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How Can I Do My 2012 Federal Tax Return With H&r Block

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How Can I Do My 2012 Federal Tax Return With H&r Block

How can i do my 2012 federal tax return with h&r block 3. How can i do my 2012 federal tax return with h&r block   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. How can i do my 2012 federal tax return with h&r block The allowance applies only for the first year you place the property in service. How can i do my 2012 federal tax return with h&r block For qualified property placed in service in 2013, you can take an additional 50% special allowance. How can i do my 2012 federal tax return with h&r block The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. How can i do my 2012 federal tax return with h&r block This chapter explains what is qualified property. How can i do my 2012 federal tax return with h&r block It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. How can i do my 2012 federal tax return with h&r block Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. How can i do my 2012 federal tax return with h&r block See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. How can i do my 2012 federal tax return with h&r block See chapter 6 for information about getting publications and forms. How can i do my 2012 federal tax return with h&r block What Is Qualified Property? Your property is qualified property if it is one of the following. How can i do my 2012 federal tax return with h&r block Qualified reuse and recycling property. How can i do my 2012 federal tax return with h&r block Qualified cellulosic biofuel plant property. How can i do my 2012 federal tax return with h&r block Qualified disaster assistance property. How can i do my 2012 federal tax return with h&r block Certain qualified property acquired after December 31, 2007. How can i do my 2012 federal tax return with h&r block The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. How can i do my 2012 federal tax return with h&r block Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. How can i do my 2012 federal tax return with h&r block Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). How can i do my 2012 federal tax return with h&r block Qualified reuse and recycling property also includes software necessary to operate such equipment. How can i do my 2012 federal tax return with h&r block The property must meet the following requirements. How can i do my 2012 federal tax return with h&r block The property must be depreciated under MACRS. How can i do my 2012 federal tax return with h&r block The property must have a useful life of at least 5 years. How can i do my 2012 federal tax return with h&r block The original use of the property must begin with you after August 31, 2008. How can i do my 2012 federal tax return with h&r block You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. How can i do my 2012 federal tax return with h&r block The property must be placed in service for use in your trade or business after August 31, 2008. How can i do my 2012 federal tax return with h&r block Excepted Property Qualified reuse and recycling property does not include any of the following. How can i do my 2012 federal tax return with h&r block Any rolling stock or other equipment used to transport reuse or recyclable materials. How can i do my 2012 federal tax return with h&r block Property required to be depreciated using the Alternative Depreciation System (ADS). How can i do my 2012 federal tax return with h&r block For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . How can i do my 2012 federal tax return with h&r block Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. How can i do my 2012 federal tax return with h&r block Property for which you elected not to claim any special depreciation allowance (discussed later). How can i do my 2012 federal tax return with h&r block Property placed in service and disposed of in the same tax year. How can i do my 2012 federal tax return with h&r block Property converted from business use to personal use in the same tax year acquired. How can i do my 2012 federal tax return with h&r block Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. How can i do my 2012 federal tax return with h&r block Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. How can i do my 2012 federal tax return with h&r block Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. How can i do my 2012 federal tax return with h&r block Examples include bagasse (from sugar cane), corn stalks, and switchgrass. How can i do my 2012 federal tax return with h&r block The property must meet the following requirements. How can i do my 2012 federal tax return with h&r block The property is used in the United States solely to produce cellulosic biofuel. How can i do my 2012 federal tax return with h&r block The original use of the property must begin with you after December 20, 2006. How can i do my 2012 federal tax return with h&r block You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. How can i do my 2012 federal tax return with h&r block The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. How can i do my 2012 federal tax return with h&r block Note. How can i do my 2012 federal tax return with h&r block For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). How can i do my 2012 federal tax return with h&r block The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. How can i do my 2012 federal tax return with h&r block Special Rules Sale-leaseback. How can i do my 2012 federal tax return with h&r block   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. How can i do my 2012 federal tax return with h&r block   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. How can i do my 2012 federal tax return with h&r block Syndicated leasing transactions. How can i do my 2012 federal tax return with h&r block   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. How can i do my 2012 federal tax return with h&r block   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. How can i do my 2012 federal tax return with h&r block Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. How can i do my 2012 federal tax return with h&r block Property placed in service and disposed of in the same tax year. How can i do my 2012 federal tax return with h&r block Property converted from business use to personal use in the same tax year it is acquired. How can i do my 2012 federal tax return with h&r block Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. How can i do my 2012 federal tax return with h&r block Property required to be depreciated using the Alternative Depreciation System (ADS). How can i do my 2012 federal tax return with h&r block For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . How can i do my 2012 federal tax return with h&r block Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block Property for which you elected not to claim any special depreciation allowance (discussed later). How can i do my 2012 federal tax return with h&r block Property for which a deduction was taken under section 179C for certain qualified refinery property. How can i do my 2012 federal tax return with h&r block Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. How can i do my 2012 federal tax return with h&r block Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. How can i do my 2012 federal tax return with h&r block A list of the federally declared disaster areas is available at the FEMA website at www. How can i do my 2012 federal tax return with h&r block fema. How can i do my 2012 federal tax return with h&r block gov. How can i do my 2012 federal tax return with h&r block Your property is qualified disaster assistance property if it meets the following requirements. How can i do my 2012 federal tax return with h&r block The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. How can i do my 2012 federal tax return with h&r block You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. How can i do my 2012 federal tax return with h&r block The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. How can i do my 2012 federal tax return with h&r block The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. How can i do my 2012 federal tax return with h&r block The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. How can i do my 2012 federal tax return with h&r block The property is placed in service by you on or before the date which is the last day of the fourth calendar year. How can i do my 2012 federal tax return with h&r block Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. How can i do my 2012 federal tax return with h&r block It is not excepted property (explained later in Excepted Property ). How can i do my 2012 federal tax return with h&r block Special Rules Sale-leaseback. How can i do my 2012 federal tax return with h&r block   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. How can i do my 2012 federal tax return with h&r block   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. How can i do my 2012 federal tax return with h&r block Syndicated leasing transactions. How can i do my 2012 federal tax return with h&r block   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. How can i do my 2012 federal tax return with h&r block   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. How can i do my 2012 federal tax return with h&r block Excepted Property Qualified disaster assistance property does not include any of the following. How can i do my 2012 federal tax return with h&r block Property required to be depreciated using the Alternative Depreciation System (ADS). How can i do my 2012 federal tax return with h&r block For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . How can i do my 2012 federal tax return with h&r block Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. How can i do my 2012 federal tax return with h&r block Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. How can i do my 2012 federal tax return with h&r block Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. How can i do my 2012 federal tax return with h&r block Property for which you elected not to claim any special depreciation allowance (discussed later). How can i do my 2012 federal tax return with h&r block Property placed in service and disposed of in the same tax year. How can i do my 2012 federal tax return with h&r block Property converted from business use to personal use in the same tax year acquired. How can i do my 2012 federal tax return with h&r block Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. How can i do my 2012 federal tax return with h&r block Any gambling or animal racing property (defined later). How can i do my 2012 federal tax return with h&r block Qualified revitalization building. How can i do my 2012 federal tax return with h&r block   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. How can i do my 2012 federal tax return with h&r block If the building is new, the original use of the building must begin with you. How can i do my 2012 federal tax return with h&r block If the building is not new, you must substantially rehabilitate the building and then place it in service. How can i do my 2012 federal tax return with h&r block For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block Gambling or animal racing property. How can i do my 2012 federal tax return with h&r block   Gambling or animal racing property includes the following personal and real property. How can i do my 2012 federal tax return with h&r block Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. How can i do my 2012 federal tax return with h&r block Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. How can i do my 2012 federal tax return with h&r block Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. How can i do my 2012 federal tax return with h&r block Your property is qualified property if it meets the following requirements. How can i do my 2012 federal tax return with h&r block It is one of the following types of property. How can i do my 2012 federal tax return with h&r block Tangible property depreciated under MACRS with a recovery period of 20 years or less. How can i do my 2012 federal tax return with h&r block Water utility property. How can i do my 2012 federal tax return with h&r block Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. How can i do my 2012 federal tax return with h&r block (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How can i do my 2012 federal tax return with h&r block ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). How can i do my 2012 federal tax return with h&r block You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. How can i do my 2012 federal tax return with h&r block The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). How can i do my 2012 federal tax return with h&r block The original use of the property must begin with you after December 31, 2007. How can i do my 2012 federal tax return with h&r block It is not excepted property (explained later in Excepted property). How can i do my 2012 federal tax return with h&r block Qualified leasehold improvement property. How can i do my 2012 federal tax return with h&r block    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. How can i do my 2012 federal tax return with h&r block The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. How can i do my 2012 federal tax return with h&r block That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. How can i do my 2012 federal tax return with h&r block The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. How can i do my 2012 federal tax return with h&r block The improvement is section 1250 property. How can i do my 2012 federal tax return with h&r block See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. How can i do my 2012 federal tax return with h&r block   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. How can i do my 2012 federal tax return with h&r block The enlargement of the building. How can i do my 2012 federal tax return with h&r block Any elevator or escalator. How can i do my 2012 federal tax return with h&r block Any structural component benefiting a common area. How can i do my 2012 federal tax return with h&r block The internal structural framework of the building. How can i do my 2012 federal tax return with h&r block   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. How can i do my 2012 federal tax return with h&r block However, a lease between related persons is not treated as a lease. How can i do my 2012 federal tax return with h&r block Related persons. How can i do my 2012 federal tax return with h&r block   For this purpose, the following are related persons. How can i do my 2012 federal tax return with h&r block Members of an affiliated group. How can i do my 2012 federal tax return with h&r block An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. How can i do my 2012 federal tax return with h&r block A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. How can i do my 2012 federal tax return with h&r block Two corporations that are members of the same controlled group. How can i do my 2012 federal tax return with h&r block A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. How can i do my 2012 federal tax return with h&r block The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. How can i do my 2012 federal tax return with h&r block The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. How can i do my 2012 federal tax return with h&r block A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. How can i do my 2012 federal tax return with h&r block Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. How can i do my 2012 federal tax return with h&r block A corporation and a partnership if the same persons own both of the following. How can i do my 2012 federal tax return with h&r block 80% or more of the value of the outstanding stock of the corporation. How can i do my 2012 federal tax return with h&r block 80% or more of the capital or profits interest in the partnership. How can i do my 2012 federal tax return with h&r block The executor and beneficiary of any estate. How can i do my 2012 federal tax return with h&r block Long Production Period Property To be qualified property, long production period property must meet the following requirements. How can i do my 2012 federal tax return with h&r block It must meet the requirements in (2)-(5), above. How can i do my 2012 federal tax return with h&r block The property has a recovery period of at least 10 years or is transportation property. How can i do my 2012 federal tax return with h&r block Transportation property is tangible personal property used in the trade or business of transporting persons or property. How can i do my 2012 federal tax return with h&r block The property is subject to section 263A of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. How can i do my 2012 federal tax return with h&r block Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. How can i do my 2012 federal tax return with h&r block It must meet the requirements in (2)-(5), above. How can i do my 2012 federal tax return with h&r block The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). How can i do my 2012 federal tax return with h&r block The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. How can i do my 2012 federal tax return with h&r block The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. How can i do my 2012 federal tax return with h&r block Special Rules Sale-leaseback. How can i do my 2012 federal tax return with h&r block   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. How can i do my 2012 federal tax return with h&r block   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. How can i do my 2012 federal tax return with h&r block Syndicated leasing transactions. How can i do my 2012 federal tax return with h&r block   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. How can i do my 2012 federal tax return with h&r block   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. How can i do my 2012 federal tax return with h&r block Excepted Property Qualified property does not include any of the following. How can i do my 2012 federal tax return with h&r block Property placed in service and disposed of in the same tax year. How can i do my 2012 federal tax return with h&r block Property converted from business use to personal use in the same tax year acquired. How can i do my 2012 federal tax return with h&r block Property converted from personal use to business use in the same or later tax year may be qualified property. How can i do my 2012 federal tax return with h&r block Property required to be depreciated under the Alternative Depreciation System (ADS). How can i do my 2012 federal tax return with h&r block This includes listed property used 50% or less in a qualified business use. How can i do my 2012 federal tax return with h&r block For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . How can i do my 2012 federal tax return with h&r block Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). How can i do my 2012 federal tax return with h&r block Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). How can i do my 2012 federal tax return with h&r block Property for which you elected not to claim any special depreciation allowance (discussed later). How can i do my 2012 federal tax return with h&r block Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). How can i do my 2012 federal tax return with h&r block Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. How can i do my 2012 federal tax return with h&r block For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. How can i do my 2012 federal tax return with h&r block An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. How can i do my 2012 federal tax return with h&r block If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. How can i do my 2012 federal tax return with h&r block If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. How can i do my 2012 federal tax return with h&r block See Which Depreciation Method Applies in chapter 4 . How can i do my 2012 federal tax return with h&r block Once made, the election cannot be revoked without IRS consent. How can i do my 2012 federal tax return with h&r block Additional guidance. How can i do my 2012 federal tax return with h&r block   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. How can i do my 2012 federal tax return with h&r block Proc. How can i do my 2012 federal tax return with h&r block 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. How can i do my 2012 federal tax return with h&r block irs. How can i do my 2012 federal tax return with h&r block gov/pub/irs-irbs/irb08-44. How can i do my 2012 federal tax return with h&r block pdf, Rev. How can i do my 2012 federal tax return with h&r block Proc. How can i do my 2012 federal tax return with h&r block 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. How can i do my 2012 federal tax return with h&r block irs. How can i do my 2012 federal tax return with h&r block gov/pub/irs-irbs/irb09-06. How can i do my 2012 federal tax return with h&r block pdf, and Rev. How can i do my 2012 federal tax return with h&r block Proc. How can i do my 2012 federal tax return with h&r block 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. How can i do my 2012 federal tax return with h&r block irs. How can i do my 2012 federal tax return with h&r block gov/pub/irs-irbs/irb09-29. How can i do my 2012 federal tax return with h&r block pdf. How can i do my 2012 federal tax return with h&r block Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. How can i do my 2012 federal tax return with h&r block   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. How can i do my 2012 federal tax return with h&r block irs. How can i do my 2012 federal tax return with h&r block gov/irb. How can i do my 2012 federal tax return with h&r block How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. How can i do my 2012 federal tax return with h&r block For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. How can i do my 2012 federal tax return with h&r block For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. How can i do my 2012 federal tax return with h&r block If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. How can i do my 2012 federal tax return with h&r block Depreciable basis. How can i do my 2012 federal tax return with h&r block   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. How can i do my 2012 federal tax return with h&r block   The following are examples of some credits and deductions that reduce depreciable basis. How can i do my 2012 federal tax return with h&r block Any section 179 deduction. How can i do my 2012 federal tax return with h&r block Any deduction for removal of barriers to the disabled and the elderly. How can i do my 2012 federal tax return with h&r block Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. How can i do my 2012 federal tax return with h&r block Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. How can i do my 2012 federal tax return with h&r block   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . How can i do my 2012 federal tax return with h&r block For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . How can i do my 2012 federal tax return with h&r block Depreciating the remaining cost. How can i do my 2012 federal tax return with h&r block   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . How can i do my 2012 federal tax return with h&r block Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. How can i do my 2012 federal tax return with h&r block Example. How can i do my 2012 federal tax return with h&r block On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. How can i do my 2012 federal tax return with h&r block He did not elect to claim a section 179 deduction. How can i do my 2012 federal tax return with h&r block He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. How can i do my 2012 federal tax return with h&r block He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. How can i do my 2012 federal tax return with h&r block Like-kind exchanges and involuntary conversions. How can i do my 2012 federal tax return with h&r block   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. How can i do my 2012 federal tax return with h&r block After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. How can i do my 2012 federal tax return with h&r block In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. How can i do my 2012 federal tax return with h&r block See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . How can i do my 2012 federal tax return with h&r block The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. How can i do my 2012 federal tax return with h&r block How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. How can i do my 2012 federal tax return with h&r block To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. How can i do my 2012 federal tax return with h&r block When to make election. How can i do my 2012 federal tax return with h&r block   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. How can i do my 2012 federal tax return with h&r block   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 original return (not including extensions). How can i do my 2012 federal tax return with h&r block Attach the election statement to the amended return. How can i do my 2012 federal tax return with h&r block On the amended return, write “Filed pursuant to section 301. How can i do my 2012 federal tax return with h&r block 9100-2. How can i do my 2012 federal tax return with h&r block ” Revoking an election. How can i do my 2012 federal tax return with h&r block   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How can i do my 2012 federal tax return with h&r block A request to revoke the election is a request for a letter ruling. How can i do my 2012 federal tax return with h&r block If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. How can i do my 2012 federal tax return with h&r block When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. How can i do my 2012 federal tax return with h&r block See When Do You Recapture MACRS Depreciation in chapter 4 or more information. How can i do my 2012 federal tax return with h&r block Recapture of allowance deducted for qualified GO Zone property. How can i do my 2012 federal tax return with h&r block   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. How can i do my 2012 federal tax return with h&r block For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. How can i do my 2012 federal tax return with h&r block Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. How can i do my 2012 federal tax return with h&r block   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. How can i do my 2012 federal tax return with h&r block Recapture of allowance for qualified Recovery Assistance property. How can i do my 2012 federal tax return with h&r block   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. How can i do my 2012 federal tax return with h&r block For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. How can i do my 2012 federal tax return with h&r block Recapture of allowance for qualified disaster assistance property. How can i do my 2012 federal tax return with h&r block   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. How can i do my 2012 federal tax return with h&r block   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. How can i do my 2012 federal tax return with h&r block Prev  Up  Next   Home   More Online Publications
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IRS Encourages Small Employers to Check Out Small Business Health Care Tax Credit; Helpful Resources, Tax Tips Available on IRS.gov

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IR-2014-27, March 10, 2014

WASHINGTON — With business tax-filing deadlines fast approaching, the Internal Revenue Service today encouraged small employers that provide health insurance coverage to their employees to check out the small business health care tax credit and then claim it if they qualify.

The Small Business Health Care Tax Credit page on IRS.gov is packed with information and resources designed to help small employers see if they qualify for the credit and then figure it correctly. These include a 2013 tax credit estimator, examples of typical tax savings under various scenarios and answers to frequently-asked questions.

Additionally, the IRS has Health Care Tax Tips, designed to provide useful information to employers, families and individuals. These tips include a new Small Business Health Care Tax Credit tip as well as tips covering other Affordable Care Act topics.

The small business health care tax credit was included in the Affordable Care Act enacted in 2010. Under the ACA, eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014. For 2010 through 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. In 2014, the maximum credit rate rises to 50 percent for small businesses and 35 percent for tax-exempt organizations.

Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax-exempt organizations provide health insurance for their employees.

Depending upon how they are structured, eligible small employers are likely subject to one of the following three tax-filing deadlines, which fall in coming weeks:

  • March 17: Corporations and S Corporations that file on a calendar year basis can figure the credit on Form 8941 attached to the income tax return.
  • April 15: Partnerships and individuals have until April 15 to complete and file their income tax returns (partnerships on Form 1065 and individuals on Form 1040). Sole proprietors can figure the credit on Form 8941 attached to the individual income tax return. Individuals who have business income and credits reported to them on Schedules K-1—partners in partnerships, S corporation shareholders and beneficiaries of estates and trusts—will report the credit amount directly on Form 3800– no Form 8941 required. The resulting credit is entered on Form 1040, Line 53.
  • May 15: Tax-exempt organizations that file on a calendar year basis can use Form 8941 and then claim the credit on Form 990-T, Line 44f.

Taxpayers needing more time to determine eligibility should consider obtaining an automatic tax-filing extension, usually for six months. See Form 4868 for individuals, Form 7004 for businesses and Form 8868 for tax-exempt organizations.

Businesses that have already filed and later find that they qualified in 2013 or an earlier year can still claim the credit by filing an amended return for the affected years. Corporations use Form 1120X, individuals use Form 1040X and tax-exempt organizations use Form 990-T. A three-year statute of limitations normally applies to these refund claims. See the instructions to these forms for details.

Some businesses and tax-exempt organizations that already locked into health insurance plan structures and contributions may not have had the opportunity to make any needed adjustments to qualify for the credit for 2013 or earlier years. These employers can still make changes so they qualify to claim the credit on future returns.

To learn more about the Small Business Health Care Tax Credit and view tips about other ACA topics, visit the Health Care Tax Tip page on IRS.gov/aca. Newly added tips include:

  • Small Business Health Care Tax Credit ─ Employers can find out if they qualify and how much they can get.
  • What You Need to Know about the Amount of Health Insurance Reported on Form W-2 - Learn about the amount of health insurance reported on Form W-2. 
  • What do I need to know about the Health Care Law for my 2013 Tax Return? – Provides tips that help with filing the 2013 income tax return, including information about filing requirements and Form W-2.

To receive copies of IRS tax tips via email, subscribe at www.irs.gov/uac/Subscribe-to-IRS-Tax-Tips.

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Page Last Reviewed or Updated: 13-Mar-2014

The How Can I Do My 2012 Federal Tax Return With H&r Block

How can i do my 2012 federal tax return with h&r block 3. How can i do my 2012 federal tax return with h&r block   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. How can i do my 2012 federal tax return with h&r block Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. How can i do my 2012 federal tax return with h&r block In addition, you will contribute matching or nonelective contributions. How can i do my 2012 federal tax return with h&r block SIMPLE plans can only be maintained on a calendar-year basis. How can i do my 2012 federal tax return with h&r block A SIMPLE plan can be set up in either of the following ways. How can i do my 2012 federal tax return with h&r block Using SIMPLE IRAs (SIMPLE IRA plan). How can i do my 2012 federal tax return with h&r block As part of a 401(k) plan (SIMPLE 401(k) plan). How can i do my 2012 federal tax return with h&r block Many financial institutions will help you set up a SIMPLE plan. How can i do my 2012 federal tax return with h&r block SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. How can i do my 2012 federal tax return with h&r block Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. How can i do my 2012 federal tax return with h&r block For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. How can i do my 2012 federal tax return with h&r block Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. How can i do my 2012 federal tax return with h&r block You meet the employee limit. How can i do my 2012 federal tax return with h&r block You do not maintain another qualified plan unless the other plan is for collective bargaining employees. How can i do my 2012 federal tax return with h&r block Employee limit. How can i do my 2012 federal tax return with h&r block   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. How can i do my 2012 federal tax return with h&r block Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. How can i do my 2012 federal tax return with h&r block Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). How can i do my 2012 federal tax return with h&r block   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. How can i do my 2012 federal tax return with h&r block Grace period for employers who cease to meet the 100-employee limit. How can i do my 2012 federal tax return with h&r block   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. How can i do my 2012 federal tax return with h&r block   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. How can i do my 2012 federal tax return with h&r block Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. How can i do my 2012 federal tax return with h&r block Coverage under the plan has not significantly changed during the grace period. How can i do my 2012 federal tax return with h&r block The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. How can i do my 2012 federal tax return with h&r block    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. How can i do my 2012 federal tax return with h&r block Other qualified plan. How can i do my 2012 federal tax return with h&r block   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. How can i do my 2012 federal tax return with h&r block Exception. How can i do my 2012 federal tax return with h&r block   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. How can i do my 2012 federal tax return with h&r block Who Can Participate in a SIMPLE IRA Plan? Eligible employee. How can i do my 2012 federal tax return with h&r block   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. How can i do my 2012 federal tax return with h&r block The term “employee” includes a self-employed individual who received earned income. How can i do my 2012 federal tax return with h&r block   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. How can i do my 2012 federal tax return with h&r block For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. How can i do my 2012 federal tax return with h&r block However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Excludable employees. How can i do my 2012 federal tax return with h&r block   The following employees do not need to be covered under a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. How can i do my 2012 federal tax return with h&r block Nonresident alien employees who have received no U. How can i do my 2012 federal tax return with h&r block S. How can i do my 2012 federal tax return with h&r block source wages, salaries, or other personal services compensation from you. How can i do my 2012 federal tax return with h&r block Compensation. How can i do my 2012 federal tax return with h&r block   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. How can i do my 2012 federal tax return with h&r block Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. How can i do my 2012 federal tax return with h&r block If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. How can i do my 2012 federal tax return with h&r block How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Each form is a model savings incentive match plan for employees (SIMPLE) plan document. How can i do my 2012 federal tax return with h&r block Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. How can i do my 2012 federal tax return with h&r block Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. How can i do my 2012 federal tax return with h&r block Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. How can i do my 2012 federal tax return with h&r block The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. How can i do my 2012 federal tax return with h&r block Keep the original form. How can i do my 2012 federal tax return with h&r block Do not file it with the IRS. How can i do my 2012 federal tax return with h&r block Other uses of the forms. How can i do my 2012 federal tax return with h&r block   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. How can i do my 2012 federal tax return with h&r block Meeting employer notification requirements for the SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. How can i do my 2012 federal tax return with h&r block Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. How can i do my 2012 federal tax return with h&r block Deadline for setting up a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. How can i do my 2012 federal tax return with h&r block If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. How can i do my 2012 federal tax return with h&r block A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. How can i do my 2012 federal tax return with h&r block Setting up a SIMPLE IRA. How can i do my 2012 federal tax return with h&r block   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. How can i do my 2012 federal tax return with h&r block A SIMPLE IRA must be set up for each eligible employee. How can i do my 2012 federal tax return with h&r block Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. How can i do my 2012 federal tax return with h&r block   A SIMPLE IRA cannot be a Roth IRA. How can i do my 2012 federal tax return with h&r block Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. How can i do my 2012 federal tax return with h&r block Deadline for setting up a SIMPLE IRA. How can i do my 2012 federal tax return with h&r block   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. How can i do my 2012 federal tax return with h&r block See Time limits for contributing funds , later, under Contribution Limits. How can i do my 2012 federal tax return with h&r block Credit for startup costs. How can i do my 2012 federal tax return with h&r block   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. How can i do my 2012 federal tax return with h&r block For more information, see Credit for startup costs under Reminders, earlier. How can i do my 2012 federal tax return with h&r block Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. How can i do my 2012 federal tax return with h&r block The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Your decision to make either matching contributions or nonelective contributions (discussed later). How can i do my 2012 federal tax return with h&r block A summary description provided by the financial institution. How can i do my 2012 federal tax return with h&r block Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. How can i do my 2012 federal tax return with h&r block Election period. How can i do my 2012 federal tax return with h&r block   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). How can i do my 2012 federal tax return with h&r block However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. How can i do my 2012 federal tax return with h&r block For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. How can i do my 2012 federal tax return with h&r block Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. How can i do my 2012 federal tax return with h&r block Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. How can i do my 2012 federal tax return with h&r block You, as the employer, must make either matching contributions or nonelective contributions, defined later. How can i do my 2012 federal tax return with h&r block No other contributions can be made to the SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block These contributions, which you can deduct, must be made timely. How can i do my 2012 federal tax return with h&r block See Time limits for contributing funds , later. How can i do my 2012 federal tax return with h&r block Salary reduction contributions. How can i do my 2012 federal tax return with h&r block   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. How can i do my 2012 federal tax return with h&r block These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. How can i do my 2012 federal tax return with h&r block You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. How can i do my 2012 federal tax return with h&r block   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. How can i do my 2012 federal tax return with h&r block Catch-up contributions. How can i do my 2012 federal tax return with h&r block   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. How can i do my 2012 federal tax return with h&r block The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. How can i do my 2012 federal tax return with h&r block Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. How can i do my 2012 federal tax return with h&r block However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. How can i do my 2012 federal tax return with h&r block The catch-up contribution limit. How can i do my 2012 federal tax return with h&r block The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. How can i do my 2012 federal tax return with h&r block Employer matching contributions. How can i do my 2012 federal tax return with h&r block   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. How can i do my 2012 federal tax return with h&r block This requirement does not apply if you make nonelective contributions as discussed later. How can i do my 2012 federal tax return with h&r block Example. How can i do my 2012 federal tax return with h&r block In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. How can i do my 2012 federal tax return with h&r block Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. How can i do my 2012 federal tax return with h&r block You make 3% matching contributions. How can i do my 2012 federal tax return with h&r block The total contribution you make for John is $2,000, figured as follows. How can i do my 2012 federal tax return with h&r block Salary reduction contributions ($25,000 × . How can i do my 2012 federal tax return with h&r block 05) $1,250 Employer matching contribution ($25,000 × . How can i do my 2012 federal tax return with h&r block 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. How can i do my 2012 federal tax return with h&r block Salary reduction contributions ($40,000 × . How can i do my 2012 federal tax return with h&r block 10) $4,000 Employer matching contribution ($40,000 × . How can i do my 2012 federal tax return with h&r block 03) 1,200 Total contributions $5,200 Lower percentage. How can i do my 2012 federal tax return with h&r block   If you choose a matching contribution less than 3%, the percentage must be at least 1%. How can i do my 2012 federal tax return with h&r block You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. How can i do my 2012 federal tax return with h&r block You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. How can i do my 2012 federal tax return with h&r block Nonelective contributions. How can i do my 2012 federal tax return with h&r block   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. How can i do my 2012 federal tax return with h&r block If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. How can i do my 2012 federal tax return with h&r block Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). How can i do my 2012 federal tax return with h&r block   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. How can i do my 2012 federal tax return with h&r block Example 1. How can i do my 2012 federal tax return with h&r block In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. How can i do my 2012 federal tax return with h&r block Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. How can i do my 2012 federal tax return with h&r block You make a 2% nonelective contribution. How can i do my 2012 federal tax return with h&r block Both of you are under age 50. How can i do my 2012 federal tax return with h&r block The total contribution you make for Jane is $4,320, figured as follows. How can i do my 2012 federal tax return with h&r block Salary reduction contributions ($36,000 × . How can i do my 2012 federal tax return with h&r block 10) $3,600 2% nonelective contributions ($36,000 × . How can i do my 2012 federal tax return with h&r block 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. How can i do my 2012 federal tax return with h&r block Salary reduction contributions ($50,000 × . How can i do my 2012 federal tax return with h&r block 10) $5,000 2% nonelective contributions ($50,000 × . How can i do my 2012 federal tax return with h&r block 02) 1,000 Total contributions $6,000 Example 2. How can i do my 2012 federal tax return with h&r block Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. How can i do my 2012 federal tax return with h&r block Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . How can i do my 2012 federal tax return with h&r block 02) 1,500 Total contributions $13,500 Time limits for contributing funds. How can i do my 2012 federal tax return with h&r block   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. How can i do my 2012 federal tax return with h&r block You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. How can i do my 2012 federal tax return with h&r block Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. How can i do my 2012 federal tax return with h&r block When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. How can i do my 2012 federal tax return with h&r block You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. How can i do my 2012 federal tax return with h&r block Example 1. How can i do my 2012 federal tax return with h&r block Your tax year is the fiscal year ending June 30. How can i do my 2012 federal tax return with h&r block Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. How can i do my 2012 federal tax return with h&r block Example 2. How can i do my 2012 federal tax return with h&r block You are a sole proprietor whose tax year is the calendar year. How can i do my 2012 federal tax return with h&r block Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. How can i do my 2012 federal tax return with h&r block Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. How can i do my 2012 federal tax return with h&r block For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. How can i do my 2012 federal tax return with h&r block Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. How can i do my 2012 federal tax return with h&r block (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. How can i do my 2012 federal tax return with h&r block ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. How can i do my 2012 federal tax return with h&r block SIMPLE IRA plan contributions are not subject to federal income tax withholding. How can i do my 2012 federal tax return with h&r block However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. How can i do my 2012 federal tax return with h&r block Matching and nonelective contributions are not subject to these taxes. How can i do my 2012 federal tax return with h&r block Reporting on Form W-2. How can i do my 2012 federal tax return with h&r block   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. How can i do my 2012 federal tax return with h&r block You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. How can i do my 2012 federal tax return with h&r block You must also include them in box 12. How can i do my 2012 federal tax return with h&r block Mark the “Retirement plan” checkbox in box 13. How can i do my 2012 federal tax return with h&r block For more information, see the Form W-2 instructions. How can i do my 2012 federal tax return with h&r block Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. How can i do my 2012 federal tax return with h&r block Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. How can i do my 2012 federal tax return with h&r block However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. How can i do my 2012 federal tax return with h&r block Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. How can i do my 2012 federal tax return with h&r block Early withdrawals generally are subject to a 10% additional tax. How can i do my 2012 federal tax return with h&r block However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. How can i do my 2012 federal tax return with h&r block More information. How can i do my 2012 federal tax return with h&r block   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. How can i do my 2012 federal tax return with h&r block More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. How can i do my 2012 federal tax return with h&r block SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. How can i do my 2012 federal tax return with h&r block A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. How can i do my 2012 federal tax return with h&r block However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. How can i do my 2012 federal tax return with h&r block Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. How can i do my 2012 federal tax return with h&r block If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. How can i do my 2012 federal tax return with h&r block See Catch-up contributions , earlier under Contribution Limits. How can i do my 2012 federal tax return with h&r block You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. How can i do my 2012 federal tax return with h&r block No other contributions can be made to the trust. How can i do my 2012 federal tax return with h&r block No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. How can i do my 2012 federal tax return with h&r block The employee's rights to any contributions are nonforfeitable. How can i do my 2012 federal tax return with h&r block No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). How can i do my 2012 federal tax return with h&r block Compensation is defined earlier in this chapter. How can i do my 2012 federal tax return with h&r block Employee notification. How can i do my 2012 federal tax return with h&r block   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. How can i do my 2012 federal tax return with h&r block See Notification Requirement in this chapter. How can i do my 2012 federal tax return with h&r block Credit for startup costs. How can i do my 2012 federal tax return with h&r block   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. How can i do my 2012 federal tax return with h&r block For more information, see Credit for startup costs under Reminders, earlier. How can i do my 2012 federal tax return with h&r block Note on Forms. How can i do my 2012 federal tax return with h&r block   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. How can i do my 2012 federal tax return with h&r block To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. How can i do my 2012 federal tax return with h&r block Prev  Up  Next   Home   More Online Publications