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How Do I Amend My 2012 Taxes

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How Do I Amend My 2012 Taxes

How do i amend my 2012 taxes 7. How do i amend my 2012 taxes   Depreciation, Depletion, and Amortization Table of Contents What's New for 2013 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Overview of DepreciationWhat Property Can Be Depreciated? What Property Cannot Be Depreciated? When Does Depreciation Begin and End? Can You Use MACRS To Depreciate Your Property? What Is the Basis of Your Depreciable Property? How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions? Section 179 Expense DeductionWhat Property Qualifies? What Property Does Not Qualify? How Much Can You Deduct? How Do You Elect the Deduction? When Must You Recapture the Deduction? Claiming the Special Depreciation AllowanceWhat is Qualified Property? How Can You Elect Not To Claim the Allowance? When Must You Recapture an Allowance Figuring Depreciation Under MACRSWhich Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS? What Is the Placed-in-Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies? Which Convention Applies? Which Depreciation Method Applies? How Is the Depreciation Deduction Figured? How Do You Use General Asset Accounts? When Do You Recapture MACRS Depreciation? Additional Rules for Listed PropertyWhat Is Listed Property? What Is the Business-Use Requirement? Do the Passenger Automobile Limits Apply? Depletion Who Can Claim Depletion? Figuring Depletion AmortizationBusiness Start-Up Costs Reforestation Costs Section 197 Intangibles What's New for 2013 Increased section 179 expense deduction dollar limits. How do i amend my 2012 taxes  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. How do i amend my 2012 taxes This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. How do i amend my 2012 taxes See Dollar Limits under Section 179 Expense Deduction , later. How do i amend my 2012 taxes Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. How do i amend my 2012 taxes . How do i amend my 2012 taxes  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. How do i amend my 2012 taxes See Claiming the Special Depreciation Allowance , later. How do i amend my 2012 taxes Expiration of the 3- year recovery period for certain race horses. How do i amend my 2012 taxes  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. How do i amend my 2012 taxes Introduction If you buy or make improvements to farm property such as machinery, equipment, livestock, or a structure with a useful life of more than a year, you generally cannot deduct its entire cost in one year. How do i amend my 2012 taxes Instead, you must spread the cost over the time you use the property and deduct part of it each year. How do i amend my 2012 taxes For most types of property, this is called depreciation. How do i amend my 2012 taxes This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. How do i amend my 2012 taxes For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. How do i amend my 2012 taxes Topics - This chapter discusses: Overview of depreciation Section 179 expense deduction Special depreciation allowance Modified Accelerated Cost Recovery System (MACRS) Listed property Basic information on cost depletion (including timber depletion) and percentage depletion Amortization of the costs of going into business, reforestation costs, the costs of pollution control facilities, and the costs of section 197 intangibles Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) T (Timber), Forest Activities Schedule 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. How do i amend my 2012 taxes It is important to keep good records for property you depreciate. How do i amend my 2012 taxes Do not file these records with your return. How do i amend my 2012 taxes Instead, you should keep them as part of the permanent records of the depreciated property. How do i amend my 2012 taxes They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. How do i amend my 2012 taxes For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. How do i amend my 2012 taxes For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. How do i amend my 2012 taxes Overview of Depreciation This overview discusses basic information on the following. How do i amend my 2012 taxes What property can be depreciated. How do i amend my 2012 taxes What property cannot be depreciated. How do i amend my 2012 taxes When depreciation begins and ends. How do i amend my 2012 taxes Whether MACRS can be used to figure depreciation. How do i amend my 2012 taxes What is the basis of your depreciable property. How do i amend my 2012 taxes How to treat repairs and improvements. How do i amend my 2012 taxes When you must file Form 4562. How do i amend my 2012 taxes How you can correct depreciation claimed incorrectly. How do i amend my 2012 taxes What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, equipment, vehicles, certain livestock, and furniture. How do i amend my 2012 taxes You can also depreciate certain intangible property, such as copyrights, patents, and computer software. How do i amend my 2012 taxes To be depreciable, the property must meet all the following requirements. How do i amend my 2012 taxes It must be property you own. How do i amend my 2012 taxes It must be used in your business or income-producing activity. How do i amend my 2012 taxes It must have a determinable useful life. How do i amend my 2012 taxes It must have a useful life that extends substantially beyond the year you place it in service. How do i amend my 2012 taxes Property You Own To claim depreciation, you usually must be the owner of the property. How do i amend my 2012 taxes You are considered as owning property even if it is subject to a debt. How do i amend my 2012 taxes Leased property. How do i amend my 2012 taxes   You can depreciate leased property only if you retain the incidents of ownership in the property. How do i amend my 2012 taxes This means you bear the burden of exhaustion of the capital investment in the property. How do i amend my 2012 taxes Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. How do i amend my 2012 taxes You can, however, depreciate any capital improvements you make to the leased property. How do i amend my 2012 taxes See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. How do i amend my 2012 taxes   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. How do i amend my 2012 taxes However, you cannot depreciate the cost of the property if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased. How do i amend my 2012 taxes Life tenant. How do i amend my 2012 taxes   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. How do i amend my 2012 taxes See Certain term interests in property , later, for an exception. How do i amend my 2012 taxes Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. How do i amend my 2012 taxes If you use property to produce income (investment use), the income must be taxable. How do i amend my 2012 taxes You cannot depreciate property that you use solely for personal activities. How do i amend my 2012 taxes However, if you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the percentage of business or investment use. How do i amend my 2012 taxes Example 1. How do i amend my 2012 taxes   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. How do i amend my 2012 taxes If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. How do i amend my 2012 taxes Example 2. How do i amend my 2012 taxes   If you use part of your home for business, you may be able to deduct depreciation on that part based on its business use. How do i amend my 2012 taxes For more information, see Business Use of Your Home in chapter 4. How do i amend my 2012 taxes Inventory. How do i amend my 2012 taxes   You can never depreciate inventory because it is not held for use in your business. How do i amend my 2012 taxes Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. How do i amend my 2012 taxes Livestock. How do i amend my 2012 taxes   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. How do i amend my 2012 taxes Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis. How do i amend my 2012 taxes However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. How do i amend my 2012 taxes Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. How do i amend my 2012 taxes This means it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. How do i amend my 2012 taxes Irrigation systems and water wells. How do i amend my 2012 taxes   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. How do i amend my 2012 taxes You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. How do i amend my 2012 taxes In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. How do i amend my 2012 taxes However, land preparation costs for center pivot irrigation systems are not depreciable. How do i amend my 2012 taxes Dams, ponds, and terraces. How do i amend my 2012 taxes   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. How do i amend my 2012 taxes What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. How do i amend my 2012 taxes This includes the following. How do i amend my 2012 taxes Land. How do i amend my 2012 taxes You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. How do i amend my 2012 taxes The cost of land generally includes the cost of clearing, grading, planting, and landscaping. How do i amend my 2012 taxes Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. How do i amend my 2012 taxes See chapter 1 of Publication 946. How do i amend my 2012 taxes Property placed in service and disposed of in the same year. How do i amend my 2012 taxes Determining when property is placed in service is explained later. How do i amend my 2012 taxes Equipment used to build capital improvements. How do i amend my 2012 taxes You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. How do i amend my 2012 taxes Intangible property such as section 197 intangibles. How do i amend my 2012 taxes This property does not have a determinable useful life and generally cannot be depreciated. How do i amend my 2012 taxes However, see Amortization , later. How do i amend my 2012 taxes Special rules apply to computer software (discussed below). How do i amend my 2012 taxes Certain term interests (discussed below). How do i amend my 2012 taxes Computer software. How do i amend my 2012 taxes   Computer software is generally not a section 197 intangible even if acquired in connection with the acquisition of a business, if it meets all of the following tests. How do i amend my 2012 taxes It is readily available for purchase by the general public. How do i amend my 2012 taxes It is subject to a nonexclusive license. How do i amend my 2012 taxes It has not been substantially modified. How do i amend my 2012 taxes   If the software meets the tests above, it can be depreciated and may qualify for the section 179 expense deduction and the special depreciation allowance (if applicable), discussed later. How do i amend my 2012 taxes Certain term interests in property. How do i amend my 2012 taxes   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. How do i amend my 2012 taxes This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. How do i amend my 2012 taxes For more information, see chapter 1 of Publication 946. How do i amend my 2012 taxes When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. How do i amend my 2012 taxes You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. How do i amend my 2012 taxes Placed in Service Property is placed in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. How do i amend my 2012 taxes Even if you are not using the property, it is in service when it is ready and available for its specific use. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes You bought a planter for use in your farm business. How do i amend my 2012 taxes The planter was delivered in December 2012 after harvest was over. How do i amend my 2012 taxes You begin to depreciate the planter for 2012 because it was ready and available for its specific use in 2012, even though it will not be used until the spring of 2013. How do i amend my 2012 taxes If your planter comes unassembled in December 2012 and is put together in February 2013, it is not placed in service until 2013. How do i amend my 2012 taxes You begin to depreciate it in 2013. How do i amend my 2012 taxes If your planter was delivered and assembled in February 2013 but not used until April 2013, it is placed in service in February 2013, because this is when the planter was ready for its specified use. How do i amend my 2012 taxes You begin to depreciate it in 2013. How do i amend my 2012 taxes Fruit or nut trees and vines. How do i amend my 2012 taxes   If you acquire an orchard, grove, or vineyard before the trees or vines have reached the income-producing stage, and they have a preproductive period of more than 2 years, you must capitalize the preproductive-period costs under the uniform capitalization rules (unless you elect not to use these rules). How do i amend my 2012 taxes See chapter 6 for information about the uniform capitalization rules. How do i amend my 2012 taxes Your depreciation begins when the trees and vines reach the income-producing stage (that is, when they bear fruit, nuts, or grapes in quantities sufficient to commercially warrant harvesting). How do i amend my 2012 taxes Immature livestock. How do i amend my 2012 taxes   Depreciation for livestock begins when the livestock reaches the age of maturity. How do i amend my 2012 taxes If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. How do i amend my 2012 taxes If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. How do i amend my 2012 taxes If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. How do i amend my 2012 taxes Your basis for depreciation is your initial cost for the immature livestock. How do i amend my 2012 taxes Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle. How do i amend my 2012 taxes For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. How do i amend my 2012 taxes Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. How do i amend my 2012 taxes This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. How do i amend my 2012 taxes Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. How do i amend my 2012 taxes You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. How do i amend my 2012 taxes You sell or exchange the property. How do i amend my 2012 taxes You convert the property to personal use. How do i amend my 2012 taxes You abandon the property. How do i amend my 2012 taxes You transfer the property to a supplies or scrap account. How do i amend my 2012 taxes The property is destroyed. How do i amend my 2012 taxes For information on abandonment of property, see chapter 8. How do i amend my 2012 taxes For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. How do i amend my 2012 taxes Can You Use MACRS To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most business and investment property placed in service after 1986. How do i amend my 2012 taxes MACRS is explained later under Figuring Depreciation Under MACRS . How do i amend my 2012 taxes You cannot use MACRS to depreciate the following property. How do i amend my 2012 taxes Property you placed in service before 1987. How do i amend my 2012 taxes Use the methods discussed in Publication 534. How do i amend my 2012 taxes Certain property owned or used in 1986. How do i amend my 2012 taxes See chapter 1 of Publication 946. How do i amend my 2012 taxes Intangible property. How do i amend my 2012 taxes Films, video tapes, and recordings. How do i amend my 2012 taxes Certain corporate or partnership property acquired in a nontaxable transfer. How do i amend my 2012 taxes Property you elected to exclude from MACRS. How do i amend my 2012 taxes For more information, see chapter 1 of Publication 946. How do i amend my 2012 taxes What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. How do i amend my 2012 taxes To determine basis, you need to know the cost or other basis of your property. How do i amend my 2012 taxes Cost or other basis. How do i amend my 2012 taxes   The basis of property you buy is usually its cost plus amounts you paid for items such as sales tax, freight charges, and installation and testing fees. How do i amend my 2012 taxes The cost includes the amount you pay in cash, debt obligations, other property, or services. How do i amend my 2012 taxes   There are times when you cannot use cost as basis. How do i amend my 2012 taxes In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. How do i amend my 2012 taxes Adjusted basis. How do i amend my 2012 taxes   To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. How do i amend my 2012 taxes Basis adjustment for depreciation allowed or allowable. How do i amend my 2012 taxes   After you place your property in service, you must reduce the basis of the property by the depreciation allowed or allowable, whichever is greater. How do i amend my 2012 taxes Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). How do i amend my 2012 taxes Depreciation allowable is depreciation you are entitled to deduct. How do i amend my 2012 taxes   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. How do i amend my 2012 taxes   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). How do i amend my 2012 taxes   For more information, see chapter 6. How do i amend my 2012 taxes How Do You Treat Repairs and Improvements? You generally deduct the cost of repairing business property in the same way as any other business expense. How do i amend my 2012 taxes However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. How do i amend my 2012 taxes Treat improvements as separate depreciable property. How do i amend my 2012 taxes See chapter 1 of Publication 946 for more information. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes You repair a small section on a corner of the roof of a barn that you rent to others. How do i amend my 2012 taxes You deduct the cost of the repair as a business expense. How do i amend my 2012 taxes However, if you replace the entire roof, the new roof is considered to be an improvement because it increases the value and lengthens the life for the property. How do i amend my 2012 taxes You depreciate the cost of the new roof. How do i amend my 2012 taxes Improvements to rented property. How do i amend my 2012 taxes   You can depreciate permanent improvements you make to business property you rent from someone else. How do i amend my 2012 taxes Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. How do i amend my 2012 taxes You must complete and attach Form 4562 to your tax return if you are claiming any of the following. How do i amend my 2012 taxes A section 179 expense deduction for the current year or a section 179 carryover from a prior year. How do i amend my 2012 taxes Depreciation for property placed in service during the current year. How do i amend my 2012 taxes Depreciation on any vehicle or other listed property, regardless of when it was placed in service. How do i amend my 2012 taxes Amortization of costs that began in the current year. How do i amend my 2012 taxes For more information, see the Instructions for Form 4562. How do i amend my 2012 taxes How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. How do i amend my 2012 taxes You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. How do i amend my 2012 taxes You claimed the incorrect amount because of a mathematical error made in any year. How do i amend my 2012 taxes You claimed the incorrect amount because of a posting error made in any year, for example, omitting an asset from the depreciation schedule. How do i amend my 2012 taxes You have not adopted a method of accounting for the property placed in service by you in tax years ending after December 29, 2003. How do i amend my 2012 taxes You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. How do i amend my 2012 taxes Note. How do i amend my 2012 taxes You have adopted a method of accounting if you used the same incorrect method of depreciation for two or more consecutively filed returns. How do i amend my 2012 taxes If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. How do i amend my 2012 taxes See the Instructions for Form 3115. How do i amend my 2012 taxes Section 179 Expense Deduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. How do i amend my 2012 taxes This is the section 179 expense deduction. How do i amend my 2012 taxes You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. How do i amend my 2012 taxes This part of the chapter explains the rules for the section 179 expense deduction. How do i amend my 2012 taxes It explains what property qualifies for the deduction, what property does not qualify for the deduction, the limits that may apply, how to elect the deduction, and when you may have to recapture the deduction. How do i amend my 2012 taxes For more information, see chapter 2 of Publication 946. How do i amend my 2012 taxes What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. How do i amend my 2012 taxes It must be eligible property. How do i amend my 2012 taxes It must be acquired for business use. How do i amend my 2012 taxes It must have been acquired by purchase. How do i amend my 2012 taxes Eligible Property To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property. How do i amend my 2012 taxes Tangible personal property. How do i amend my 2012 taxes Qualified real property. How do i amend my 2012 taxes (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. How do i amend my 2012 taxes For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. How do i amend my 2012 taxes ) Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services; A research facility used in connection with any of the activities in (a) above; or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. How do i amend my 2012 taxes Single purpose agricultural (livestock) or horticultural structures. How do i amend my 2012 taxes Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. How do i amend my 2012 taxes Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive lease, and has not been substantially modified. How do i amend my 2012 taxes Tangible personal property. How do i amend my 2012 taxes   Tangible personal property is any tangible property that is not real property. How do i amend my 2012 taxes It includes the following property. How do i amend my 2012 taxes Machinery and equipment. How do i amend my 2012 taxes Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment. How do i amend my 2012 taxes Gasoline storage tanks and pumps at retail service stations. How do i amend my 2012 taxes Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. How do i amend my 2012 taxes Facility used for the bulk storage of fungible commodities. How do i amend my 2012 taxes   A facility used for the bulk storage of fungible commodities is qualifying property for purposes of the section 179 expense deduction if it is used in connection with any of the activities listed earlier in item (3)(a). How do i amend my 2012 taxes Bulk storage means the storage of a commodity in a large mass before it is used. How do i amend my 2012 taxes Grain bins. How do i amend my 2012 taxes   A grain bin is an example of a storage facility that is qualifying section 179 property. How do i amend my 2012 taxes It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. How do i amend my 2012 taxes Single purpose agricultural or horticultural structures. How do i amend my 2012 taxes   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. How do i amend my 2012 taxes Agricultural structure. How do i amend my 2012 taxes   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. How do i amend my 2012 taxes To house, raise, and feed a particular type of livestock and its produce. How do i amend my 2012 taxes To house the equipment, including any replacements, needed to house, raise, or feed the livestock. How do i amend my 2012 taxes For this purpose, livestock includes poultry. How do i amend my 2012 taxes   Single purpose structures are qualifying property if used, for example, to breed chickens or hogs, produce milk from dairy cattle, or produce feeder cattle or pigs, broiler chickens, or eggs. How do i amend my 2012 taxes The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock. How do i amend my 2012 taxes Horticultural structure. How do i amend my 2012 taxes   A single purpose horticultural structure is either of the following. How do i amend my 2012 taxes A greenhouse specifically designed, constructed, and used for the commercial production of plants. How do i amend my 2012 taxes A structure specifically designed, constructed, and used for the commercial production of mushrooms. How do i amend my 2012 taxes Use of structure. How do i amend my 2012 taxes   A structure must be used only for the purpose that qualified it. How do i amend my 2012 taxes For example, a hog barn will not be qualifying property if you use it to house poultry. How do i amend my 2012 taxes Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. How do i amend my 2012 taxes   If a structure includes work space, the work space can be used only for the following activities. How do i amend my 2012 taxes Stocking, caring for, or collecting livestock or plants or their produce. How do i amend my 2012 taxes Maintaining the enclosure or structure. How do i amend my 2012 taxes Maintaining or replacing the equipment or stock enclosed or housed in the structure. How do i amend my 2012 taxes Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. How do i amend my 2012 taxes For example, property acquired by gift or inheritance does not qualify. How do i amend my 2012 taxes Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes Ken is a farmer. How do i amend my 2012 taxes He purchased two tractors, one from his brother and one from his father. How do i amend my 2012 taxes He placed both tractors in service in the same year he bought them. How do i amend my 2012 taxes The tractor purchased from his father does not qualify for the section 179 expense deduction because he is a related person (as defined above). How do i amend my 2012 taxes The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). How do i amend my 2012 taxes What Property Does Not Qualify? Land and improvements. How do i amend my 2012 taxes   Land and land improvements, do not qualify as section 179 property. How do i amend my 2012 taxes Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. How do i amend my 2012 taxes However, agricultural fences do qualify as section 179 property. How do i amend my 2012 taxes Similarly, field drainage tile also qualifies as section 179 property. How do i amend my 2012 taxes Excepted property. How do i amend my 2012 taxes   Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property. How do i amend my 2012 taxes Certain property you lease to others (if you are a noncorporate lessor). How do i amend my 2012 taxes Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. How do i amend my 2012 taxes Property used by a tax-exempt organization (other than a tax-exempt farmers' cooperative) unless the property is used mainly in a taxable unrelated trade or business. How do i amend my 2012 taxes Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months). How do i amend my 2012 taxes How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. How do i amend my 2012 taxes However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. How do i amend my 2012 taxes These limits apply to each taxpayer, not to each business. How do i amend my 2012 taxes However, see Married individuals under Dollar Limits , later. How do i amend my 2012 taxes See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. How do i amend my 2012 taxes If you deduct only part of the cost of qualifying property as a section 179 expense deduction, you can generally depreciate the cost you do not deduct. How do i amend my 2012 taxes Use Part I of Form 4562 to figure your section 179 expense deduction. How do i amend my 2012 taxes Partial business use. How do i amend my 2012 taxes   When you use property for business and nonbusiness purposes, you can elect the section 179 expense deduction only if you use it more than 50% for business in the year you place it in service. How do i amend my 2012 taxes If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. How do i amend my 2012 taxes Use the resulting business cost to figure your section 179 expense deduction. How do i amend my 2012 taxes Trade-in of other property. How do i amend my 2012 taxes   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 expense deduction includes only the cash you paid. How do i amend my 2012 taxes For example, if you buy (for cash and a trade-in) a new tractor for use in your business, your cost for the section 179 expense deduction is the cash you paid. How do i amend my 2012 taxes It does not include the adjusted basis of the old tractor you trade for the new tractor. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. How do i amend my 2012 taxes They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. How do i amend my 2012 taxes J-Bar also traded a used pickup truck with an adjusted basis of $8,000 for a new pickup truck costing $35,000. How do i amend my 2012 taxes They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. How do i amend my 2012 taxes Only the cash paid by J-Bar qualifies for the section 179 expense deduction. How do i amend my 2012 taxes J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). How do i amend my 2012 taxes Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 is $500,000. How do i amend my 2012 taxes If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 expense deduction among the items in any way, as long as the total deduction is not more than $500,000. How do i amend my 2012 taxes Qualified real property that you elect to treat as section 179 property is limited to $250,000 of the maximum section 179 deduction of $500,000 for 2013. How do i amend my 2012 taxes You do not have to claim the full $500,000. How do i amend my 2012 taxes For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. How do i amend my 2012 taxes Reduced dollar limit for cost exceeding $2 million. How do i amend my 2012 taxes   If the cost of your qualifying section 179 property placed in service in 2013 is over $2 million, you must reduce the dollar limit (but not below zero) by the amount of cost over $2 million. How do i amend my 2012 taxes If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 expense deduction and you cannot carry over the cost that is more than $2,500,000. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes This year, James Smith placed in service machinery costing $2,050,000. How do i amend my 2012 taxes Because this cost is $50,000 more than $2 million, he must reduce his dollar limit to $450,000 ($500,000 − $50,000). How do i amend my 2012 taxes Limits for sport utility vehicles. How do i amend my 2012 taxes   The total amount you can elect to deduct for certain sport utility vehicles and certain other vehicles placed in service in 2013 is $25,000. How do i amend my 2012 taxes This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, and highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. How do i amend my 2012 taxes   For more information, see chapter 2 of Publication 946. How do i amend my 2012 taxes Limits for passenger automobiles. How do i amend my 2012 taxes   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. How do i amend my 2012 taxes See Do the Passenger Automobile Limits Apply , later. How do i amend my 2012 taxes Married individuals. How do i amend my 2012 taxes   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. How do i amend my 2012 taxes If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. How do i amend my 2012 taxes If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2 million. How do i amend my 2012 taxes You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. How do i amend my 2012 taxes If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. How do i amend my 2012 taxes Joint return after separate returns. How do i amend my 2012 taxes   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. How do i amend my 2012 taxes The dollar limit (after reduction for any cost of section 179 property over $2 million). How do i amend my 2012 taxes The total cost of section 179 property you and your spouse elected to expense on your separate returns. How do i amend my 2012 taxes Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. How do i amend my 2012 taxes Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. How do i amend my 2012 taxes Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. How do i amend my 2012 taxes See Carryover of disallowed deduction , later. How do i amend my 2012 taxes Taxable income. How do i amend my 2012 taxes   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. How do i amend my 2012 taxes In addition to net income or loss from a sole proprietorship, partnership, or S corporation, net income or loss derived from a trade or business also includes the following items. How do i amend my 2012 taxes Section 1231 gains (or losses) as discussed in chapter 9. How do i amend my 2012 taxes Interest from working capital of your trade or business. How do i amend my 2012 taxes Wages, salaries, tips, or other pay earned by you (or your spouse if you file a joint return) as an employee of any employer. How do i amend my 2012 taxes   In addition, figure taxable income without regard to any of the following. How do i amend my 2012 taxes The section 179 expense deduction. How do i amend my 2012 taxes The self-employment tax deduction. How do i amend my 2012 taxes Any net operating loss carryback or carryforward. How do i amend my 2012 taxes Any unreimbursed employee business expenses. How do i amend my 2012 taxes Two different taxable income limits. How do i amend my 2012 taxes   In addition to the business income limit for your section 179 expense deduction, you may have a taxable income limit for some other deduction (for example, charitable contributions). How do i amend my 2012 taxes You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. How do i amend my 2012 taxes If so, complete the following steps. How do i amend my 2012 taxes Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. How do i amend my 2012 taxes 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. How do i amend my 2012 taxes 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. How do i amend my 2012 taxes 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. How do i amend my 2012 taxes 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. How do i amend my 2012 taxes 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. How do i amend my 2012 taxes 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. How do i amend my 2012 taxes 8 Figure your actual other deduction using the taxable income figured in Step 7. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. How do i amend my 2012 taxes It elects to expense the entire $500,000 cost under section 179. How do i amend my 2012 taxes In June, the corporation gave a charitable contribution of $10,000. How do i amend my 2012 taxes A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. How do i amend my 2012 taxes The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. How do i amend my 2012 taxes XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. How do i amend my 2012 taxes XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. How do i amend my 2012 taxes Step 1. How do i amend my 2012 taxes Taxable income figured without either deduction is $520,000. How do i amend my 2012 taxes Step 2. How do i amend my 2012 taxes Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. How do i amend my 2012 taxes Step 3. How do i amend my 2012 taxes $20,000 ($520,000 − $500,000). How do i amend my 2012 taxes Step 4. How do i amend my 2012 taxes Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. How do i amend my 2012 taxes Step 5. How do i amend my 2012 taxes $518,000 ($520,000 − $2,000). How do i amend my 2012 taxes Step 6. How do i amend my 2012 taxes Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. How do i amend my 2012 taxes Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. How do i amend my 2012 taxes Step 7. How do i amend my 2012 taxes $20,000 ($520,000 − $500,000). How do i amend my 2012 taxes Step 8. How do i amend my 2012 taxes Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. How do i amend my 2012 taxes Carryover of disallowed deduction. How do i amend my 2012 taxes   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. How do i amend my 2012 taxes   The amount you carry over is used in determining your section 179 expense deduction in the next year. How do i amend my 2012 taxes However, it is subject to the limits in that year. How do i amend my 2012 taxes If you place more than one property in service in a year, you can select the properties for which all or a part of the cost will be carried forward. How do i amend my 2012 taxes Your selections must be shown in your books and records. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes Last year, Joyce Jones placed in service a machine that cost $8,000 and elected to deduct all $8,000 under section 179. How do i amend my 2012 taxes The taxable income from her business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) was $6,000. How do i amend my 2012 taxes Her section 179 expense deduction was limited to $6,000. How do i amend my 2012 taxes The $2,000 cost that was not allowed as a section 179 expense deduction (because of the business income limit) is carried to this year. How do i amend my 2012 taxes This year, Joyce placed another machine in service that cost $9,000. How do i amend my 2012 taxes Her taxable income from business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) is $10,000. How do i amend my 2012 taxes Joyce can deduct the full cost of the machine ($9,000) but only $1,000 of the carryover from last year because of the business income limit. How do i amend my 2012 taxes She can carry over the balance of $1,000 to next year. How do i amend my 2012 taxes Partnerships and S Corporations The section 179 expense deduction limits apply both to the partnership or S corporation and to each partner or shareholder. How do i amend my 2012 taxes The partnership or S corporation determines its section 179 expense deduction subject to the limits. How do i amend my 2012 taxes It then allocates the deduction among its partners or shareholders. How do i amend my 2012 taxes If you are a partner in a partnership or shareholder of an S corporation, you add the amount allocated from the partnership or S corporation to any section 179 costs not related to the partnership or S corporation and then apply the dollar limit to this total. How do i amend my 2012 taxes To determine any reduction in the dollar limit for costs over $560,000, you do not include any of the cost of section 179 property placed in service by the partnership or S corporation. How do i amend my 2012 taxes After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. How do i amend my 2012 taxes For more information, see chapter 2 of Publication 946. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. How do i amend my 2012 taxes P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). How do i amend my 2012 taxes Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. How do i amend my 2012 taxes Because P's taxable income from the active conduct of all its trades or businesses for the year was $400,000, it can deduct the full $340,000. How do i amend my 2012 taxes P allocates $100,000 of its section 179 expense deduction and $110,000 of its taxable income to John, one of its partners. How do i amend my 2012 taxes John also conducts a business as a sole proprietor and in 2013, placed in service in that business, section 179 property costing $28,000. How do i amend my 2012 taxes John's taxable income from that business was $10,000. How do i amend my 2012 taxes In addition to the $100,000 allocated from P, he elects to expense the $28,000 of his sole proprietorship's section 179 costs. How do i amend my 2012 taxes However, John's deduction is limited to his business taxable income of $120,000 ($110,000 from P plus $10,000 from his sole proprietorship). How do i amend my 2012 taxes He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. How do i amend my 2012 taxes How Do You Elect the Deduction? You elect to take the section 179 expense deduction by completing Part I of Form 4562. How do i amend my 2012 taxes If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. How do i amend my 2012 taxes   File Form 4562 with either of the following: Your original tax return (whether or not you filed it timely), or An amended return filed within the time prescribed by law. How do i amend my 2012 taxes An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. How do i amend my 2012 taxes The amended return must also include any resulting adjustments to taxable income. How do i amend my 2012 taxes Revoking an election. How do i amend my 2012 taxes   An election (or any specification made in the election) to take a section 179 expense deduction for 2013 can be revoked without IRS approval by filing an amended return. How do i amend my 2012 taxes The amended return must be filed within the time prescribed by law. How do i amend my 2012 taxes The amended return must also include any resulting adjustments to taxable income (for example, allowable depreciation in that tax year for the item of section 179 property for which the election pertains. How do i amend my 2012 taxes ) Once made, the revocation is irrevocable. How do i amend my 2012 taxes When Must You Recapture the Deduction? You may have to recapture the section 179 expense deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. How do i amend my 2012 taxes In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. How do i amend my 2012 taxes You also increase the basis of the property by the recapture amount. How do i amend my 2012 taxes Recovery periods for property are discussed later. How do i amend my 2012 taxes If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. How do i amend my 2012 taxes Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. How do i amend my 2012 taxes   If the property is listed property, do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. How do i amend my 2012 taxes Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. How do i amend my 2012 taxes Figuring the recapture amount. How do i amend my 2012 taxes   To figure the amount to recapture, take the following steps. How do i amend my 2012 taxes Figure the allowable depreciation for the section 179 expense deduction you claimed. How do i amend my 2012 taxes Begin with the year you placed the property in service and include the year of recapture. How do i amend my 2012 taxes Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. How do i amend my 2012 taxes The result is the amount you must recapture. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. How do i amend my 2012 taxes The property is not listed property. How do i amend my 2012 taxes He elected a $5,000 section 179 expense deduction for the property and also elected not to claim a special depreciation allowance. How do i amend my 2012 taxes He used the property only for business in 2011 and 2012. How do i amend my 2012 taxes During 2013, he used the property 40% for business and 60% for personal use. How do i amend my 2012 taxes He figures his recapture amount as follows. How do i amend my 2012 taxes Section 179 expense deduction claimed (2011) $5,000 Minus: Allowable depreciation (instead of section 179 expense deduction):   2011 $1,250   2012 1,875   2013 ($1,250 × 40% (business)) 500 3,625 2013 — Recapture amount $1,375     Paul must include $1,375 in income for 2013. How do i amend my 2012 taxes Where to report recapture. How do i amend my 2012 taxes   Report any recapture of the section 179 expense deduction as ordinary income in Part IV of Form 4797 and include it in income on Schedule F (Form 1040). How do i amend my 2012 taxes Recapture for qualified section 179 GO Zone property. How do i amend my 2012 taxes   If any qualified section 179 GO Zone property ceases to be used in the GO Zone in a later year, you must recapture the benefit of the increased section 179 expense deduction as “other income. How do i amend my 2012 taxes ” Claiming the Special Depreciation Allowance For qualified property (defined below) placed in service in 2013, you can take an additional 50% special depreciation allowance. How do i amend my 2012 taxes The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS. How do i amend my 2012 taxes Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. How do i amend my 2012 taxes What is Qualified Property? For farmers, qualified property generally is certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. How do i amend my 2012 taxes Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. How do i amend my 2012 taxes   Certain qualified property (defined below) acquired after December 31, 2007, and before January 1, 2014, is eligible for a 50% special depreciation allowance. How do i amend my 2012 taxes   Qualified property includes the following: Tangible property depreciated under the Modified Accelerated Cost Recovery System (MACRS) with a recovery period of 20 years or less. How do i amend my 2012 taxes Water utility property. How do i amend my 2012 taxes Off-the-shelf computer software. How do i amend my 2012 taxes Qualified leasehold improvement property. How do i amend my 2012 taxes   Qualified property must also meet all of the following tests: You must have acquired qualified property by purchase after December 31, 2007. How do i amend my 2012 taxes If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. How do i amend my 2012 taxes Qualified property must be placed in service after December 31, 2007 and placed in service before January 1, 2014 (before January 1, 2015 for certain property with a long production period and for certain aircraft). How do i amend my 2012 taxes The original use of the property must begin with you after December 31, 2007. How do i amend my 2012 taxes For more information, see chapter 3 of Publication 946. How do i amend my 2012 taxes How Can You Elect Not To Claim the Allowance? You can elect, for any class of property, not to deduct the special depreciation allowance for all property in such class placed in service during the tax year. How do i amend my 2012 taxes To make the election, attach a statement to your return indicating the class of property for which you are making the election. How do i amend my 2012 taxes 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 do i amend my 2012 taxes However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How do i amend my 2012 taxes Attach the election statement to the amended return. How do i amend my 2012 taxes On the amended return, write “Filed pursuant to section 301. How do i amend my 2012 taxes 9100-2. How do i amend my 2012 taxes ” Once made, the election may not be revoked without IRS consent. How do i amend my 2012 taxes If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. How do i amend my 2012 taxes 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 do i amend my 2012 taxes For more information, see chapter 3 of Publication 946. How do i amend my 2012 taxes Figuring Depreciation Under MACRS The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. How do i amend my 2012 taxes MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). How do i amend my 2012 taxes Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. How do i amend my 2012 taxes To be sure you can use MACRS to figure depreciation for your property, see Can You Use MACRS To Depreciate Your Property, earlier. How do i amend my 2012 taxes This part explains how to determine which MACRS depreciation system applies to your property. How do i amend my 2012 taxes It also discusses the following information that you need to know before you can figure depreciation under MACRS. How do i amend my 2012 taxes Property's recovery class. How do i amend my 2012 taxes Placed-in-service date. How do i amend my 2012 taxes Basis for depreciation. How do i amend my 2012 taxes Recovery period. How do i amend my 2012 taxes Convention. How do i amend my 2012 taxes Depreciation method. How do i amend my 2012 taxes Finally, this part explains how to use this information to figure your depreciation deduction. How do i amend my 2012 taxes Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. How do i amend my 2012 taxes You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. How do i amend my 2012 taxes Required use of ADS. How do i amend my 2012 taxes   You must use ADS for the following property. How do i amend my 2012 taxes All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. How do i amend my 2012 taxes Listed property used 50% or less in a qualified business use. How do i amend my 2012 taxes See Additional Rules for Listed Property , later. How do i amend my 2012 taxes Any tax-exempt use property. How do i amend my 2012 taxes Any tax-exempt bond-financed property. How do i amend my 2012 taxes Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. How do i amend my 2012 taxes Any tangible property used predominantly outside the United States during the year. How do i amend my 2012 taxes If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. How do i amend my 2012 taxes Electing ADS. How do i amend my 2012 taxes   Although your property may qualify for GDS, you can elect to use ADS. How do i amend my 2012 taxes The election generally must cover all property in the same property class you placed in service during the year. How do i amend my 2012 taxes However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. How do i amend my 2012 taxes Once you make this election, you can never revoke it. How do i amend my 2012 taxes   You make the election by completing line 20 in Part III of Form 4562. How do i amend my 2012 taxes Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. How do i amend my 2012 taxes 3-year property. How do i amend my 2012 taxes 5-year property. How do i amend my 2012 taxes 7-year property. How do i amend my 2012 taxes 10-year property. How do i amend my 2012 taxes 15-year property. How do i amend my 2012 taxes 20-year property. How do i amend my 2012 taxes 25-year property. How do i amend my 2012 taxes Residential rental property. How do i amend my 2012 taxes Nonresidential real property. How do i amend my 2012 taxes See Which Property Class Applies Under GDS in chapter 4 of Publication 946 for examples of the types of property included in each class. How do i amend my 2012 taxes What Is the Placed-in-Service Date? You begin to claim depreciation when your property is placed in service for use either in a trade or business or for the production of income. How do i amend my 2012 taxes The placed-in-service date for your property is the date the property is ready and available for a specific use. How do i amend my 2012 taxes It is therefore not necessarily the date it is first used. How do i amend my 2012 taxes If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. How do i amend my 2012 taxes See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. How do i amend my 2012 taxes What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. How do i amend my 2012 taxes Reduce that amount by any credits and deductions allocable to the property. How do i amend my 2012 taxes The following are examples of some of the credits and deductions that reduce basis. How do i amend my 2012 taxes Any deduction for section 179 property. How do i amend my 2012 taxes Any deduction for removal of barriers to the disabled and the elderly. How do i amend my 2012 taxes Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. How do i amend my 2012 taxes Any special depreciation allowance. How do i amend my 2012 taxes Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. How do i amend my 2012 taxes For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property , earlier. How do i amend my 2012 taxes Also, see chapter 6. How do i amend my 2012 taxes For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. How do i amend my 2012 taxes Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. How do i amend my 2012 taxes It is determined based on the depreciation system (GDS or ADS) used. How do i amend my 2012 taxes See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. How do i amend my 2012 taxes For a complete list of recovery periods, see the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. How do i amend my 2012 taxes House trailers for farm laborers. How do i amend my 2012 taxes   To depreciate a house trailer you supply as housing for those who work on your farm, use one of the following recovery periods if the house trailer is mobile (it has wheels and a history of movement). How do i amend my 2012 taxes A 7-year recovery period under GDS. How do i amend my 2012 taxes A 10-year recovery period under ADS. How do i amend my 2012 taxes   However, if the house trailer is not mobile (its wheels have been removed and permanent utilities and pipes attached to it), use one of the following recovery periods. How do i amend my 2012 taxes A 20-year recovery period under GDS. How do i amend my 2012 taxes A 25-year recovery period under ADS. How do i amend my 2012 taxes Water wells. How do i amend my 2012 taxes   Water wells used to provide water for raising poultry and livestock are land improvements. How do i amend my 2012 taxes If they are depreciable, use one of the following recovery periods. How do i amend my 2012 taxes A 15-year recovery period under GDS. How do i amend my 2012 taxes A 20-year recovery period under ADS. How do i amend my 2012 taxes   The types of water wells that can be depreciated were discussed earlier in Irrigation systems and water wells under Property Having a Determinable Useful Life . How do i amend my 2012 taxes Table 7-1. How do i amend my 2012 taxes Farm Property Recovery Periods   Recovery Period in Years Assets GDS ADS Agricultural structures (single purpose) 10 15 Automobiles 5 5 Calculators and copiers 5 6 Cattle (dairy or breeding) 5 7 Communication equipment1 7 10 Computer and peripheral equipment 5 5 Drainage facilities 15 20 Farm buildings2 20 25 Farm machinery and equipment 7 10 Fences (agricultural) 7 10 Goats and sheep (breeding) 5 5 Grain bin 7 10 Hogs (breeding) 3 3 Horses (age when placed in service)     Breeding and working (12 years or less) 7 10 Breeding and working (more than 12 years) 3 10 Racing horses 3 12 Horticultural structures (single purpose) 10 15 Logging machinery and equipment3 5 6 Nonresidential real property 394 40 Office furniture, fixtures, and equipment (not calculators, copiers, or typewriters) 7 10 Paved lots 15 20 Residential rental property 27. How do i amend my 2012 taxes 5 40 Tractor units (over-the-road) 3 4 Trees or vines bearing fruit or nuts 10 20 Truck (heavy duty, unloaded weight 13,000 lbs. How do i amend my 2012 taxes or more) 5 6 Truck (actual weight less than 13,000 lbs) 5 5 Water wells 15 20 1 Not including communication equipment listed in other classes. How do i amend my 2012 taxes 2 Not including single purpose agricultural or horticultural structures. How do i amend my 2012 taxes 3 Used by logging and sawmill operators for cutting of timber. How do i amend my 2012 taxes 4 For property placed in service after May 12, 1993; for property placed in service before May 13, 1993,  the recovery period is 31. How do i amend my 2012 taxes 5 years. How do i amend my 2012 taxes Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. How do i amend my 2012 taxes The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. How do i amend my 2012 taxes Use one of the following conventions. How do i amend my 2012 taxes The half-year convention. How do i amend my 2012 taxes The mid-month convention. How do i amend my 2012 taxes The mid-quarter convention. How do i amend my 2012 taxes For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. How do i amend my 2012 taxes Also, see the Instructions for Form 4562. How do i amend my 2012 taxes Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. How do i amend my 2012 taxes The 200% declining balance method over a GDS recovery period. How do i amend my 2012 taxes The 150% declining balance method over a GDS recovery period. How do i amend my 2012 taxes The straight line method over a GDS recovery period. How do i amend my 2012 taxes The straight line method over an ADS recovery period. How do i amend my 2012 taxes Depreciation Table. How do i amend my 2012 taxes   The following table lists the types of property you can depreciate under each method. How do i amend my 2012 taxes The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. How do i amend my 2012 taxes Depreciation Table System/Method   Type of Property GDS using  150% DB • All property used in a farming business (except real property)   • All 15- and 20-year property   • Nonfarm 3-, 5-, 7-, and 10-year property1 GDS using SL • Nonresidential real property   • Residential rental property   • Trees or vines bearing fruit or nuts   • All 3-, 5-, 7-, 10-, 15-, and 20-year property1 ADS using SL • Property used predomi- nantly outside the United States   • Farm property used when an election not to apply the uniform capitalization rules is in effect   • Tax-exempt property   • Tax-exempt bond-financed property   • Imported property2   • Any property for which you elect to use this method1 GDS using  200% DB • Nonfarm 3-, 5-, 7-, and 10-year property 1Elective method 2See section 168(g)(6) of the Internal Revenue  Code Property used in farming business. How do i amend my 2012 taxes   For personal property placed in service after 1988 in a farming business, you must use the 150% declining balance method over a GDS recovery period or you can elect one of the following methods. How do i amend my 2012 taxes The straight line method over a GDS recovery period. How do i amend my 2012 taxes The straight line method over an ADS recovery period. How do i amend my 2012 taxes For property placed in service before 1999, you could have elected to use the 150% declining balance method using the ADS recovery periods for certain property classes. How do i amend my 2012 taxes If you made this election, continue to use the same method and recovery period for that property. How do i amend my 2012 taxes Real property. How do i amend my 2012 taxes   You can depreciate real property using the straight line method under either GDS or ADS. How do i amend my 2012 taxes Switching to straight line. How do i amend my 2012 taxes   If you use a declining balance method, you switch to the straight line method in the year it provides an equal or greater deduction. How do i amend my 2012 taxes If you use the MACRS percentage tables, discussed later under How Is the Depreciation Deduction Figured , you do not need to determine in which year your deduction is greater using the straight line method. How do i amend my 2012 taxes The tables have the switch to the straight line method built into their rates. How do i amend my 2012 taxes Fruit or nut trees and vines. How do i amend my 2012 taxes   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. How do i amend my 2012 taxes ADS required for some farmers. How do i amend my 2012 taxes   If you elect not to apply the uniform capitalization rules to any plant shown in Table 6-1 of chapter 6 and produced in your farming business, you must use ADS for all property you place in service in any year the election is in effect. How do i amend my 2012 taxes See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. How do i amend my 2012 taxes Electing a different method. How do i amend my 2012 taxes   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. How do i amend my 2012 taxes You must make the election by the due date of the return (including extensions) for the year you placed the property in service. How do i amend my 2012 taxes 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 your return (excluding extensions). How do i amend my 2012 taxes Attach the election to the amended return and write “Filed pursuant to section 301. How do i amend my 2012 taxes 9100-2” on the election statement. How do i amend my 2012 taxes File the amended return at the same address you filed the original return. How do i amend my 2012 taxes Once you make the election, you cannot change it. How do i amend my 2012 taxes    If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. How do i amend my 2012 taxes However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. How do i amend my 2012 taxes Straight line election. How do i amend my 2012 taxes   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. How do i amend my 2012 taxes Make the election by entering “S/L” under column (f) in Part III of Form 4562. How do i amend my 2012 taxes ADS election. How do i amend my 2012 taxes   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. How do i amend my 2012 taxes ADS uses the straight line method of depreciation over the ADS recovery periods, which are generally longer than the GDS recovery periods. How do i amend my 2012 taxes The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. How do i amend my 2012 taxes Additional ADS recovery periods for other classes of property may be found in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. How do i amend my 2012 taxes How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed-in-service date, basis amount, recovery period, convention, and depreciation method that applies to your property. How do i amend my 2012 taxes Then you are ready to figure your depreciation deduction. How do i amend my 2012 taxes You can figure it in one of two ways. How do i amend my 2012 taxes You can use the percentage tables provided by the IRS. How do i amend my 2012 taxes You can figure your own deduction without using the tables. How do i amend my 2012 taxes Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. How do i amend my 2012 taxes Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. How do i amend my 2012 taxes These percentage tables are in Appendix A of Publication 946. How do i amend my 2012 taxes Rules for using the tables. How do i amend my 2012 taxes   The following rules cover the use of the percentage tables. How do i amend my 2012 taxes You must apply the rates in the percentage tables to your property's unadjusted basis. How do i amend my 2012 taxes Unadjusted basis is the same basis amount you would use to figure gain on a sale but figured without reducing your original basis by any MACRS depreciation taken in earlier years. How do i amend my 2012 taxes You cannot use the percentage tables for a short tax year. How do i amend my 2012 taxes See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. How do i amend my 2012 taxes You generally must continue to use them for the entire recovery period of the property. How do i amend my 2012 taxes You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to the property, which is depreciated as a separate property. How do i amend my 2012 taxes Basis adjustment due to casualty loss. How do i amend my 2012 taxes   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. How do i amend my 2012 taxes For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. How do i amend my 2012 taxes See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. How do i amend my 2012 taxes Figuring depreciation using the 150% DB method and half-year convention. How do i amend my 2012 taxes    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. How do i amend my 2012 taxes The percentages are based on the 150% declining balance method with a change to the straight line method. How do i amend my 2012 taxes This table covers only the half-year convention and the first 8 years for 20-year property. How do i amend my 2012 taxes See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. How do i amend my 2012 taxes   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . How do i amend my 2012 taxes Example 1. How do i amend my 2012 taxes During the year, you bought an item of 7-year property for $10,000 and placed it in service. How do i amend my 2012 taxes You do not elect a section 179 expense deduction for this property. How do i amend my 2012 taxes In addition, the property is not qualified property for purposes of the special depreciation allowance. How do i amend my 2012 taxes The unadjusted basis of the property is $10,000. How do i amend my 2012 taxes You use the percentages in Table 7-2 to figure your deduction. How do i amend my 2012 taxes Since this is 7-year property, you multiply $10,000 by 10. How do i amend my 2012 taxes 71% to get this year's depreciation of $1,071. How do i amend my 2012 taxes For next year, your depreciation will be $1,913 ($10,000 × 19. How do i amend my 2012 taxes 13%). How do i amend my 2012 taxes Example 2. How do i amend my 2012 taxes You had a barn constructed on your farm at a cost of $20,000. How do i amend my 2012 taxes You placed the barn in service this year. How do i amend my 2012 taxes You elect not to claim the special depreciation allowance. How do i amend my 2012 taxes The barn is 20-year property and you use the table percentages to figure your deduction. How do i amend my 2012 taxes You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. How do i amend my 2012 taxes 75% to get $750. How do i amend my 2012 taxes For next year, your depreciation will be $1,443. How do i amend my 2012 taxes 80 ($20,000 × 7. How do i amend my 2012 taxes 219%). How do i amend my 2012 taxes Table 7-2. How do i amend my 2012 taxes 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. How do i amend my 2012 taxes 0 % 15. How do i amend my 2012 taxes 00 % 10. How do i amend my 2012 taxes 71 % 3. How do i amend my 2012 taxes 750 % 2 37. How do i amend my 2012 taxes 5   25. How do i amend my 2012 taxes 50   19. How do i amend my 2012 taxes 13   7. How do i amend my 2012 taxes 219   3 25. How do i amend my 2012 taxes 0   17. How do i amend my 2012 taxes 85   15. How do i amend my 2012 taxes 03   6. How do i amend my 2012 taxes 677   4 12. How do i amend my 2012 taxes 5   16. How do i amend my 2012 taxes 66   12. How do i amend my 2012 taxes 25   6. How do i amend my 2012 taxes 177   5     16. How do i amend my 2012 taxes 66   12. How do i amend my 2012 taxes 25   5. How do i amend my 2012 taxes 713   6     8. How do i amend my 2012 taxes 33   12. How do i amend my 2012 taxes 25   5. How do i amend my 2012 taxes 285   7         12. How do i amend my 2012 taxes 25   4. How do i amend my 2012 taxes 888   8         6. How do i amend my 2012 taxes 13   4. How do i amend my 2012 taxes 522   Figuring depreciation using the straight line method and half-year convention. How do i amend my 2012 taxes   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. How do i amend my 2012 taxes The table covers only the first 8 years for 20-year property. How do i amend my 2012 taxes See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. How do i amend my 2012 taxes Table 7-3. How do i amend my 2012 taxes Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. How do i amend my 2012 taxes 67 % 10 % 7. How do i amend my 2012 taxes 14 % 2. How do i amend my 2012 taxes 5 % 2 33. How do i amend my 2012 taxes 33   20   14. How do i amend my 2012 taxes 29   5. How do i amend my 2012 taxes 0   3 33. How do i amend my 2012 taxes 33   20   14. How do i amend my 2012 taxes 29   5. How do i amend my 2012 taxes 0   4 16. How do i amend my 2012 taxes 67   20   14. How do i amend my 2012 taxes 28   5. How do i amend my 2012 taxes 0   5     20   14. How do i amend my 2012 taxes 29   5. How do i amend my 2012 taxes 0   6     10   14. How do i amend my 2012 taxes 28   5. How do i amend my 2012 taxes 0   7         14. How do i amend my 2012 taxes 29   5. How do i amend my 2012 taxes 0   8         7. How do i amend my 2012 taxes 14   5. How do i amend my 2012 taxes 0    
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The How Do I Amend My 2012 Taxes

How do i amend my 2012 taxes 2. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Recognizing Losses on Investments Distributions After Owner's Death What's New for 2013 Roth IRA contribution limit. How do i amend my 2012 taxes  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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. How do i amend my 2012 taxes For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in this chapter. How do i amend my 2012 taxes Modified AGI limit for Roth IRA contributions increased. How do i amend my 2012 taxes  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. How do i amend my 2012 taxes Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. How do i amend my 2012 taxes 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-. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. How do i amend my 2012 taxes See Can You Contribute to a Roth IRA? in this chapter. How do i amend my 2012 taxes Net Investment Income Tax. How do i amend my 2012 taxes  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). How do i amend my 2012 taxes However, these distributions are taken into account when determining the modified adjusted gross income threshold. How do i amend my 2012 taxes Distributions from a nonqualified retirement plan are included in net investment income. How do i amend my 2012 taxes See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. How do i amend my 2012 taxes What's New for 2014 Modified AGI limit for Roth IRA contributions increased. How do i amend my 2012 taxes  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. How do i amend my 2012 taxes Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. How do i amend my 2012 taxes 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-. How do i amend my 2012 taxes You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. How do i amend my 2012 taxes Reminders Deemed IRAs. How do i amend my 2012 taxes  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. How do i amend my 2012 taxes If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. How do i amend my 2012 taxes An employee's account can be treated as a traditional IRA or a Roth IRA. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Designated Roth accounts. How do i amend my 2012 taxes  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. How do i amend my 2012 taxes These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income. How do i amend my 2012 taxes Designated Roth accounts are not IRAs and should not be confused with Roth IRAs. How do i amend my 2012 taxes Contributions, up to their respective limits, can be made to Roth IRAs and designated Roth accounts according to your eligibility to participate. How do i amend my 2012 taxes A contribution to one does not impact your eligibility to contribute to the other. How do i amend my 2012 taxes See Publication 575, for more information on designated Roth accounts. How do i amend my 2012 taxes Introduction Regardless of your age, you may be able to establish and make nondeductible contributions to an individual retirement plan called a Roth IRA. How do i amend my 2012 taxes Contributions not reported. How do i amend my 2012 taxes   You do not report Roth IRA contributions on your return. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes It can be either an account or an annuity. How do i amend my 2012 taxes Individual retirement accounts and annuities are described in chapter 1 under How Can a Traditional IRA Be Opened. How do i amend my 2012 taxes To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. How do i amend my 2012 taxes A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. How do i amend my 2012 taxes Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. How do i amend my 2012 taxes But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Traditional IRA. How do i amend my 2012 taxes   A traditional IRA is any IRA that is not a Roth IRA or SIMPLE IRA. How do i amend my 2012 taxes Traditional IRAs are discussed in chapter 1. How do i amend my 2012 taxes When Can a Roth IRA Be Opened? You can open a Roth IRA at any time. How do i amend my 2012 taxes However, the time for making contributions for any year is limited. How do i amend my 2012 taxes See When Can You Make Contributions , later under Can You Contribute to a Roth IRA. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes You may be able to claim a credit for contributions to your Roth IRA. How do i amend my 2012 taxes For more information, see chapter 4. How do i amend my 2012 taxes Is there an age limit for contributions?   Contributions can be made to your Roth IRA regardless of your age. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Compensation. How do i amend my 2012 taxes   Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. How do i amend my 2012 taxes It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments. How do i amend my 2012 taxes For more information, see What Is Compensation? under Who Can Open a Traditional IRA? in chapter 1. How do i amend my 2012 taxes Modified AGI. How do i amend my 2012 taxes   Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjustments. How do i amend my 2012 taxes Use Worksheet 2-1 , later, to determine your modified AGI. How do i amend my 2012 taxes    Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses. How do i amend my 2012 taxes Subtract them from AGI only for the purpose of figuring your modified AGI for Roth IRA purposes. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Worksheet 2-1. How do i amend my 2012 taxes Modified Adjusted Gross Income for Roth IRA Purposes Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes. How do i amend my 2012 taxes 1. How do i amend my 2012 taxes Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37 1. How do i amend my 2012 taxes   2. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   3. How do i amend my 2012 taxes Subtract line 2 from line 1 3. How do i amend my 2012 taxes   4. How do i amend my 2012 taxes Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 4. How do i amend my 2012 taxes   5. How do i amend my 2012 taxes Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 5. How do i amend my 2012 taxes   6. How do i amend my 2012 taxes Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 6. How do i amend my 2012 taxes   7. How do i amend my 2012 taxes Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 7. How do i amend my 2012 taxes   8. How do i amend my 2012 taxes Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 8. How do i amend my 2012 taxes   9. How do i amend my 2012 taxes Enter any foreign housing deduction from Form 2555, line 50 9. How do i amend my 2012 taxes   10. How do i amend my 2012 taxes Enter any excludable qualified savings bond interest from Form 8815, line 14 10. How do i amend my 2012 taxes   11. How do i amend my 2012 taxes Enter any excluded employer-provided adoption benefits from Form 8839, line 28 11. How do i amend my 2012 taxes   12. How do i amend my 2012 taxes Add the amounts on lines 3 through 11 12. How do i amend my 2012 taxes   13. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   Is the amount on line 12 more than the amount on line 13? If yes, see the note below. How do i amend my 2012 taxes  If no, the amount on line 12 is your modified adjusted gross income for Roth IRA purposes. How do i amend my 2012 taxes       Note. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes (If you receive social security benefits, use Worksheet 1 in Appendix B to refigure your AGI. How do i amend my 2012 taxes ) Then go to line 3 above in this Worksheet 2-1 to refigure your modified AGI. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Roth IRAs only. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained later under Contribution limit reduced . How do i amend my 2012 taxes Roth IRAs and traditional IRAs. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes   However, if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained below under Contribution limit reduced . How do i amend my 2012 taxes   Simplified employee pensions (SEPs) are discussed in Publication 560. How do i amend my 2012 taxes Savings incentive match plans for employees (SIMPLEs) are discussed in chapter 3. How do i amend my 2012 taxes Repayment of reservist distributions. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes However, the total repayments cannot be more than the amount of your distribution. How do i amend my 2012 taxes Note. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes For more information, see Qualified reservist repayments under How Much Can Be Contributed? in chapter 1. How do i amend my 2012 taxes Contribution limit reduced. How do i amend my 2012 taxes   If your modified AGI is above a certain amount, your contribution limit is gradually reduced. How do i amend my 2012 taxes Use Table 2-1, later, to determine if this reduction applies to you. How do i amend my 2012 taxes Table 2-1. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes IF you have taxable compensation and your filing status is . How do i amend my 2012 taxes . How do i amend my 2012 taxes . How do i amend my 2012 taxes AND your modified AGI is . How do i amend my 2012 taxes . How do i amend my 2012 taxes . How do i amend my 2012 taxes THEN . How do i amend my 2012 taxes . How do i amend my 2012 taxes . How do i amend my 2012 taxes 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 . How do i amend my 2012 taxes at least $178,000 but less than $188,000 the amount you can contribute is reduced as explained under Contribution limit reduced . How do i amend my 2012 taxes $188,000 or more you cannot contribute to a Roth IRA. How do i amend my 2012 taxes 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 . How do i amend my 2012 taxes more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced . How do i amend my 2012 taxes $10,000 or more you cannot contribute to a Roth IRA. How do i amend my 2012 taxes 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 . How do i amend my 2012 taxes at least $112,000 but less than $127,000 the amount you can contribute is reduced as explained under Contribution limit reduced . How do i amend my 2012 taxes $127,000 or more you cannot contribute to a Roth IRA. How do i amend my 2012 taxes Figuring the reduction. How do i amend my 2012 taxes   If the amount you can contribute must be reduced, use Worksheet 2-2, later, to figure your reduced contribution limit. How do i amend my 2012 taxes Worksheet 2-2. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes If it is, use this worksheet to determine how much it is reduced. How do i amend my 2012 taxes 1. How do i amend my 2012 taxes Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. How do i amend my 2012 taxes   2. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   3. How do i amend my 2012 taxes Subtract line 2 from line 1 3. How do i amend my 2012 taxes   4. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   5. How do i amend my 2012 taxes Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). How do i amend my 2012 taxes If the result is 1. How do i amend my 2012 taxes 000 or more, enter 1. How do i amend my 2012 taxes 000 5. How do i amend my 2012 taxes   6. How do i amend my 2012 taxes Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. How do i amend my 2012 taxes   7. How do i amend my 2012 taxes Multiply line 5 by line 6 7. How do i amend my 2012 taxes   8. How do i amend my 2012 taxes Subtract line 7 from line 6. How do i amend my 2012 taxes Round the result up to the nearest $10. How do i amend my 2012 taxes If the result is less than $200, enter $200 8. How do i amend my 2012 taxes   9. How do i amend my 2012 taxes Enter contributions for the year to other IRAs 9. How do i amend my 2012 taxes   10. How do i amend my 2012 taxes Subtract line 9 from line 6 10. How do i amend my 2012 taxes   11. How do i amend my 2012 taxes Enter the lesser of line 8 or line 10. How do i amend my 2012 taxes This is your reduced Roth IRA contribution limit 11. How do i amend my 2012 taxes      Round your reduced contribution limit up to the nearest $10. How do i amend my 2012 taxes If your reduced contribution limit is more than $0, but less than $200, increase the limit to $200. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes You are a 45-year-old, single individual with taxable compensation of $113,000. How do i amend my 2012 taxes You want to make the maximum allowable contribution to your Roth IRA for 2013. How do i amend my 2012 taxes Your modified AGI for 2013 is $113,000. How do i amend my 2012 taxes You have not contributed to any traditional IRA, so the maximum contribution limit before the modified AGI reduction is $5,500. How do i amend my 2012 taxes You figure your reduced Roth IRA contribution of $5,140 as shown on Worksheet 2-2. How do i amend my 2012 taxes Example—Illustrated, later. How do i amend my 2012 taxes   Worksheet 2-2. How do i amend my 2012 taxes Example—Illustrated Before using this worksheet, check Table 2-1, earlier, to determine whether or not your Roth IRA contribution limit is reduced. How do i amend my 2012 taxes If it is, use this worksheet to determine how much it is reduced. How do i amend my 2012 taxes 1. How do i amend my 2012 taxes Enter your modified AGI for Roth IRA purposes (Worksheet 2-1, line 12) 1. How do i amend my 2012 taxes 113,000 2. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 112,000 3. How do i amend my 2012 taxes Subtract line 2 from line 1 3. How do i amend my 2012 taxes 1,000 4. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 15,000 5. How do i amend my 2012 taxes Divide line 3 by line 4 and enter the result as a decimal (rounded to at least three places). How do i amend my 2012 taxes If the result is 1. How do i amend my 2012 taxes 000 or more, enter 1. How do i amend my 2012 taxes 000 5. How do i amend my 2012 taxes . How do i amend my 2012 taxes 067 6. How do i amend my 2012 taxes Enter the lesser of: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation 6. How do i amend my 2012 taxes 5,500 7. How do i amend my 2012 taxes Multiply line 5 by line 6 7. How do i amend my 2012 taxes 369 8. How do i amend my 2012 taxes Subtract line 7 from line 6. How do i amend my 2012 taxes Round the result up to the nearest $10. How do i amend my 2012 taxes If the result is less than $200, enter $200 8. How do i amend my 2012 taxes 5,140 9. How do i amend my 2012 taxes Enter contributions for the year to other IRAs 9. How do i amend my 2012 taxes 0 10. How do i amend my 2012 taxes Subtract line 9 from line 6 10. How do i amend my 2012 taxes 5,500 11. How do i amend my 2012 taxes Enter the lesser of line 8 or line 10. How do i amend my 2012 taxes This is your reduced Roth IRA contribution limit 11. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes You can make contributions for 2013 by the due date (not including extensions) for filing your 2013 tax return. How do i amend my 2012 taxes This means that most people can make contributions for 2013 by April 15, 2014. How do i amend my 2012 taxes What if You Contribute Too Much? A 6% excise tax applies to any excess contribution to a Roth IRA. How do i amend my 2012 taxes Excess contributions. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Withdrawal of excess contributions. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes This treatment only applies if any earnings on the contributions are also withdrawn. How do i amend my 2012 taxes The earnings are considered earned and received in the year the excess contribution was made. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes If you do, file an amended return with “Filed pursuant to section 301. How do i amend my 2012 taxes 9100-2” written at the top. How do i amend my 2012 taxes Report any related earnings on the amended return and include an explanation of the withdrawal. How do i amend my 2012 taxes Make any other necessary changes on the amended return. How do i amend my 2012 taxes Applying excess contributions. How do i amend my 2012 taxes    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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes You may be able to roll over amounts from a qualified retirement plan to a Roth IRA. How do i amend my 2012 taxes You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. How do i amend my 2012 taxes You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA. How do i amend my 2012 taxes Conversions You can convert a traditional IRA to a Roth IRA. How do i amend my 2012 taxes The conversion is treated as a rollover, regardless of the conversion method used. How do i amend my 2012 taxes Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. How do i amend my 2012 taxes However, the 1-year waiting period does not apply. How do i amend my 2012 taxes Conversion methods. How do i amend my 2012 taxes   You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways. How do i amend my 2012 taxes Rollover. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Trustee-to-trustee transfer. How do i amend my 2012 taxes You can direct the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA. How do i amend my 2012 taxes Same trustee transfer. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Same trustee. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Income. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. How do i amend my 2012 taxes See Publication 505, Tax Withholding and Estimated Tax. How do i amend my 2012 taxes More information. How do i amend my 2012 taxes   For more information on conversions, see Converting From Any Traditional IRA Into a Roth IRA in chapter 1. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA. How do i amend my 2012 taxes See Converting From Any Traditional IRA Into a Roth IRA in chapter 1. How do i amend my 2012 taxes Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan. How do i amend my 2012 taxes Rollover methods. How do i amend my 2012 taxes   You can roll over amounts from a qualified retirement plan to a Roth IRA in one of the following ways. How do i amend my 2012 taxes Rollover. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Since the distribution is paid directly to you, the payer generally must withhold 20% of it. How do i amend my 2012 taxes Direct rollover option. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Generally, no tax is withheld from any part of the designated distribution that is directly paid to the trustee of the Roth IRA. How do i amend my 2012 taxes Rollover by nonspouse beneficiary. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes You must make the rollover by a direct trustee-to-trustee transfer into an inherited Roth IRA. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes For more information, see Distributions after the employee’s death under Tax on Excess Accumulation in Publication 575. How do i amend my 2012 taxes Income. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. How do i amend my 2012 taxes See Publication 505, Tax Withholding and Estimated Tax. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes The contribution is treated as a qualified rollover contribution. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the 1-year waiting period between rollovers. How do i amend my 2012 taxes The rollover must be completed before the end of the 1-year period beginning on the date you received the payment. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another , apply to these rollovers. How do i amend my 2012 taxes However, rollovers from retirement plans other than Roth IRAs are disregarded for purposes of the 1-year waiting period between rollovers. How do i amend my 2012 taxes A rollover from a Roth IRA to an employer retirement plan is not allowed. How do i amend my 2012 taxes A rollover from a designated Roth account can only be made to another designated Roth account or to a Roth IRA. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes The 5-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA. How do i amend my 2012 taxes See What are Qualified Distributions , later. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes For more information, see Rollover of Exxon Valdez Settlement Income in chapter 1. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes The contribution must be made within 180 days from the date you received the payment. How do i amend my 2012 taxes The contribution will be treated as a qualified rollover contribution. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Qualified airline employee. How do i amend my 2012 taxes    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. How do i amend my 2012 taxes These provisions also apply to surviving spouses of qualified airline employees. How do i amend my 2012 taxes Airline payment. How do i amend my 2012 taxes    An airline payment is any payment of money or other property that is paid to a qualified airline employee from a commercial airline carrier. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Also, an airline payment shall not include any amount payable on the basis of the airline carrier’s future earnings or profits. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. How do i amend my 2012 taxes You may have to include part of other distributions in your income. How do i amend my 2012 taxes See Ordering Rules for Distributions , later. How do i amend my 2012 taxes Basis of distributed property. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Withdrawals of contributions by due date. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes What Are Qualified Distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Distributions of conversion and certain rollover contributions within 5-year period. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes A separate 5-year period applies to each conversion and rollover. How do i amend my 2012 taxes See Ordering Rules for Distributions , later, to determine the recapture amount, if any. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes See What Are Qualified Distributions , earlier. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes You also must pay the additional tax on any portion of the distribution attributable to earnings on contributions. How do i amend my 2012 taxes Other early distributions. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Exceptions. How do i amend my 2012 taxes   You may not have to pay the 10% additional tax in the following situations. How do i amend my 2012 taxes You have reached age 59½. How do i amend my 2012 taxes You are totally and permanently disabled. How do i amend my 2012 taxes You are the beneficiary of a deceased IRA owner. How do i amend my 2012 taxes You use the distribution to buy, build, or rebuild a first home. How do i amend my 2012 taxes The distributions are part of a series of substantially equal payments. How do i amend my 2012 taxes You have unreimbursed medical expenses that are more than 10% (or 7. How do i amend my 2012 taxes 5% if you or your spouse was born before January 2, 1949) of your adjusted gross income (defined earlier) for the year. How do i amend my 2012 taxes You are paying medical insurance premiums during a period of unemployment. How do i amend my 2012 taxes The distributions are not more than your qualified higher education expenses. How do i amend my 2012 taxes The distribution is due to an IRS levy of the qualified plan. How do i amend my 2012 taxes The distribution is a qualified reservist distribution. How do i amend my 2012 taxes Most of these exceptions are discussed earlier in chapter 1 under Early Distributions . How do i amend my 2012 taxes Please click here for the text description of the image. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes For these purposes, disregard the withdrawal of excess contributions and the earnings on them (discussed earlier under What if You Contribute Too Much ). How do i amend my 2012 taxes Order the distributions as follows. How do i amend my 2012 taxes Regular contributions. How do i amend my 2012 taxes Conversion and rollover contributions, on a first-in, first-out basis (generally, total conversions and rollovers from the earliest year first). How do i amend my 2012 taxes See Aggregation (grouping and adding) rules, later. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Earnings on contributions. How do i amend my 2012 taxes Disregard rollover contributions from other Roth IRAs for this purpose. How do i amend my 2012 taxes Aggregation (grouping and adding) rules. How do i amend my 2012 taxes   Determine the taxable amounts distributed (withdrawn), distributions, and contributions by grouping and adding them together as follows. How do i amend my 2012 taxes Add all distributions from all your Roth IRAs during the year together. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Add this total to the total undistributed regular contributions made in prior years. How do i amend my 2012 taxes Add all conversion and rollover contributions made during the year together. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Also disregard any amount withdrawn to correct an excess contribution (including the earnings withdrawn) for this purpose. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes On October 15, 2009, Justin converted all $80,000 in his traditional IRA to his Roth IRA. How do i amend my 2012 taxes His Forms 8606 from prior years show that $20,000 of the amount converted is his basis. How do i amend my 2012 taxes Justin included $60,000 ($80,000 − $20,000) in his gross income. How do i amend my 2012 taxes On February 23, 2013, Justin made a regular contribution of $5,000 to a Roth IRA. How do i amend my 2012 taxes On November 8, 2013, at age 60, Justin took a $7,000 distribution from his Roth IRA. How do i amend my 2012 taxes The first $5,000 of the distribution is a return of Justin's regular contribution and is not includible in his income. How do i amend my 2012 taxes The next $2,000 of the distribution is not includible in income because it was included previously. How do i amend my 2012 taxes Figuring your recapture amount. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   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). How do i amend my 2012 taxes The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. How do i amend my 2012 taxes Note. How do i amend my 2012 taxes Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. How do i amend my 2012 taxes See the Example , earlier. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. How do i amend my 2012 taxes Amount to include on Form 5329, line 1. How do i amend my 2012 taxes   Include on line 1 of your 2013 Form 5329 the following four amounts from the Recapture Amount—Allocation Chart that you filled out. How do i amend my 2012 taxes The amount you allocated to line 20 of your 2013 Form 8606. How do i amend my 2012 taxes The amount(s) allocated to your 2009 through 2013 Forms 8606, line 18, and your 2010 Form 8606, line 23. How do i amend my 2012 taxes The amount(s) allocated to your 2009, 2011, 2012, and 2013 Forms 1040, line 16b; Forms 1040A, line 12b; and Forms 1040NR, line 17b. How do i amend my 2012 taxes The amount from your 2013 Form 8606, line 25. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes Ishmael, age 32, opened a Roth IRA in 2000. How do i amend my 2012 taxes He made the maximum contributions to it every year. How do i amend my 2012 taxes In addition, he made the following transactions into his Roth IRA. How do i amend my 2012 taxes In 2005, he converted $10,000 from his traditional IRA into his Roth IRA. How do i amend my 2012 taxes He filled out a 2005 Form 8606 and attached it with his 2005 Form 1040. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes He entered $10,000 on line 18 of Form 8606. How do i amend my 2012 taxes In 2011, he rolled over the entire balance of his qualified retirement plan, $20,000, into a Roth IRA when he changed jobs. How do i amend my 2012 taxes He used a 2011 Form 1040 to file his taxes. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Box 5 of his 2011 Form 1099-R reported $0 since he did not make any after-tax contributions to the qualified retirement plan. How do i amend my 2012 taxes He entered $20,000 on line 16b of Form 1040 since that is the taxable amount that was rolled over in 2011. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes He has not taken any early distribution from his Roth IRA before 2013. How do i amend my 2012 taxes In 2013, he made the maximum contribution of $5,500 to his Roth IRA. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes See his filled out Illustrated Recapture Amount—Allocation Chart, later, to see how he allocated the amounts from the above transactions. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes   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). How do i amend my 2012 taxes The maximum amount you can enter on each line below is the amount entered on the referenced lines of the form for that year. How do i amend my 2012 taxes Note. How do i amend my 2012 taxes Once you have allocated the full amount from your 2013 Form 8606, line 19, STOP. How do i amend my 2012 taxes See the Example , earlier. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes  **Only include any contributions (usually Form 1099-R, box 5) that were taxable to you when made and rolled over to a Roth IRA. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Must You Withdraw or Use Assets? You are not required to take distributions from your Roth IRA at any age. How do i amend my 2012 taxes The minimum distribution rules that apply to traditional IRAs do not apply to Roth IRAs while the owner is alive. How do i amend my 2012 taxes 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 . How do i amend my 2012 taxes Minimum distributions. How do i amend my 2012 taxes   You cannot use your Roth IRA to satisfy minimum distribution requirements for your traditional IRA. How do i amend my 2012 taxes Nor can you use distributions from traditional IRAs for required distributions from Roth IRAs. How do i amend my 2012 taxes See Distributions to beneficiaries , later. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes Your basis is the total amount of contributions in your Roth IRAs. How do i amend my 2012 taxes 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). How do i amend my 2012 taxes Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes See When Can You Withdraw or Use Assets? in chapter 1. How do i amend my 2012 taxes Distributions to beneficiaries. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes (See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. How do i amend my 2012 taxes )   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. How do i amend my 2012 taxes Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Combining with other Roth IRAs. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes Distributions that are not qualified distributions. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes   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. How do i amend my 2012 taxes See Ordering Rules for Distributions , earlier in this chapter under Are Distributions Taxable. How do i amend my 2012 taxes Example. How do i amend my 2012 taxes When Ms. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes No distributions had been made from her IRA. How do i amend my 2012 taxes She had no basis in the conversion contribution in 2009. How do i amend my 2012 taxes When she established this Roth IRA (her first) in 2009, she named each of her four children as equal beneficiaries. How do i amend my 2012 taxes Each child will receive one-fourth of each type of contribution and one-fourth of the earnings. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes 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. How do i amend my 2012 taxes If this applies to you, substitute “Roth IRA” for “traditional IRA” in that discussion. How do i amend my 2012 taxes Prev  Up  Next   Home   More Online Publications