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How Do I Amend My Taxes

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How Do I Amend My Taxes

How do i amend my taxes Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. How do i amend my taxes Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. How do i amend my taxes Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. How do i amend my taxes Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. How do i amend my taxes Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. How do i amend my taxes Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. How do i amend my taxes C Campaign contributions, Lobbying and political activities. How do i amend my taxes , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. 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How do i amend my taxes D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. How do i amend my taxes Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. How do i amend my taxes Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. How do i amend my taxes Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. How do i amend my taxes Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. How do i amend my taxes Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. How do i amend my taxes Educator Expenses, Eligible educator. How do i amend my taxes Employee business (see Employee business expenses) Entertainment, Meals and entertainment. How do i amend my taxes Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. How do i amend my taxes Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. How do i amend my taxes , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. How do i amend my taxes Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. How do i amend my taxes F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. How do i amend my taxes Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. How do i amend my taxes Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. How do i amend my taxes Form 4562 Depreciation and amortization, Reporting your depreciation deduction. How do i amend my taxes , Depreciation. How do i amend my taxes , Computer used in a home office. How do i amend my taxes Free tax services, Free help with your tax return. How do i amend my taxes Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. How do i amend my taxes State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. How do i amend my taxes Expenses, Home Office Principal place of business, Principal place of business. How do i amend my taxes Travel and transportation expenses, Home office. How do i amend my taxes I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. How do i amend my taxes K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. How do i amend my taxes Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. How do i amend my taxes , Lobbying Expenses, Exceptions. How do i amend my taxes Local transportation, Local transportation expenses. How do i amend my taxes Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. How do i amend my taxes Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. How do i amend my taxes P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. How do i amend my taxes , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. How do i amend my taxes Prosecution travel expenses, Federal crime investigation and prosecution. How do i amend my taxes Protective clothing, Protective clothing. How do i amend my taxes Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. How do i amend my taxes Computer used in a home office, Computer used in a home office. How do i amend my taxes Depreciation, Depreciation. How do i amend my taxes Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. How do i amend my taxes Impairment-related work expenses, Impairment-related work expenses. How do i amend my taxes Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. How do i amend my taxes Research expenses, Research Expenses of a College Professor Résumé, Résumé. How do i amend my taxes Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. How do i amend my taxes , Additional information. How do i amend my taxes Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. How do i amend my taxes Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. How do i amend my taxes Education, Travel as education. How do i amend my taxes Indefinite work assignments, Indefinite work assignment. How do i amend my taxes Job search, Travel and transportation expenses. How do i amend my taxes Local transportation, Local transportation expenses. How do i amend my taxes Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. How do i amend my taxes Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. How do i amend my taxes Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. How do i amend my taxes W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications
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Tax Relief for Victims of Tropical Storm Lee in Pennsylvania

E-file to Remain Open through Oct. 31 for Tropical Storm Lee Victims

Updated 11/1/11 to include Huntingdon and Monroe counties.
Updated 9/27/11 to include Berks, Bucks, Chester, Delaware, Montgomery, Northampton and Philadelphia counties.

PA-34-2011, Sept. 13, 2011

PHILADELPHIA — Victims of Tropical Storm Lee that began on Sept. 3, 2011 in parts of Pennsylvania may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Adams, Berks, Bradford, Bucks, Chester, Columbia, Cumberland, Dauphin, Delaware, Huntingdon, Lancaster, Lebanon, Luzerne, Lycoming, Monroe, Montgomery, Montour, Northampton, Northumberland, Perry, Philadelphia, Schuylkill, Snyder, Sullivan, Susquehanna, Union, Wyoming and York. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 3, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Sept. 3, and on or before Sept. 19, as long as the deposits are made by Sept. 19, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Sept. 3 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Sept. 3 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Sept. 3 and on or before Sept. 19 provided the taxpayer makes these deposits by Sept. 19.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Pennsylvania/Tropical Storm Lee” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 27-Sep-2013

The How Do I Amend My Taxes

How do i amend my taxes 9. How do i amend my taxes   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. How do i amend my taxes Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. How do i amend my taxes Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. How do i amend my taxes Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. How do i amend my taxes It also covers the following topics. How do i amend my taxes Personal use of dwelling unit (including vacation home). How do i amend my taxes Depreciation. How do i amend my taxes Limits on rental losses. How do i amend my taxes How to report your rental income and expenses. How do i amend my taxes If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. How do i amend my taxes If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. How do i amend my taxes If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. How do i amend my taxes See Publication 527, Residential Rental Property, for more information. How do i amend my taxes Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. How do i amend my taxes Rental income is any payment you receive for the use or occupation of property. How do i amend my taxes In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. How do i amend my taxes When to report. How do i amend my taxes   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. How do i amend my taxes You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. How do i amend my taxes You constructively receive income when it is made available to you, for example, by being credited to your bank account. How do i amend my taxes   For more information about when you constructively receive income, see Accounting Methods in chapter 1. How do i amend my taxes Advance rent. How do i amend my taxes   Advance rent is any amount you receive before the period that it covers. How do i amend my taxes Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. How do i amend my taxes Example. How do i amend my taxes You sign a 10-year lease to rent your property. How do i amend my taxes In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. How do i amend my taxes You must include $10,000 in your income in the first year. How do i amend my taxes Canceling a lease. How do i amend my taxes   If your tenant pays you to cancel a lease, the amount you receive is rent. How do i amend my taxes Include the payment in your income in the year you receive it regardless of your method of accounting. How do i amend my taxes Expenses paid by tenant. How do i amend my taxes   If your tenant pays any of your expenses, the payments are rental income. How do i amend my taxes Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. How do i amend my taxes See Rental Expenses , later, for more information. How do i amend my taxes Property or services. How do i amend my taxes   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. How do i amend my taxes   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. How do i amend my taxes Security deposits. How do i amend my taxes   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. How do i amend my taxes But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. How do i amend my taxes   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. How do i amend my taxes Include it in your income when you receive it. How do i amend my taxes Part interest. How do i amend my taxes   If you own a part interest in rental property, you must report your part of the rental income from the property. How do i amend my taxes Rental of property also used as your home. How do i amend my taxes   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. How do i amend my taxes However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. How do i amend my taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. How do i amend my taxes Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. How do i amend my taxes It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. How do i amend my taxes Depreciation , which you can also deduct from your rental income, is discussed later. How do i amend my taxes Personal use of rental property. How do i amend my taxes   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. How do i amend my taxes Also, your rental expense deductions may be limited. How do i amend my taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. How do i amend my taxes Part interest. How do i amend my taxes   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. How do i amend my taxes When to deduct. How do i amend my taxes   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. How do i amend my taxes Depreciation. How do i amend my taxes   You can begin to depreciate rental property when it is ready and available for rent. How do i amend my taxes See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. How do i amend my taxes Pre-rental expenses. How do i amend my taxes   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. How do i amend my taxes Uncollected rent. How do i amend my taxes   If you are a cash-basis taxpayer, do not deduct uncollected rent. How do i amend my taxes Because you have not included it in your income, it is not deductible. How do i amend my taxes Vacant rental property. How do i amend my taxes   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. How do i amend my taxes However, you cannot deduct any loss of rental income for the period the property is vacant. How do i amend my taxes Vacant while listed for sale. How do i amend my taxes   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. How do i amend my taxes If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. How do i amend my taxes Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. How do i amend my taxes Improvements. How do i amend my taxes   You must capitalize any expense you pay to improve your rental property. How do i amend my taxes An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. How do i amend my taxes Betterments. How do i amend my taxes   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. How do i amend my taxes Restoration. How do i amend my taxes   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. How do i amend my taxes Adaptation. How do i amend my taxes   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. How do i amend my taxes Separate the costs of repairs and improvements, and keep accurate records. How do i amend my taxes You will need to know the cost of improvements when you sell or depreciate your property. How do i amend my taxes The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. How do i amend my taxes Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. How do i amend my taxes Insurance premiums paid in advance. How do i amend my taxes   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. How do i amend my taxes You cannot deduct the total premium in the year you pay it. How do i amend my taxes Legal and other professional fees. How do i amend my taxes   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. How do i amend my taxes For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. How do i amend my taxes You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. How do i amend my taxes Local benefit taxes. How do i amend my taxes   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. How do i amend my taxes These charges are nondepreciable capital expenditures, and must be added to the basis of your property. How do i amend my taxes However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. How do i amend my taxes Local transportation expenses. How do i amend my taxes    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. How do i amend my taxes However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. How do i amend my taxes See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. How do i amend my taxes   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. How do i amend my taxes For 2013, the standard mileage rate for business use is 56. How do i amend my taxes 5 cents per mile. How do i amend my taxes For more information, see chapter 26. How do i amend my taxes    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. How do i amend my taxes In addition, you must complete Form 4562, Part V, and attach it to your tax return. How do i amend my taxes Rental of equipment. How do i amend my taxes   You can deduct the rent you pay for equipment that you use for rental purposes. How do i amend my taxes However, in some cases, lease contracts are actually purchase contracts. How do i amend my taxes If so, you cannot deduct these payments. How do i amend my taxes You can recover the cost of purchased equipment through depreciation. How do i amend my taxes Rental of property. How do i amend my taxes   You can deduct the rent you pay for property that you use for rental purposes. How do i amend my taxes If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. How do i amend my taxes Travel expenses. How do i amend my taxes   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. How do i amend my taxes You must properly allocate your expenses between rental and nonrental activities. How do i amend my taxes You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. How do i amend my taxes You recover the cost of improvements by taking depreciation. How do i amend my taxes For information on travel expenses, see chapter 26. How do i amend my taxes    To deduct travel expenses, you must keep records that follow the rules in chapter 26. How do i amend my taxes   See Rental Expenses in Publication 527 for more information. How do i amend my taxes Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. How do i amend my taxes You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. How do i amend my taxes You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. How do i amend my taxes However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). How do i amend my taxes Example. How do i amend my taxes Your tax year is the calendar year. How do i amend my taxes You moved from your home in May and started renting it out on June 1. How do i amend my taxes You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. How do i amend my taxes Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. How do i amend my taxes Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. How do i amend my taxes You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). How do i amend my taxes You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. How do i amend my taxes There is no change in the types of expenses deductible for the personal-use part of your property. How do i amend my taxes Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). How do i amend my taxes You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. How do i amend my taxes You do not have to divide the expenses that belong only to the rental part of your property. How do i amend my taxes For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. How do i amend my taxes If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. How do i amend my taxes You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. How do i amend my taxes How to divide expenses. How do i amend my taxes   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. How do i amend my taxes You can use any reasonable method for dividing the expense. How do i amend my taxes It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. How do i amend my taxes The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. How do i amend my taxes Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. How do i amend my taxes You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. How do i amend my taxes For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. How do i amend my taxes Where to report. How do i amend my taxes   Report your not-for-profit rental income on Form 1040, line 21. How do i amend my taxes For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. How do i amend my taxes   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. How do i amend my taxes You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. How do i amend my taxes Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. How do i amend my taxes In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. How do i amend my taxes Only your rental expenses may be deducted on Schedule E (Form 1040). How do i amend my taxes Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). How do i amend my taxes You must also determine if the dwelling unit is considered a home. How do i amend my taxes The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. How do i amend my taxes Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. How do i amend my taxes There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. How do i amend my taxes Dwelling unit. How do i amend my taxes   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. How do i amend my taxes It also includes all structures or other property belonging to the dwelling unit. How do i amend my taxes A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. How do i amend my taxes   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. How do i amend my taxes Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. How do i amend my taxes Example. How do i amend my taxes   You rent a room in your home that is always available for short-term occupancy by paying customers. How do i amend my taxes You do not use the room yourself, and you allow only paying customers to use the room. How do i amend my taxes The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. How do i amend my taxes Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. How do i amend my taxes When dividing your expenses, follow these rules. How do i amend my taxes Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. How do i amend my taxes This rule does not apply when determining whether you used the unit as a home. How do i amend my taxes Any day that the unit is available for rent but not actually rented is not a day of rental use. How do i amend my taxes Example. How do i amend my taxes Your beach cottage was available for rent from June 1 through August 31 (92 days). How do i amend my taxes During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. How do i amend my taxes The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. How do i amend my taxes Your family also used the cottage during the last 2 weeks of May (14 days). How do i amend my taxes The cottage was not used at all before May 17 or after August 31. How do i amend my taxes You figure the part of the cottage expenses to treat as rental expenses as follows. How do i amend my taxes The cottage was used for rental a total of 85 days (92 − 7). How do i amend my taxes The days it was available for rent but not rented (7 days) are not days of rental use. How do i amend my taxes The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. How do i amend my taxes You used the cottage for personal purposes for 14 days (the last 2 weeks in May). How do i amend my taxes The total use of the cottage was 99 days (14 days personal use + 85 days rental use). How do i amend my taxes Your rental expenses are 85/99 (86%) of the cottage expenses. How do i amend my taxes Note. How do i amend my taxes When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. How do i amend my taxes Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. How do i amend my taxes Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. How do i amend my taxes If you have a net loss, you may not be able to deduct all of the rental expenses. How do i amend my taxes See Dwelling Unit Used as a Home, next. How do i amend my taxes Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. How do i amend my taxes You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. How do i amend my taxes See What is a day of personal use , later. How do i amend my taxes Fair rental price. How do i amend my taxes   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. How do i amend my taxes The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. How do i amend my taxes   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. How do i amend my taxes Instead, count it as a day of personal use in applying both (1) and (2) above. How do i amend my taxes What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. How do i amend my taxes You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). How do i amend my taxes However, see Days used as a main home before or after renting , later. How do i amend my taxes A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. How do i amend my taxes Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. How do i amend my taxes ), and lineal descendants (children, grandchildren, etc. How do i amend my taxes ). How do i amend my taxes Anyone under an arrangement that lets you use some other dwelling unit. How do i amend my taxes Anyone at less than a fair rental price. How do i amend my taxes Main home. How do i amend my taxes   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. How do i amend my taxes Shared equity financing agreement. How do i amend my taxes   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. How do i amend my taxes Donation of use of property. How do i amend my taxes   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. How do i amend my taxes Examples. How do i amend my taxes   The following examples show how to determine days of personal use. How do i amend my taxes Example 1. How do i amend my taxes You and your neighbor are co-owners of a condominium at the beach. How do i amend my taxes Last year, you rented the unit to vacationers whenever possible. How do i amend my taxes The unit was not used as a main home by anyone. How do i amend my taxes Your neighbor used the unit for 2 weeks last year; you did not use it at all. How do i amend my taxes Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. How do i amend my taxes Example 2. How do i amend my taxes You and your neighbors are co-owners of a house under a shared equity financing agreement. How do i amend my taxes Your neighbors live in the house and pay you a fair rental price. How do i amend my taxes Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. How do i amend my taxes This is because your neighbors rent the house as their main home under a shared equity financing agreement. How do i amend my taxes Example 3. How do i amend my taxes You own a rental property that you rent to your son. How do i amend my taxes Your son does not own any interest in this property. How do i amend my taxes He uses it as his main home and pays you a fair rental price. How do i amend my taxes Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. How do i amend my taxes Example 4. How do i amend my taxes You rent your beach house to Joshua. How do i amend my taxes Joshua rents his cabin in the mountains to you. How do i amend my taxes You each pay a fair rental price. How do i amend my taxes You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. How do i amend my taxes Days used for repairs and maintenance. How do i amend my taxes   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. How do i amend my taxes Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. How do i amend my taxes Days used as a main home before or after renting. How do i amend my taxes   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. How do i amend my taxes Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. How do i amend my taxes You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. How do i amend my taxes However, this special rule does not apply when dividing expenses between rental and personal use. How do i amend my taxes Examples. How do i amend my taxes   The following examples show how to determine whether you used your rental property as a home. How do i amend my taxes Example 1. How do i amend my taxes You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. How do i amend my taxes You rented the basement apartment at a fair rental price to college students during the regular school year. How do i amend my taxes You rented to them on a 9-month lease (273 days). How do i amend my taxes You figured 10% of the total days rented to others at a fair rental price is 27 days. How do i amend my taxes During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. How do i amend my taxes Your basement apartment was used as a home because you used it for personal purposes for 30 days. How do i amend my taxes Rent-free use by your brothers is considered personal use. How do i amend my taxes Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). How do i amend my taxes Example 2. How do i amend my taxes You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). How do i amend my taxes Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. How do i amend my taxes You figured 10% of the total days rented to others at a fair rental price is 3 days. How do i amend my taxes The room was used as a home because you used it for personal purposes for 21 days. How do i amend my taxes That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). How do i amend my taxes Example 3. How do i amend my taxes You own a condominium apartment in a resort area. How do i amend my taxes You rented it at a fair rental price for a total of 170 days during the year. How do i amend my taxes For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. How do i amend my taxes Your family actually used the apartment for 10 of those days. How do i amend my taxes Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. How do i amend my taxes You figured 10% of the total days rented to others at a fair rental price is 16 days. How do i amend my taxes Your family also used the apartment for 7 other days during the year. How do i amend my taxes You used the apartment as a home because you used it for personal purposes for 17 days. How do i amend my taxes That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). How do i amend my taxes Minimal rental use. How do i amend my taxes   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. How do i amend my taxes See Used as a home but rented less than 15 days , later, for more information. How do i amend my taxes Limit on deductions. How do i amend my taxes   Renting a dwelling unit that is considered a home is not a passive activity. How do i amend my taxes Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. How do i amend my taxes The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. How do i amend my taxes Any expenses carried forward to the next year will be subject to any limits that apply for that year. How do i amend my taxes This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. How do i amend my taxes   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. How do i amend my taxes Reporting Income and Deductions Property not used for personal purposes. How do i amend my taxes   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. How do i amend my taxes Property used for personal purposes. How do i amend my taxes   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. How do i amend my taxes Not used as a home. How do i amend my taxes   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. How do i amend my taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . How do i amend my taxes The expenses for personal use are not deductible as rental expenses. How do i amend my taxes   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. How do i amend my taxes Used as a home but rented less than 15 days. How do i amend my taxes   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). How do i amend my taxes You are not required to report the rental income and rental expenses from this activity. How do i amend my taxes The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). How do i amend my taxes See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. How do i amend my taxes Used as a home and rented 15 days or more. How do i amend my taxes   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. How do i amend my taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . How do i amend my taxes The expenses for personal use are not deductible as rental expenses. How do i amend my taxes   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. How do i amend my taxes You do not need to use Worksheet 9-1. How do i amend my taxes   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. How do i amend my taxes To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. How do i amend my taxes Depreciation You recover the cost of income-producing property through yearly tax deductions. How do i amend my taxes You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. How do i amend my taxes Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. How do i amend my taxes You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. How do i amend my taxes You can deduct depreciation only on the part of your property used for rental purposes. How do i amend my taxes Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. How do i amend my taxes You may have to use Form 4562 to figure and report your depreciation. How do i amend my taxes See How To Report Rental Income and Expenses , later. How do i amend my taxes Alternative minimum tax (AMT). How do i amend my taxes    If you use accelerated depreciation, you may be subject to the AMT. How do i amend my taxes Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). How do i amend my taxes Claiming the correct amount of depreciation. How do i amend my taxes   You should claim the correct amount of depreciation each tax year. How do i amend my taxes If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. How do i amend my taxes   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. How do i amend my taxes S Individual Income Tax Return. How do i amend my taxes If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. How do i amend my taxes See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. How do i amend my taxes Changing your accounting method to deduct unclaimed depreciation. How do i amend my taxes   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. How do i amend my taxes In some instances, that consent is automatic. How do i amend my taxes For more information, see chapter 1 of Publication 946. How do i amend my taxes Land. How do i amend my taxes   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. How do i amend my taxes The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. How do i amend my taxes More information. How do i amend my taxes   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. How do i amend my taxes Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. How do i amend my taxes You must consider these rules in the order shown below. How do i amend my taxes At-risk rules. How do i amend my taxes These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. How do i amend my taxes This applies only if the real property was placed in service after 1986. How do i amend my taxes Passive activity limits. How do i amend my taxes Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. How do i amend my taxes However, there are exceptions. How do i amend my taxes At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. How do i amend my taxes Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. How do i amend my taxes In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. How do i amend my taxes You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. How do i amend my taxes See Publication 925 for more information. How do i amend my taxes Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. How do i amend my taxes For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. How do i amend my taxes Limits on passive activity deductions and credits. How do i amend my taxes    Deductions or losses from passive activities are limited. How do i amend my taxes You generally cannot offset income, other than passive income, with losses from passive activities. How do i amend my taxes Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. How do i amend my taxes Any excess loss or credit is carried forward to the next tax year. How do i amend my taxes   For a detailed discussion of these rules, see Publication 925. How do i amend my taxes    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. How do i amend my taxes Real estate professionals. How do i amend my taxes   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. How do i amend my taxes For a detailed discussion of the requirements, see Publication 527. How do i amend my taxes For a detailed discussion of material participation, see Publication 925. How do i amend my taxes Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. How do i amend my taxes Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. How do i amend my taxes Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. How do i amend my taxes This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. How do i amend my taxes Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. How do i amend my taxes Active participation. How do i amend my taxes   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. How do i amend my taxes Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. How do i amend my taxes Maximum special allowance. How do i amend my taxes   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. How do i amend my taxes   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. How do i amend my taxes If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. How do i amend my taxes   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. How do i amend my taxes More information. How do i amend my taxes   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. How do i amend my taxes How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). How do i amend my taxes However, do not use that schedule to report a not-for-profit activity. How do i amend my taxes See Not Rented for Profit, earlier. How do i amend my taxes Providing substantial services. How do i amend my taxes   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). How do i amend my taxes Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. How do i amend my taxes For information, see Publication 334, Tax Guide for Small Business. How do i amend my taxes You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. How do i amend my taxes   Use Form 1065, U. How do i amend my taxes S. How do i amend my taxes Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). How do i amend my taxes Qualified joint venture. How do i amend my taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. How do i amend my taxes This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. How do i amend my taxes For more information, see Publication 527. How do i amend my taxes Form 1098, Mortgage Interest Statement. How do i amend my taxes    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. How do i amend my taxes If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. How do i amend my taxes Attach a statement to your return showing the name and address of the other person. How do i amend my taxes In the left margin of Schedule E, next to line 13, enter “See attached. How do i amend my taxes ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. How do i amend my taxes , you normally report your rental income and expenses on Schedule E, Part I. How do i amend my taxes List your total income, expenses, and depreciation for each rental property. How do i amend my taxes Be sure to enter the number of fair rental and personal use days on line 2. How do i amend my taxes If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. How do i amend my taxes Complete lines 1 and 2 for each property. How do i amend my taxes However, fill in lines 23a through 26 on only one Schedule E. How do i amend my taxes On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. How do i amend my taxes To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. How do i amend my taxes If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. How do i amend my taxes Form 6198, At-Risk Limitations. How do i amend my taxes See At-Risk Rules , earlier. How do i amend my taxes Also see Publication 925. How do i amend my taxes Form 8582, Passive Activity Loss Limitations. How do i amend my taxes See Passive Activity Limits , earlier. How do i amend my taxes Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. How do i amend my taxes If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. How do i amend my taxes Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). How do i amend my taxes Worksheet 9-1. How do i amend my taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. How do i amend my taxes Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . How do i amend my taxes ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. How do i amend my taxes Rental Use Percentage A. How do i amend my taxes Total days available for rent at fair rental price A. How do i amend my taxes       B. How do i amend my taxes Total days available for rent (line A) but not rented B. How do i amend my taxes       C. How do i amend my taxes Total days of rental use. How do i amend my taxes Subtract line B from line A C. How do i amend my taxes       D. How do i amend my taxes Total days of personal use (including days rented at less than fair rental price) D. How do i amend my taxes       E. How do i amend my taxes Total days of rental and personal use. How do i amend my taxes Add lines C and D E. How do i amend my taxes       F. How do i amend my taxes Percentage of expenses allowed for rental. How do i amend my taxes Divide line C by line E     F. How do i amend my taxes   PART II. How do i amend my taxes Allowable Rental Expenses 1. How do i amend my taxes Enter rents received 1. How do i amend my taxes   2a. How do i amend my taxes Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. How do i amend my taxes       b. How do i amend my taxes Enter the rental portion of real estate taxes b. How do i amend my taxes       c. How do i amend my taxes Enter the rental portion of deductible casualty and theft losses (see instructions) c. How do i amend my taxes       d. How do i amend my taxes Enter direct rental expenses (see instructions) d. How do i amend my taxes       e. How do i amend my taxes Fully deductible rental expenses. How do i amend my taxes Add lines 2a–2d. How do i amend my taxes Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. How do i amend my taxes   3. How do i amend my taxes Subtract line 2e from line 1. How do i amend my taxes If zero or less, enter -0- 3. How do i amend my taxes   4a. How do i amend my taxes Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. How do i amend my taxes       b. How do i amend my taxes Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. How do i amend my taxes       c. How do i amend my taxes Carryover of operating expenses from 2012 worksheet c. How do i amend my taxes       d. How do i amend my taxes Add lines 4a–4c d. How do i amend my taxes       e. How do i amend my taxes Allowable expenses. How do i amend my taxes Enter the smaller of line 3 or line 4d (see instructions) 4e. How do i amend my taxes   5. How do i amend my taxes Subtract line 4e from line 3. How do i amend my taxes If zero or less, enter -0- 5. How do i amend my taxes   6a. How do i amend my taxes Enter the rental portion of excess casualty and theft losses (see instructions) 6a. How do i amend my taxes       b. How do i amend my taxes Enter the rental portion of depreciation of the dwelling unit b. How do i amend my taxes       c. How do i amend my taxes Carryover of excess casualty losses and depreciation from 2012 worksheet c. How do i amend my taxes       d. How do i amend my taxes Add lines 6a–6c d. How do i amend my taxes       e. How do i amend my taxes Allowable excess casualty and theft losses and depreciation. How do i amend my taxes Enter the smaller of  line 5 or line 6d (see instructions) 6e. How do i amend my taxes   PART III. How do i amend my taxes Carryover of Unallowed Expenses to Next Year 7a. How do i amend my taxes Operating expenses to be carried over to next year. How do i amend my taxes Subtract line 4e from line 4d 7a. How do i amend my taxes   b. How do i amend my taxes Excess casualty and theft losses and depreciation to be carried over to next year. How do i amend my taxes  Subtract line 6e from line 6d b. How do i amend my taxes   Worksheet 9-1 Instructions. How do i amend my taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. How do i amend my taxes Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. How do i amend my taxes Line 2a. How do i amend my taxes Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. How do i amend my taxes Do not include interest on a loan that did not benefit the dwelling unit. How do i amend my taxes For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. How do i amend my taxes Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. How do i amend my taxes Include the rental portion of this interest in the total you enter on line 2a of the worksheet. How do i amend my taxes   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. How do i amend my taxes See the Schedule A instructions. How do i amend my taxes However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. How do i amend my taxes See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. How do i amend my taxes Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. How do i amend my taxes   Note. How do i amend my taxes Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. How do i amend my taxes Instead, figure the personal portion on a separate Schedule A. How do i amend my taxes If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. How do i amend my taxes           Line 2c. How do i amend my taxes Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. How do i amend my taxes To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. How do i amend my taxes If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. How do i amend my taxes On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. How do i amend my taxes Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. How do i amend my taxes   Note. How do i amend my taxes Do not file this Form 4684 or use it to figure your personal losses on Schedule A. How do i amend my taxes Instead, figure the personal portion on a separate Form 4684. How do i amend my taxes           Line 2d. How do i amend my taxes Enter the total of your rental expenses that are directly related only to the rental activity. How do i amend my taxes These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. How do i amend my taxes Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. How do i amend my taxes           Line 2e. How do i amend my taxes You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. How do i amend my taxes Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. How do i amend my taxes           Line 4b. How do i amend my taxes On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. How do i amend my taxes If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. How do i amend my taxes Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). How do i amend my taxes           Line 4e. How do i amend my taxes You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. How do i amend my taxes *           Line 6a. How do i amend my taxes To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. How do i amend my taxes   A. How do i amend my taxes Enter the amount from Form 4684, line 10       B. How do i amend my taxes Enter the rental portion of line A       C. How do i amend my taxes Enter the amount from line 2c of this worksheet       D. How do i amend my taxes Subtract line C from line B. How do i amend my taxes Enter the result here and on line 6a of this worksheet               Line 6e. How do i amend my taxes You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. How do i amend my taxes * *Allocating the limited deduction. How do i amend my taxes If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. How do i amend my taxes Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. How do i amend my taxes Prev  Up  Next   Home   More Online Publications