included in the owner's income had it been distributed to the IRA owner when he or she was alive. Free tax returns   If the owner of a Roth IRA dies before the end of: The 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for the owner's benefit, or The 5-year period starting with the year of a conversion contribution from a traditional IRA or a rollover from a qualified retirement plan to a Roth IRA, each type of contribution is divided among multiple beneficiaries according to the pro-rata share of each. Free tax returns See Ordering Rules for Distributions , earlier in this chapter under Are Distributions Taxable. Free tax returns Example. Free tax returns When Ms. Free tax returns Hibbard died in 2013, her Roth IRA contained regular contributions of $4,000, a conversion contribution of $10,000 that was made in 2009, and earnings of $2,000. Free tax returns No distributions had been made from her IRA. Free tax returns She had no basis in the conversion contribution in 2009. Free tax returns When she established this Roth IRA (her first) in 2009, she named each of her four children as equal beneficiaries. Free tax returns Each child will receive one-fourth of each type of contribution and one-fourth of the earnings. Free tax returns An immediate distribution of $4,000 to each child will be treated as $1,000 from regular contributions, $2,500 from conversion contributions, and $500 from earnings. Free tax returns In this case, because the distributions are made before the end of the applicable 5-year period for a qualified distribution, each beneficiary includes $500 in income for 2013. Free tax returns The 10% additional tax on early distributions does not apply because the distribution was made to the beneficiaries as a result of the death of the IRA owner. Free tax returns If distributions from an inherited Roth IRA are less than the required minimum distribution for the year, discussed in chapter 1 under When Must You Withdraw Assets? (Required Minimum Distributions), you may have to pay a 50% excise tax for that year on the amount not distributed as required. Free tax returns For the tax on excess accumulations (insufficient distributions), see Excess Accumulations (Insufficient Distributions) under What Acts Result in Penalties or Additional Taxes? in chapter 1. Free tax returns If this applies to you, substitute “Roth IRA” for “traditional IRA” in that discussion. Free tax returns Prev  Up  Next   Home   More Online Publications Skip to content
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Recalls API Server

When you're buying and using products, safety comes first.

Access the Data

Use our Recalls API to tap into a list of car, drug, food, and product safety data and recalls.

See the most recent recalls in JSON or RSS.

You can also see how this data is used when searching for recalls on USA.gov.

Contribute to the Code

The server code that runs our Recalls API is here on Github. If you're a Ruby developer, keep reading. Fork this repo to add features (such as additional datasets) or fix bugs.

Ruby

This code is currently tested against Ruby 2.1.

Gems

We use bundler to manage gems. You can install bundler and other required gems like this:

gem install bundler
bundle install

Solr

We're using Solr for fulltext search. You can start/stop/reindex Solr like this:

bundle exec rake sunspot:solr:start
bundle exec rake sunspot:solr:stop
bundle exec rake sunspot:solr:run
bundle exec rake sunspot:solr:reindex

Database

database.yml assumes you have a local database server up and running (preferably MySQL >= 5.1.65), accessible from user 'root' with no password.

Create and setup your development and test databases:

bundle exec rake db:setup
bundle exec rake db:setup RAILS_ENV=test

Seed data

Populate recall data for your development database:

bundle exec rake usagov:recalls:import_cdc_data
bundle exec rake usagov:recalls:import_cpsc_data
bundle exec rake usagov:recalls:import_nhtsa_data

You need to run these tasks daily to receive the latest recalls data.

Running it

Fire up a server and try it all out:

bundle exec rails s

http://127.0.0.1:3000/search.json?query=stroller

API Versioning

We support API versioning with json format. The current version is v1.

You can specify a a specific JSON version of recalls data like this:

curl -H 'Accept: application/vnd.usagov.recalls.v1' http://localhost:3000/search.json

Parameters

Seven generic parameters are accepted: (1) query, (2) organization, (3) start_date, (4) end_date, (5) page, (6) per_page, and (7) sort. There are additional parameters that are specific to food, product, and car safety recalls. None are required.

Full documentation on the parameters is in our Recalls API documentation.

Tests

Tests require a Solr server to be spun up.

bundle exec rake sunspot:solr:start RAILS_ENV=test

Make sure the tests run:

bundle exec rake spec

Code Coverage

We track test coverage of the codebase over time, to help identify areas where we could write better tests and to see when poorly tested code got introduced.

After running your tests, view the report by opening coverage/rcov/index.html in your browser.

Click around on the files that have < 100% coverage to see what lines weren't exercised.

License

This project is covered under the terms of the GNU General Public License, version 2 or later.

Terms of Use

By accessing this Recalls API server, you agree to our Terms of Service.

Feedback

You can send feedback via Github Issues.


Something went wrong with that request. Please try again.

The Free Tax Returns

Free tax returns 7. Free tax returns   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Free tax returns Costs not included. Free tax returns Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Free tax returns Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Free tax returns Film and Television Production Costs What's New Film and television productions costs. Free tax returns  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Free tax returns See Film and Television Production Costs , later. Free tax returns Introduction This chapter discusses costs you can elect to deduct or capitalize. Free tax returns You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Free tax returns If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Free tax returns When you capitalize a cost, you add it to the basis of property to which it relates. Free tax returns A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Free tax returns Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Free tax returns You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Free tax returns For more information on the alternative minimum tax, see the instructions for the following forms. Free tax returns Form 6251, Alternative Minimum Tax—Individuals. Free tax returns Form 4626, Alternative Minimum Tax—Corporations. Free tax returns Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Free tax returns Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Free tax returns Certain carrying charges must be capitalized under the uniform capitalization rules. Free tax returns (For information on capitalization of interest, see chapter 4 . Free tax returns ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Free tax returns You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Free tax returns For unimproved and unproductive real property, your election is good for only 1 year. Free tax returns You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Free tax returns For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Free tax returns For personal property, your election is effective until the date you install or first use it, whichever is later. Free tax returns How to make the election. Free tax returns   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Free tax returns However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Attach the statement to the amended return and write “Filed pursuant to section 301. Free tax returns 9100-2” on the statement. Free tax returns File the amended return at the same address you filed the original return. Free tax returns Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Free tax returns However, you can elect to deduct these costs as a current business expense. Free tax returns Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Free tax returns If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Free tax returns For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Free tax returns Research and experimental costs defined. Free tax returns   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Free tax returns Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Free tax returns Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Free tax returns      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Free tax returns However, costs paid or incurred to obtain another's patent are not research and experimental costs. Free tax returns Product. Free tax returns   The term “product” includes any of the following items. Free tax returns Formula. Free tax returns Invention. Free tax returns Patent. Free tax returns Pilot model. Free tax returns Process. Free tax returns Technique. Free tax returns Property similar to the items listed above. Free tax returns It also includes products used by you in your trade or business or held for sale, lease, or license. Free tax returns Costs not included. Free tax returns   Research and experimental costs do not include expenses for any of the following activities. Free tax returns Advertising or promotions. Free tax returns Consumer surveys. Free tax returns Efficiency surveys. Free tax returns Management studies. Free tax returns Quality control testing. Free tax returns Research in connection with literary, historical, or similar projects. Free tax returns The acquisition of another's patent, model, production, or process. Free tax returns When and how to elect. Free tax returns   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Free tax returns If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Free tax returns Deducting or Amortizing Research and Experimentation Costs IF you . Free tax returns . Free tax returns . Free tax returns THEN . Free tax returns . Free tax returns . Free tax returns Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Free tax returns Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Free tax returns See Research and Experimental Costs in chapter 8. Free tax returns Research credit. Free tax returns   If you pay or incur qualified research expenses, you may be able to take the research credit. Free tax returns For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Free tax returns Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Free tax returns You can usually recover them through depreciation or depletion. Free tax returns However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Free tax returns These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Free tax returns You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Free tax returns You can elect to deduct only the costs of items with no salvage value. Free tax returns These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Free tax returns Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Free tax returns However, see Amounts paid to contractor that must be capitalized , later. Free tax returns You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Free tax returns It does not matter whether there is any intent to produce hydrocarbons. Free tax returns If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Free tax returns Amounts paid to contractor that must be capitalized. Free tax returns   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Free tax returns How to make the election. Free tax returns   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Free tax returns No formal statement is required. Free tax returns If you file Schedule C (Form 1040), enter these costs under “Other expenses. Free tax returns ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Free tax returns For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Free tax returns You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Free tax returns Energy credit for costs of geothermal wells. Free tax returns   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Free tax returns See the Instructions for Form 3468 for more information. Free tax returns Nonproductive well. Free tax returns   If you capitalize your IDCs, you have another option if the well is nonproductive. Free tax returns You can deduct the IDCs of the nonproductive well as an ordinary loss. Free tax returns You must indicate and clearly state your election on your tax return for the year the well is completed. Free tax returns Once made, the election for oil and gas wells is binding for all later years. Free tax returns You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Free tax returns Costs incurred outside the United States. Free tax returns   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Free tax returns However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Free tax returns If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Free tax returns These rules do not apply to a nonproductive well. Free tax returns Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Free tax returns You recover these costs through depletion as the mineral is removed from the ground. Free tax returns However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Free tax returns How to make the election. Free tax returns   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Free tax returns Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Free tax returns The election applies to the tax year you make this election and all later tax years. Free tax returns Partnerships and S corporations. Free tax returns   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Free tax returns Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Free tax returns Reduced corporate deductions for exploration costs. Free tax returns   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Free tax returns It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Free tax returns A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Free tax returns For more information on this method of amortization, see Internal Revenue Code section 59(e). Free tax returns   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Free tax returns However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Free tax returns See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Free tax returns   These rules also apply to the deduction of development costs by corporations. Free tax returns See Development Costs , later. Free tax returns Recapture of exploration expenses. Free tax returns   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Free tax returns Use either of the following methods. Free tax returns Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Free tax returns Your election must be clearly indicated on the return. Free tax returns Increase your adjusted basis in the mine by the amount included in income. Free tax returns Generally, you must elect this recapture method by the due date (including extensions) of your return. Free tax returns However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Make the election on your amended return and write “Filed pursuant to section 301. Free tax returns 9100-2” on the form where you are including the income. Free tax returns File the amended return at the same address you filed the original return. Free tax returns Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free tax returns   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Free tax returns Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free tax returns   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Free tax returns Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Free tax returns If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Free tax returns Foreign exploration costs. Free tax returns   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Free tax returns You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Free tax returns (Cost depletion is discussed in chapter 9 . Free tax returns ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Free tax returns These rules also apply to foreign development costs. Free tax returns Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Free tax returns These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Free tax returns Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Free tax returns Development costs do not include the costs for the acquisition or improvement of depreciable property. Free tax returns Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Free tax returns This election applies each tax year to expenses paid or incurred in that year. Free tax returns Once made, the election is binding for the year and cannot be revoked for any reason. Free tax returns How to make the election. Free tax returns   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Free tax returns Generally, you must make the election by the due date of the return (including extensions). Free tax returns However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free tax returns 9100-2. Free tax returns ” File the amended return at the same address you filed the original return. Free tax returns Foreign development costs. Free tax returns   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Free tax returns Reduced corporate deductions for development costs. Free tax returns   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Free tax returns Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Free tax returns For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Free tax returns Circulation costs are deductible even if they normally would be capitalized. Free tax returns This rule does not apply to the following costs that must be capitalized. Free tax returns The purchase of land or depreciable property. Free tax returns The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Free tax returns Other treatment of circulation costs. Free tax returns   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Free tax returns Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Free tax returns Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Free tax returns How to make the election. Free tax returns   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Free tax returns Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Free tax returns Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Free tax returns However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Free tax returns The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Free tax returns Any remaining costs must be amortized. Free tax returns For information about amortizing start-up and organizational costs, see chapter 8 . Free tax returns Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Free tax returns Organizational costs include the costs of creating a corporation. Free tax returns For more information on start-up and organizational costs, see chapter 8 . Free tax returns How to make the election. Free tax returns   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Free tax returns However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free tax returns 9100-2. Free tax returns ” File the amended return at the same address you filed the original return. Free tax returns The election applies when computing taxable income for the current tax year and all subsequent years. Free tax returns Reforestation Costs Reforestation costs are generally capital expenditures. Free tax returns However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Free tax returns The remaining costs can be amortized over an 84-month period. Free tax returns For information about amortizing reforestation costs, see chapter 8 . Free tax returns Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Free tax returns Qualified timber property is property that contains trees in significant commercial quantities. Free tax returns See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Free tax returns If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Free tax returns Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Free tax returns How to make the election. Free tax returns   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Free tax returns If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Free tax returns If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Free tax returns The unique stand identification numbers. Free tax returns The total number of acres reforested during the tax year. Free tax returns The nature of the reforestation treatments. Free tax returns The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Free tax returns   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free tax returns 9100-2. Free tax returns ” File the amended return at the same address you filed the original return. Free tax returns The election applies when computing taxable income for the current tax year and all subsequent years. Free tax returns   For additional information on reforestation costs, see chapter 8 . Free tax returns Recapture. Free tax returns   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Free tax returns For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Free tax returns Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Free tax returns However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Free tax returns Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Free tax returns However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Free tax returns You must own or lease the facility or vehicle for use in connection with your trade or business. Free tax returns A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Free tax returns A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Free tax returns You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Free tax returns Deduction limit. Free tax returns   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Free tax returns However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Free tax returns Partners and partnerships. Free tax returns   The $15,000 limit applies to a partnership and also to each partner in the partnership. Free tax returns A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Free tax returns If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Free tax returns   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Free tax returns If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Free tax returns Example. Free tax returns Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Free tax returns Emilio had $12,000 of similar expenses in his sole proprietorship. Free tax returns He elected to deduct $7,000 of them. Free tax returns Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Free tax returns Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Free tax returns Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Free tax returns Qualification standards. Free tax returns   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Free tax returns You can view the Americans with Disabilities Act at www. Free tax returns ada. Free tax returns gov/pubs/ada. Free tax returns htm. Free tax returns   The following is a list of some architectural barrier removal costs that can be deducted. Free tax returns Ground and floor surfaces. Free tax returns Walks. Free tax returns Parking lots. Free tax returns Ramps. Free tax returns Entrances. Free tax returns Doors and doorways. Free tax returns Stairs. Free tax returns Floors. Free tax returns Toilet rooms. Free tax returns Water fountains. Free tax returns Public telephones. Free tax returns Elevators. Free tax returns Controls. Free tax returns Signage. Free tax returns Alarms. Free tax returns Protruding objects. Free tax returns Symbols of accessibility. Free tax returns You can find the ADA guidelines and requirements for architectural barrier removal at www. Free tax returns usdoj. Free tax returns gov/crt/ada/reg3a. Free tax returns html. Free tax returns   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Free tax returns You can find the guidelines and requirements for transportation barrier removal at www. Free tax returns fta. Free tax returns dot. Free tax returns gov. Free tax returns   Also, you can access the ADA website at www. Free tax returns ada. Free tax returns gov for additional information. Free tax returns Other barrier removals. Free tax returns   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Free tax returns The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Free tax returns The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Free tax returns The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Free tax returns How to make the election. Free tax returns   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Free tax returns Identify the deduction as a separate item. Free tax returns The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Free tax returns If you make this election, you must maintain adequate records to support your deduction. Free tax returns   For your election to be valid, you generally must file your return by its due date, including extensions. Free tax returns However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free tax returns Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free tax returns 9100-2. Free tax returns ” File the amended return at the same address you filed the original return. Free tax returns Your election is irrevocable after the due date, including extensions, of your return. Free tax returns Disabled access credit. Free tax returns   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Free tax returns If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Free tax returns   For more information, see Form 8826, Disabled Access Credit. Free tax returns Film and Television Production Costs Film and television production costs are generally capital expenses. Free tax returns However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Free tax returns For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Free tax returns Prev  Up  Next   Home   More Online Publications