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How Do I File An Amendment To My Tax Return

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How Do I File An Amendment To My Tax Return

How do i file an amendment to my tax return 7. How do i file an amendment to my tax return   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 file an amendment to my tax return  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 file an amendment to my tax return 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 file an amendment to my tax return See Dollar Limits under Section 179 Expense Deduction , later. How do i file an amendment to my tax return Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. How do i file an amendment to my tax return . How do i file an amendment to my tax return  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 file an amendment to my tax return See Claiming the Special Depreciation Allowance , later. How do i file an amendment to my tax return Expiration of the 3- year recovery period for certain race horses. How do i file an amendment to my tax return  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 file an amendment to my tax return 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 file an amendment to my tax return Instead, you must spread the cost over the time you use the property and deduct part of it each year. How do i file an amendment to my tax return For most types of property, this is called depreciation. How do i file an amendment to my tax return This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. How do i file an amendment to my tax return For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. How do i file an amendment to my tax return 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 file an amendment to my tax return It is important to keep good records for property you depreciate. How do i file an amendment to my tax return Do not file these records with your return. How do i file an amendment to my tax return Instead, you should keep them as part of the permanent records of the depreciated property. How do i file an amendment to my tax return 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 file an amendment to my tax return For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. How do i file an amendment to my tax return For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. How do i file an amendment to my tax return Overview of Depreciation This overview discusses basic information on the following. How do i file an amendment to my tax return What property can be depreciated. How do i file an amendment to my tax return What property cannot be depreciated. How do i file an amendment to my tax return When depreciation begins and ends. How do i file an amendment to my tax return Whether MACRS can be used to figure depreciation. How do i file an amendment to my tax return What is the basis of your depreciable property. How do i file an amendment to my tax return How to treat repairs and improvements. How do i file an amendment to my tax return When you must file Form 4562. How do i file an amendment to my tax return How you can correct depreciation claimed incorrectly. How do i file an amendment to my tax return 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 file an amendment to my tax return You can also depreciate certain intangible property, such as copyrights, patents, and computer software. How do i file an amendment to my tax return To be depreciable, the property must meet all the following requirements. How do i file an amendment to my tax return It must be property you own. How do i file an amendment to my tax return It must be used in your business or income-producing activity. How do i file an amendment to my tax return It must have a determinable useful life. How do i file an amendment to my tax return It must have a useful life that extends substantially beyond the year you place it in service. How do i file an amendment to my tax return Property You Own To claim depreciation, you usually must be the owner of the property. How do i file an amendment to my tax return You are considered as owning property even if it is subject to a debt. How do i file an amendment to my tax return Leased property. How do i file an amendment to my tax return   You can depreciate leased property only if you retain the incidents of ownership in the property. How do i file an amendment to my tax return This means you bear the burden of exhaustion of the capital investment in the property. How do i file an amendment to my tax return 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 file an amendment to my tax return You can, however, depreciate any capital improvements you make to the leased property. How do i file an amendment to my tax return See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return Life tenant. How do i file an amendment to my tax return   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 file an amendment to my tax return See Certain term interests in property , later, for an exception. How do i file an amendment to my tax return 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 file an amendment to my tax return If you use property to produce income (investment use), the income must be taxable. How do i file an amendment to my tax return You cannot depreciate property that you use solely for personal activities. How do i file an amendment to my tax return 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 file an amendment to my tax return Example 1. How do i file an amendment to my tax return   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. How do i file an amendment to my tax return If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. How do i file an amendment to my tax return Example 2. How do i file an amendment to my tax return   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 file an amendment to my tax return For more information, see Business Use of Your Home in chapter 4. How do i file an amendment to my tax return Inventory. How do i file an amendment to my tax return   You can never depreciate inventory because it is not held for use in your business. How do i file an amendment to my tax return Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. How do i file an amendment to my tax return Livestock. How do i file an amendment to my tax return   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. How do i file an amendment to my tax return 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 file an amendment to my tax return However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. How do i file an amendment to my tax return Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. How do i file an amendment to my tax return 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 file an amendment to my tax return Irrigation systems and water wells. How do i file an amendment to my tax return   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. How do i file an amendment to my tax return You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. How do i file an amendment to my tax return In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. How do i file an amendment to my tax return However, land preparation costs for center pivot irrigation systems are not depreciable. How do i file an amendment to my tax return Dams, ponds, and terraces. How do i file an amendment to my tax return   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. How do i file an amendment to my tax return What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. How do i file an amendment to my tax return This includes the following. How do i file an amendment to my tax return Land. How do i file an amendment to my tax return You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. How do i file an amendment to my tax return The cost of land generally includes the cost of clearing, grading, planting, and landscaping. How do i file an amendment to my tax return Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. How do i file an amendment to my tax return See chapter 1 of Publication 946. How do i file an amendment to my tax return Property placed in service and disposed of in the same year. How do i file an amendment to my tax return Determining when property is placed in service is explained later. How do i file an amendment to my tax return Equipment used to build capital improvements. How do i file an amendment to my tax return You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. How do i file an amendment to my tax return Intangible property such as section 197 intangibles. How do i file an amendment to my tax return This property does not have a determinable useful life and generally cannot be depreciated. How do i file an amendment to my tax return However, see Amortization , later. How do i file an amendment to my tax return Special rules apply to computer software (discussed below). How do i file an amendment to my tax return Certain term interests (discussed below). How do i file an amendment to my tax return Computer software. How do i file an amendment to my tax return   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 file an amendment to my tax return It is readily available for purchase by the general public. How do i file an amendment to my tax return It is subject to a nonexclusive license. How do i file an amendment to my tax return It has not been substantially modified. How do i file an amendment to my tax return   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 file an amendment to my tax return Certain term interests in property. How do i file an amendment to my tax return   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 file an amendment to my tax return This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. How do i file an amendment to my tax return For more information, see chapter 1 of Publication 946. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Example. How do i file an amendment to my tax return You bought a planter for use in your farm business. How do i file an amendment to my tax return The planter was delivered in December 2012 after harvest was over. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You begin to depreciate it in 2013. How do i file an amendment to my tax return 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 file an amendment to my tax return You begin to depreciate it in 2013. How do i file an amendment to my tax return Fruit or nut trees and vines. How do i file an amendment to my tax return   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 file an amendment to my tax return See chapter 6 for information about the uniform capitalization rules. How do i file an amendment to my tax return 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 file an amendment to my tax return Immature livestock. How do i file an amendment to my tax return   Depreciation for livestock begins when the livestock reaches the age of maturity. How do i file an amendment to my tax return If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. How do i file an amendment to my tax return If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. How do i file an amendment to my tax return If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. How do i file an amendment to my tax return Your basis for depreciation is your initial cost for the immature livestock. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. How do i file an amendment to my tax return This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You sell or exchange the property. How do i file an amendment to my tax return You convert the property to personal use. How do i file an amendment to my tax return You abandon the property. How do i file an amendment to my tax return You transfer the property to a supplies or scrap account. How do i file an amendment to my tax return The property is destroyed. How do i file an amendment to my tax return For information on abandonment of property, see chapter 8. How do i file an amendment to my tax return For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. How do i file an amendment to my tax return 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 file an amendment to my tax return MACRS is explained later under Figuring Depreciation Under MACRS . How do i file an amendment to my tax return You cannot use MACRS to depreciate the following property. How do i file an amendment to my tax return Property you placed in service before 1987. How do i file an amendment to my tax return Use the methods discussed in Publication 534. How do i file an amendment to my tax return Certain property owned or used in 1986. How do i file an amendment to my tax return See chapter 1 of Publication 946. How do i file an amendment to my tax return Intangible property. How do i file an amendment to my tax return Films, video tapes, and recordings. How do i file an amendment to my tax return Certain corporate or partnership property acquired in a nontaxable transfer. How do i file an amendment to my tax return Property you elected to exclude from MACRS. How do i file an amendment to my tax return For more information, see chapter 1 of Publication 946. How do i file an amendment to my tax return What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. How do i file an amendment to my tax return To determine basis, you need to know the cost or other basis of your property. How do i file an amendment to my tax return Cost or other basis. How do i file an amendment to my tax return   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 file an amendment to my tax return The cost includes the amount you pay in cash, debt obligations, other property, or services. How do i file an amendment to my tax return   There are times when you cannot use cost as basis. How do i file an amendment to my tax return In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. How do i file an amendment to my tax return Adjusted basis. How do i file an amendment to my tax return   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 file an amendment to my tax return Basis adjustment for depreciation allowed or allowable. How do i file an amendment to my tax return   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 file an amendment to my tax return Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). How do i file an amendment to my tax return Depreciation allowable is depreciation you are entitled to deduct. How do i file an amendment to my tax return   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 file an amendment to my tax return   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 file an amendment to my tax return   For more information, see chapter 6. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Treat improvements as separate depreciable property. How do i file an amendment to my tax return See chapter 1 of Publication 946 for more information. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return You repair a small section on a corner of the roof of a barn that you rent to others. How do i file an amendment to my tax return You deduct the cost of the repair as a business expense. How do i file an amendment to my tax return 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 file an amendment to my tax return You depreciate the cost of the new roof. How do i file an amendment to my tax return Improvements to rented property. How do i file an amendment to my tax return   You can depreciate permanent improvements you make to business property you rent from someone else. How do i file an amendment to my tax return Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. How do i file an amendment to my tax return You must complete and attach Form 4562 to your tax return if you are claiming any of the following. How do i file an amendment to my tax return A section 179 expense deduction for the current year or a section 179 carryover from a prior year. How do i file an amendment to my tax return Depreciation for property placed in service during the current year. How do i file an amendment to my tax return Depreciation on any vehicle or other listed property, regardless of when it was placed in service. How do i file an amendment to my tax return Amortization of costs that began in the current year. How do i file an amendment to my tax return For more information, see the Instructions for Form 4562. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You claimed the incorrect amount because of a mathematical error made in any year. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. How do i file an amendment to my tax return Note. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return See the Instructions for Form 3115. How do i file an amendment to my tax return 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 file an amendment to my tax return This is the section 179 expense deduction. How do i file an amendment to my tax return You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. How do i file an amendment to my tax return This part of the chapter explains the rules for the section 179 expense deduction. How do i file an amendment to my tax return 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 file an amendment to my tax return For more information, see chapter 2 of Publication 946. How do i file an amendment to my tax return What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. How do i file an amendment to my tax return It must be eligible property. How do i file an amendment to my tax return It must be acquired for business use. How do i file an amendment to my tax return It must have been acquired by purchase. How do i file an amendment to my tax return 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 file an amendment to my tax return Tangible personal property. How do i file an amendment to my tax return Qualified real property. How do i file an amendment to my tax return (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. How do i file an amendment to my tax return For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. How do i file an amendment to my tax return ) 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 file an amendment to my tax return Single purpose agricultural (livestock) or horticultural structures. How do i file an amendment to my tax return Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. How do i file an amendment to my tax return 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 file an amendment to my tax return Tangible personal property. How do i file an amendment to my tax return   Tangible personal property is any tangible property that is not real property. How do i file an amendment to my tax return It includes the following property. How do i file an amendment to my tax return Machinery and equipment. How do i file an amendment to my tax return 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 file an amendment to my tax return Gasoline storage tanks and pumps at retail service stations. How do i file an amendment to my tax return Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. How do i file an amendment to my tax return Facility used for the bulk storage of fungible commodities. How do i file an amendment to my tax return   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 file an amendment to my tax return Bulk storage means the storage of a commodity in a large mass before it is used. How do i file an amendment to my tax return Grain bins. How do i file an amendment to my tax return   A grain bin is an example of a storage facility that is qualifying section 179 property. How do i file an amendment to my tax return It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. How do i file an amendment to my tax return Single purpose agricultural or horticultural structures. How do i file an amendment to my tax return   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. How do i file an amendment to my tax return Agricultural structure. How do i file an amendment to my tax return   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. How do i file an amendment to my tax return To house, raise, and feed a particular type of livestock and its produce. How do i file an amendment to my tax return To house the equipment, including any replacements, needed to house, raise, or feed the livestock. How do i file an amendment to my tax return For this purpose, livestock includes poultry. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return Horticultural structure. How do i file an amendment to my tax return   A single purpose horticultural structure is either of the following. How do i file an amendment to my tax return A greenhouse specifically designed, constructed, and used for the commercial production of plants. How do i file an amendment to my tax return A structure specifically designed, constructed, and used for the commercial production of mushrooms. How do i file an amendment to my tax return Use of structure. How do i file an amendment to my tax return   A structure must be used only for the purpose that qualified it. How do i file an amendment to my tax return For example, a hog barn will not be qualifying property if you use it to house poultry. How do i file an amendment to my tax return Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. How do i file an amendment to my tax return   If a structure includes work space, the work space can be used only for the following activities. How do i file an amendment to my tax return Stocking, caring for, or collecting livestock or plants or their produce. How do i file an amendment to my tax return Maintaining the enclosure or structure. How do i file an amendment to my tax return Maintaining or replacing the equipment or stock enclosed or housed in the structure. How do i file an amendment to my tax return Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. How do i file an amendment to my tax return For example, property acquired by gift or inheritance does not qualify. How do i file an amendment to my tax return Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return Ken is a farmer. How do i file an amendment to my tax return He purchased two tractors, one from his brother and one from his father. How do i file an amendment to my tax return He placed both tractors in service in the same year he bought them. How do i file an amendment to my tax return 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 file an amendment to my tax return The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). How do i file an amendment to my tax return What Property Does Not Qualify? Land and improvements. How do i file an amendment to my tax return   Land and land improvements, do not qualify as section 179 property. How do i file an amendment to my tax return Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. How do i file an amendment to my tax return However, agricultural fences do qualify as section 179 property. How do i file an amendment to my tax return Similarly, field drainage tile also qualifies as section 179 property. How do i file an amendment to my tax return Excepted property. How do i file an amendment to my tax return   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 file an amendment to my tax return Certain property you lease to others (if you are a noncorporate lessor). How do i file an amendment to my tax return Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. How do i file an amendment to my tax return 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 file an amendment to my tax return These limits apply to each taxpayer, not to each business. How do i file an amendment to my tax return However, see Married individuals under Dollar Limits , later. How do i file an amendment to my tax return See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. How do i file an amendment to my tax return 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 file an amendment to my tax return Use Part I of Form 4562 to figure your section 179 expense deduction. How do i file an amendment to my tax return Partial business use. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return Use the resulting business cost to figure your section 179 expense deduction. How do i file an amendment to my tax return Trade-in of other property. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return It does not include the adjusted basis of the old tractor you trade for the new tractor. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. How do i file an amendment to my tax return They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. How do i file an amendment to my tax return 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 file an amendment to my tax return They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. How do i file an amendment to my tax return Only the cash paid by J-Bar qualifies for the section 179 expense deduction. How do i file an amendment to my tax return J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You do not have to claim the full $500,000. How do i file an amendment to my tax return For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. How do i file an amendment to my tax return Reduced dollar limit for cost exceeding $2 million. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return Example. How do i file an amendment to my tax return This year, James Smith placed in service machinery costing $2,050,000. How do i file an amendment to my tax return 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 file an amendment to my tax return Limits for sport utility vehicles. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return   For more information, see chapter 2 of Publication 946. How do i file an amendment to my tax return Limits for passenger automobiles. How do i file an amendment to my tax return   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. How do i file an amendment to my tax return See Do the Passenger Automobile Limits Apply , later. How do i file an amendment to my tax return Married individuals. How do i file an amendment to my tax return   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. How do i file an amendment to my tax return If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. How do i file an amendment to my tax return Joint return after separate returns. How do i file an amendment to my tax return   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 file an amendment to my tax return The dollar limit (after reduction for any cost of section 179 property over $2 million). How do i file an amendment to my tax return The total cost of section 179 property you and your spouse elected to expense on your separate returns. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. How do i file an amendment to my tax return See Carryover of disallowed deduction , later. How do i file an amendment to my tax return Taxable income. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return Section 1231 gains (or losses) as discussed in chapter 9. How do i file an amendment to my tax return Interest from working capital of your trade or business. How do i file an amendment to my tax return 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 file an amendment to my tax return   In addition, figure taxable income without regard to any of the following. How do i file an amendment to my tax return The section 179 expense deduction. How do i file an amendment to my tax return The self-employment tax deduction. How do i file an amendment to my tax return Any net operating loss carryback or carryforward. How do i file an amendment to my tax return Any unreimbursed employee business expenses. How do i file an amendment to my tax return Two different taxable income limits. How do i file an amendment to my tax return   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 file an amendment to my tax return You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. How do i file an amendment to my tax return If so, complete the following steps. How do i file an amendment to my tax return Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. How do i file an amendment to my tax return 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. How do i file an amendment to my tax return 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. How do i file an amendment to my tax return 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. How do i file an amendment to my tax return 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. How do i file an amendment to my tax return 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. How do i file an amendment to my tax return 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. How do i file an amendment to my tax return 8 Figure your actual other deduction using the taxable income figured in Step 7. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. How do i file an amendment to my tax return It elects to expense the entire $500,000 cost under section 179. How do i file an amendment to my tax return In June, the corporation gave a charitable contribution of $10,000. How do i file an amendment to my tax return A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. How do i file an amendment to my tax return The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. How do i file an amendment to my tax return XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. How do i file an amendment to my tax return XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. How do i file an amendment to my tax return Step 1. How do i file an amendment to my tax return Taxable income figured without either deduction is $520,000. How do i file an amendment to my tax return Step 2. How do i file an amendment to my tax return Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. How do i file an amendment to my tax return Step 3. How do i file an amendment to my tax return $20,000 ($520,000 − $500,000). How do i file an amendment to my tax return Step 4. How do i file an amendment to my tax return 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 file an amendment to my tax return Step 5. How do i file an amendment to my tax return $518,000 ($520,000 − $2,000). How do i file an amendment to my tax return Step 6. How do i file an amendment to my tax return Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. How do i file an amendment to my tax return Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. How do i file an amendment to my tax return Step 7. How do i file an amendment to my tax return $20,000 ($520,000 − $500,000). How do i file an amendment to my tax return Step 8. How do i file an amendment to my tax return 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 file an amendment to my tax return Carryover of disallowed deduction. How do i file an amendment to my tax return   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 file an amendment to my tax return   The amount you carry over is used in determining your section 179 expense deduction in the next year. How do i file an amendment to my tax return However, it is subject to the limits in that year. How do i file an amendment to my tax return 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 file an amendment to my tax return Your selections must be shown in your books and records. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Her section 179 expense deduction was limited to $6,000. How do i file an amendment to my tax return 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 file an amendment to my tax return This year, Joyce placed another machine in service that cost $9,000. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return She can carry over the balance of $1,000 to next year. How do i file an amendment to my tax return 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 file an amendment to my tax return The partnership or S corporation determines its section 179 expense deduction subject to the limits. How do i file an amendment to my tax return It then allocates the deduction among its partners or shareholders. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. How do i file an amendment to my tax return For more information, see chapter 2 of Publication 946. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. How do i file an amendment to my tax return P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). How do i file an amendment to my tax return Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return John's taxable income from that business was $10,000. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. How do i file an amendment to my tax return 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 file an amendment to my tax return If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return The amended return must also include any resulting adjustments to taxable income. How do i file an amendment to my tax return Revoking an election. How do i file an amendment to my tax return   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 file an amendment to my tax return The amended return must be filed within the time prescribed by law. How do i file an amendment to my tax return 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 file an amendment to my tax return ) Once made, the revocation is irrevocable. How do i file an amendment to my tax return 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 file an amendment to my tax return In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. How do i file an amendment to my tax return You also increase the basis of the property by the recapture amount. How do i file an amendment to my tax return Recovery periods for property are discussed later. How do i file an amendment to my tax return 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 file an amendment to my tax return Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. How do i file an amendment to my tax return   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 file an amendment to my tax return Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. How do i file an amendment to my tax return Figuring the recapture amount. How do i file an amendment to my tax return   To figure the amount to recapture, take the following steps. How do i file an amendment to my tax return Figure the allowable depreciation for the section 179 expense deduction you claimed. How do i file an amendment to my tax return Begin with the year you placed the property in service and include the year of recapture. How do i file an amendment to my tax return Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. How do i file an amendment to my tax return The result is the amount you must recapture. How do i file an amendment to my tax return Example. How do i file an amendment to my tax return In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. How do i file an amendment to my tax return The property is not listed property. How do i file an amendment to my tax return 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 file an amendment to my tax return He used the property only for business in 2011 and 2012. How do i file an amendment to my tax return During 2013, he used the property 40% for business and 60% for personal use. How do i file an amendment to my tax return He figures his recapture amount as follows. How do i file an amendment to my tax return 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 file an amendment to my tax return Where to report recapture. How do i file an amendment to my tax return   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 file an amendment to my tax return Recapture for qualified section 179 GO Zone property. How do i file an amendment to my tax return   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 file an amendment to my tax return ” 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 file an amendment to my tax return 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 file an amendment to my tax return Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. How do i file an amendment to my tax return 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 file an amendment to my tax return Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. How do i file an amendment to my tax return   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 file an amendment to my tax return   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 file an amendment to my tax return Water utility property. How do i file an amendment to my tax return Off-the-shelf computer software. How do i file an amendment to my tax return Qualified leasehold improvement property. How do i file an amendment to my tax return   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 file an amendment to my tax return If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. How do i file an amendment to my tax return 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 file an amendment to my tax return The original use of the property must begin with you after December 31, 2007. How do i file an amendment to my tax return For more information, see chapter 3 of Publication 946. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Attach the election statement to the amended return. How do i file an amendment to my tax return On the amended return, write “Filed pursuant to section 301. How do i file an amendment to my tax return 9100-2. How do i file an amendment to my tax return ” Once made, the election may not be revoked without IRS consent. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return For more information, see chapter 3 of Publication 946. How do i file an amendment to my tax return 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 file an amendment to my tax return MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). How do i file an amendment to my tax return Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. How do i file an amendment to my tax return 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 file an amendment to my tax return This part explains how to determine which MACRS depreciation system applies to your property. How do i file an amendment to my tax return It also discusses the following information that you need to know before you can figure depreciation under MACRS. How do i file an amendment to my tax return Property's recovery class. How do i file an amendment to my tax return Placed-in-service date. How do i file an amendment to my tax return Basis for depreciation. How do i file an amendment to my tax return Recovery period. How do i file an amendment to my tax return Convention. How do i file an amendment to my tax return Depreciation method. How do i file an amendment to my tax return Finally, this part explains how to use this information to figure your depreciation deduction. How do i file an amendment to my tax return 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 file an amendment to my tax return You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. How do i file an amendment to my tax return Required use of ADS. How do i file an amendment to my tax return   You must use ADS for the following property. How do i file an amendment to my tax return 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 file an amendment to my tax return Listed property used 50% or less in a qualified business use. How do i file an amendment to my tax return See Additional Rules for Listed Property , later. How do i file an amendment to my tax return Any tax-exempt use property. How do i file an amendment to my tax return Any tax-exempt bond-financed property. How do i file an amendment to my tax return 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 file an amendment to my tax return Any tangible property used predominantly outside the United States during the year. How do i file an amendment to my tax return If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. How do i file an amendment to my tax return Electing ADS. How do i file an amendment to my tax return   Although your property may qualify for GDS, you can elect to use ADS. How do i file an amendment to my tax return The election generally must cover all property in the same property class you placed in service during the year. How do i file an amendment to my tax return However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. How do i file an amendment to my tax return Once you make this election, you can never revoke it. How do i file an amendment to my tax return   You make the election by completing line 20 in Part III of Form 4562. How do i file an amendment to my tax return Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. How do i file an amendment to my tax return 3-year property. How do i file an amendment to my tax return 5-year property. How do i file an amendment to my tax return 7-year property. How do i file an amendment to my tax return 10-year property. How do i file an amendment to my tax return 15-year property. How do i file an amendment to my tax return 20-year property. How do i file an amendment to my tax return 25-year property. How do i file an amendment to my tax return Residential rental property. How do i file an amendment to my tax return Nonresidential real property. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return The placed-in-service date for your property is the date the property is ready and available for a specific use. How do i file an amendment to my tax return It is therefore not necessarily the date it is first used. How do i file an amendment to my tax return 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 file an amendment to my tax return See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. How do i file an amendment to my tax return 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 file an amendment to my tax return Reduce that amount by any credits and deductions allocable to the property. How do i file an amendment to my tax return The following are examples of some of the credits and deductions that reduce basis. How do i file an amendment to my tax return Any deduction for section 179 property. How do i file an amendment to my tax return Any deduction for removal of barriers to the disabled and the elderly. How do i file an amendment to my tax return Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. How do i file an amendment to my tax return Any special depreciation allowance. How do i file an amendment to my tax return Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. How do i file an amendment to my tax return 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 file an amendment to my tax return Also, see chapter 6. How do i file an amendment to my tax return For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. How do i file an amendment to my tax return 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 file an amendment to my tax return It is determined based on the depreciation system (GDS or ADS) used. How do i file an amendment to my tax return See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. How do i file an amendment to my tax return 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 file an amendment to my tax return House trailers for farm laborers. How do i file an amendment to my tax return   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 file an amendment to my tax return A 7-year recovery period under GDS. How do i file an amendment to my tax return A 10-year recovery period under ADS. How do i file an amendment to my tax return   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 file an amendment to my tax return A 20-year recovery period under GDS. How do i file an amendment to my tax return A 25-year recovery period under ADS. How do i file an amendment to my tax return Water wells. How do i file an amendment to my tax return   Water wells used to provide water for raising poultry and livestock are land improvements. How do i file an amendment to my tax return If they are depreciable, use one of the following recovery periods. How do i file an amendment to my tax return A 15-year recovery period under GDS. How do i file an amendment to my tax return A 20-year recovery period under ADS. How do i file an amendment to my tax return   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 file an amendment to my tax return Table 7-1. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return 2 Not including single purpose agricultural or horticultural structures. How do i file an amendment to my tax return 3 Used by logging and sawmill operators for cutting of timber. How do i file an amendment to my tax return 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 file an amendment to my tax return 5 years. How do i file an amendment to my tax return Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. How do i file an amendment to my tax return 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 file an amendment to my tax return Use one of the following conventions. How do i file an amendment to my tax return The half-year convention. How do i file an amendment to my tax return The mid-month convention. How do i file an amendment to my tax return The mid-quarter convention. How do i file an amendment to my tax return For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. How do i file an amendment to my tax return Also, see the Instructions for Form 4562. How do i file an amendment to my tax return Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. How do i file an amendment to my tax return The 200% declining balance method over a GDS recovery period. How do i file an amendment to my tax return The 150% declining balance method over a GDS recovery period. How do i file an amendment to my tax return The straight line method over a GDS recovery period. How do i file an amendment to my tax return The straight line method over an ADS recovery period. How do i file an amendment to my tax return Depreciation Table. How do i file an amendment to my tax return   The following table lists the types of property you can depreciate under each method. How do i file an amendment to my tax return The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. How do i file an amendment to my tax return 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 file an amendment to my tax return   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 file an amendment to my tax return The straight line method over a GDS recovery period. How do i file an amendment to my tax return The straight line method over an ADS recovery period. How do i file an amendment to my tax return 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 file an amendment to my tax return If you made this election, continue to use the same method and recovery period for that property. How do i file an amendment to my tax return Real property. How do i file an amendment to my tax return   You can depreciate real property using the straight line method under either GDS or ADS. How do i file an amendment to my tax return Switching to straight line. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return The tables have the switch to the straight line method built into their rates. How do i file an amendment to my tax return Fruit or nut trees and vines. How do i file an amendment to my tax return   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. How do i file an amendment to my tax return ADS required for some farmers. How do i file an amendment to my tax return   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 file an amendment to my tax return See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. How do i file an amendment to my tax return Electing a different method. How do i file an amendment to my tax return   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Attach the election to the amended return and write “Filed pursuant to section 301. How do i file an amendment to my tax return 9100-2” on the election statement. How do i file an amendment to my tax return File the amended return at the same address you filed the original return. How do i file an amendment to my tax return Once you make the election, you cannot change it. How do i file an amendment to my tax return    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 file an amendment to my tax return However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. How do i file an amendment to my tax return Straight line election. How do i file an amendment to my tax return   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. How do i file an amendment to my tax return Make the election by entering “S/L” under column (f) in Part III of Form 4562. How do i file an amendment to my tax return ADS election. How do i file an amendment to my tax return   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 file an amendment to my tax return 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 file an amendment to my tax return The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. How do i file an amendment to my tax return 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 file an amendment to my tax return 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 file an amendment to my tax return Then you are ready to figure your depreciation deduction. How do i file an amendment to my tax return You can figure it in one of two ways. How do i file an amendment to my tax return You can use the percentage tables provided by the IRS. How do i file an amendment to my tax return You can figure your own deduction without using the tables. How do i file an amendment to my tax return Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. How do i file an amendment to my tax return 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 file an amendment to my tax return These percentage tables are in Appendix A of Publication 946. How do i file an amendment to my tax return Rules for using the tables. How do i file an amendment to my tax return   The following rules cover the use of the percentage tables. How do i file an amendment to my tax return You must apply the rates in the percentage tables to your property's unadjusted basis. How do i file an amendment to my tax return 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 file an amendment to my tax return You cannot use the percentage tables for a short tax year. How do i file an amendment to my tax return See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. How do i file an amendment to my tax return You generally must continue to use them for the entire recovery period of the property. How do i file an amendment to my tax return 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 file an amendment to my tax return Basis adjustment due to casualty loss. How do i file an amendment to my tax return   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. How do i file an amendment to my tax return 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 file an amendment to my tax return See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. How do i file an amendment to my tax return Figuring depreciation using the 150% DB method and half-year convention. How do i file an amendment to my tax return    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. How do i file an amendment to my tax return The percentages are based on the 150% declining balance method with a change to the straight line method. How do i file an amendment to my tax return This table covers only the half-year convention and the first 8 years for 20-year property. How do i file an amendment to my tax return See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. How do i file an amendment to my tax return   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . How do i file an amendment to my tax return Example 1. How do i file an amendment to my tax return During the year, you bought an item of 7-year property for $10,000 and placed it in service. How do i file an amendment to my tax return You do not elect a section 179 expense deduction for this property. How do i file an amendment to my tax return In addition, the property is not qualified property for purposes of the special depreciation allowance. How do i file an amendment to my tax return The unadjusted basis of the property is $10,000. How do i file an amendment to my tax return You use the percentages in Table 7-2 to figure your deduction. How do i file an amendment to my tax return Since this is 7-year property, you multiply $10,000 by 10. How do i file an amendment to my tax return 71% to get this year's depreciation of $1,071. How do i file an amendment to my tax return For next year, your depreciation will be $1,913 ($10,000 × 19. How do i file an amendment to my tax return 13%). How do i file an amendment to my tax return Example 2. How do i file an amendment to my tax return You had a barn constructed on your farm at a cost of $20,000. How do i file an amendment to my tax return You placed the barn in service this year. How do i file an amendment to my tax return You elect not to claim the special depreciation allowance. How do i file an amendment to my tax return The barn is 20-year property and you use the table percentages to figure your deduction. How do i file an amendment to my tax return You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. How do i file an amendment to my tax return 75% to get $750. How do i file an amendment to my tax return For next year, your depreciation will be $1,443. How do i file an amendment to my tax return 80 ($20,000 × 7. How do i file an amendment to my tax return 219%). How do i file an amendment to my tax return Table 7-2. How do i file an amendment to my tax return 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. How do i file an amendment to my tax return 0 % 15. How do i file an amendment to my tax return 00 % 10. How do i file an amendment to my tax return 71 % 3. How do i file an amendment to my tax return 750 % 2 37. How do i file an amendment to my tax return 5   25. How do i file an amendment to my tax return 50   19. How do i file an amendment to my tax return 13   7. How do i file an amendment to my tax return 219   3 25. How do i file an amendment to my tax return 0   17. How do i file an amendment to my tax return 85   15. How do i file an amendment to my tax return 03   6. How do i file an amendment to my tax return 677   4 12. How do i file an amendment to my tax return 5   16. How do i file an amendment to my tax return 66   12. How do i file an amendment to my tax return 25   6. How do i file an amendment to my tax return 177   5     16. How do i file an amendment to my tax return 66   12. How do i file an amendment to my tax return 25   5. How do i file an amendment to my tax return 713   6     8. How do i file an amendment to my tax return 33   12. How do i file an amendment to my tax return 25   5. How do i file an amendment to my tax return 285   7         12. How do i file an amendment to my tax return 25   4. How do i file an amendment to my tax return 888   8         6. How do i file an amendment to my tax return 13   4. How do i file an amendment to my tax return 522   Figuring depreciation using the straight line method and half-year convention. How do i file an amendment to my tax return   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. How do i file an amendment to my tax return The table covers only the first 8 years for 20-year property. How do i file an amendment to my tax return See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. How do i file an amendment to my tax return Table 7-3. How do i file an amendment to my tax return Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. How do i file an amendment to my tax return 67 % 10 % 7. How do i file an amendment to my tax return 14 % 2. How do i file an amendment to my tax return 5 % 2 33. How do i file an amendment to my tax return 33   20   14. How do i file an amendment to my tax return 29   5. How do i file an amendment to my tax return 0   3 33. How do i file an amendment to my tax return 33   20   14. How do i file an amendment to my tax return 29   5. How do i file an amendment to my tax return 0   4 16. How do i file an amendment to my tax return 67   20   14. How do i file an amendment to my tax return 28   5. How do i file an amendment to my tax return 0   5     20   14. How do i file an amendment to my tax return 29   5. How do i file an amendment to my tax return 0   6     10   14. How do i file an amendment to my tax return 28   5. How do i file an amendment to my tax return 0   7         14. How do i file an amendment to my tax return 29   5. How do i file an amendment to my tax return 0   8         7. How do i file an amendment to my tax return 14   5. How do i file an amendment to my tax return 0    
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How do i file an amendment to my tax return 5. How do i file an amendment to my tax return   Credits Table of Contents Credit for the Elderly or the DisabledCan You Take the Credit? Figuring the Credit Child and Dependent Care Credit Earned Income Credit (EIC)Do You Qualify for the Earned Income Credit (EIC)? Figuring the EIC This chapter briefly discusses the credit for the elderly or disabled, the child and dependent care credit, and the earned income credit. How do i file an amendment to my tax return You may be able to reduce your federal income tax by claiming one or more of these credits. How do i file an amendment to my tax return Credit for the Elderly or the Disabled This section explains who qualifies for the credit for the elderly or the disabled and how to figure this credit. How do i file an amendment to my tax return For more information, see Publication 524, Credit for the Elderly or the Disabled. How do i file an amendment to my tax return You can take the credit only if you file Form 1040 or Form 1040A. How do i file an amendment to my tax return You cannot take the credit if you file Form 1040EZ or Form 1040NR. How do i file an amendment to my tax return Can You Take the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. How do i file an amendment to my tax return You are a qualified individual. How do i file an amendment to my tax return Your income is not more than certain limits. How do i file an amendment to my tax return  You can use Figure 5-A and Figure 5-B as guides to see if you are eligible for the credit. How do i file an amendment to my tax return   Qualified Individual You are a qualified individual for this credit if you are a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien, and either of the following applies. How do i file an amendment to my tax return You were age 65 or older at the end of 2013. How do i file an amendment to my tax return You were under age 65 at the end of 2013 and all three of the following statements are true. How do i file an amendment to my tax return You retired on permanent and total disability (explained later). How do i file an amendment to my tax return You received taxable disability income for 2013. How do i file an amendment to my tax return On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). How do i file an amendment to my tax return Age 65. How do i file an amendment to my tax return You are considered to be age 65 on the day before your 65th birthday. How do i file an amendment to my tax return Therefore, you are considered to be age 65 at the end of 2013 if you were born before January 2, 1949. How do i file an amendment to my tax return Figure 5-A. How do i file an amendment to my tax return Are You a Qualified Individual? This image is too large to be displayed in the current screen. How do i file an amendment to my tax return Please click the link to view the image. How do i file an amendment to my tax return Figure 5-A, Are you a qualified individual? U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien. How do i file an amendment to my tax return   You must be a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien (or be treated as a resident alien) to take the credit. How do i file an amendment to my tax return Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. How do i file an amendment to my tax return Exceptions. How do i file an amendment to my tax return   You may be able to take the credit if you are a nonresident alien who is married to a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return resident alien. How do i file an amendment to my tax return If you make that choice, both you and your spouse are taxed on your worldwide income. How do i file an amendment to my tax return   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return resident alien for the entire year. How do i file an amendment to my tax return In that case, you may be allowed to take the credit. How do i file an amendment to my tax return   For information on these choices, see chapter 1 of Publication 519, U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return Tax Guide for Aliens. How do i file an amendment to my tax return Married persons. How do i file an amendment to my tax return   Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. How do i file an amendment to my tax return However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. How do i file an amendment to my tax return Head of household. How do i file an amendment to my tax return   You can file as head of household and qualify to take the credit even if your spouse lived with you during the first 6 months of the year if you meet certain tests. How do i file an amendment to my tax return See Publication 524 and Publication 501. How do i file an amendment to my tax return Under age 65. How do i file an amendment to my tax return   If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability and have taxable disability income (discussed later under Disability income ). How do i file an amendment to my tax return You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. How do i file an amendment to my tax return You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the end of the tax year. How do i file an amendment to my tax return   Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. How do i file an amendment to my tax return If you retired on disability before 1977 and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. How do i file an amendment to my tax return Permanent and total disability. How do i file an amendment to my tax return   You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. How do i file an amendment to my tax return A physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. How do i file an amendment to my tax return See Physician's statement , later. How do i file an amendment to my tax return Substantial gainful activity. How do i file an amendment to my tax return   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. How do i file an amendment to my tax return   Full-time work (or part-time work done at the employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. How do i file an amendment to my tax return   Substantial gainful activity is not work you do to take care of yourself or your home. How do i file an amendment to my tax return It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. How do i file an amendment to my tax return However, doing this kind of work may show that you are able to engage in substantial gainful activity. How do i file an amendment to my tax return    Figure 5-B. How do i file an amendment to my tax return Income Limits IF your filing status is. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return THEN even if you qualify (see Figure 5-A), you CANNOT take the credit if: Your adjusted gross income (AGI)* is equal to or more than. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return single, head of household, or qualifying widow(er) with dependent child $17,500 $5,000 married filing jointly and only one spouse qualifies in Figure 5-A $20,000 $5,000 married filing jointly and both spouses qualify in Figure 5-A $25,000 $7,500 married filing separately and you lived apart from your spouse for all of 2013 $12,500 $3,750 *AGI is the amount on Form 1040A, line 22, or Form 1040, line 38      The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. How do i file an amendment to my tax return Physician's statement. How do i file an amendment to my tax return   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. How do i file an amendment to my tax return   You do not have to file this statement with your tax return, but you must keep it for your records. How do i file an amendment to my tax return The Instructions for Schedule R (Form 1040A or 1040) include a statement your physician can complete and that you can keep for your records. How do i file an amendment to my tax return Veterans. How do i file an amendment to my tax return   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. How do i file an amendment to my tax return VA Form 21-0172 must be signed by a person authorized by the VA to do so. How do i file an amendment to my tax return You can get this form from your local VA regional office. How do i file an amendment to my tax return Physician's statement obtained in earlier year. How do i file an amendment to my tax return   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. How do i file an amendment to my tax return For a detailed explanation of the conditions you must meet, see the instructions for Schedule R (Form 1040A or 1040), Part II. How do i file an amendment to my tax return If you meet the required conditions, you must check the box on Schedule R (Form 1040A or 1040), Part II, line 2. How do i file an amendment to my tax return   If you checked Schedule R (Form 1040A or 1040), Part I, box 4, 5, or 6, print in the space above the box in Part II, line 2, the first name(s) of the spouse(s) for whom the box is checked. How do i file an amendment to my tax return Disability income. How do i file an amendment to my tax return   If you are under age 65, you must also have taxable disability income to qualify for the credit. How do i file an amendment to my tax return   Disability income must meet the following two requirements. How do i file an amendment to my tax return It must be paid under your employer's accident or health plan or pension plan. How do i file an amendment to my tax return It must be included in your income as wages (or payments in lieu of wages) for the time you are absent from work because of permanent and total disability. How do i file an amendment to my tax return Payments that are not disability income. How do i file an amendment to my tax return   Any payment you receive from a plan that does not provide for disability retirement is not disability income. How do i file an amendment to my tax return Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. How do i file an amendment to my tax return   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. How do i file an amendment to my tax return Mandatory retirement age is the age set by your employer at which you would have had to retire had you not become disabled. How do i file an amendment to my tax return Figuring the Credit You can figure the credit yourself, or the IRS will figure it for you. How do i file an amendment to my tax return Figuring the credit yourself. How do i file an amendment to my tax return   If you figure the credit yourself, fill out the front of Schedule R (Form 1040A or 1040). How do i file an amendment to my tax return Next, fill out Schedule R (Form 1040A or 1040), Part III. How do i file an amendment to my tax return Credit figured for you. How do i file an amendment to my tax return   If you can take the credit and you want the IRS to figure the credit for you, see Publication 524 or the Instructions for Schedule R (Form 1040A or 1040). How do i file an amendment to my tax return If you want the IRS to figure your tax, see chapter 30 of Publication 17, Your Federal Income Tax. How do i file an amendment to my tax return Child and Dependent Care Credit You may be able to claim this credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. How do i file an amendment to my tax return The credit can be up to 35% of your expenses. How do i file an amendment to my tax return To qualify, you must pay these expenses so you can work or look for work. How do i file an amendment to my tax return If you claim this credit, you must include on your return the name and taxpayer identification number (generally the social security number) of each qualifying person for whom care is provided. How do i file an amendment to my tax return If the correct information is not shown, the credit may be reduced or disallowed. How do i file an amendment to my tax return You also must show on your return the name, address, and the taxpayer identification number of the person(s) or organization(s) that provided the care. How do i file an amendment to my tax return For more information, see Publication 503, Child and Dependent Care Expenses. How do i file an amendment to my tax return Earned Income Credit (EIC) The earned income credit (EIC) is a refundable tax credit for certain people who work and have earned income under $51,567. How do i file an amendment to my tax return The EIC is available to persons with or without a qualifying child. How do i file an amendment to my tax return Credit has no effect on certain welfare benefits. How do i file an amendment to my tax return   Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. How do i file an amendment to my tax return These programs include the following. How do i file an amendment to my tax return Medicaid and supplemental security income (SSI). How do i file an amendment to my tax return Supplemental Nutrition Assistance Program (food stamps). How do i file an amendment to my tax return Low-income housing. How do i file an amendment to my tax return Temporary Assistance for Needy Families (TANF). How do i file an amendment to my tax return  In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. How do i file an amendment to my tax return Check with your local benefit coordinator to find out if your refund will affect your benefits. How do i file an amendment to my tax return Do You Qualify for the Earned Income Credit (EIC)? Use Table 5-1 as an initial guide to the rules you must meet in order to qualify for the EIC. How do i file an amendment to my tax return The specific rules you must meet depend on whether you have a qualifying child. How do i file an amendment to my tax return If you have a qualifying child, the rules in Parts A, B, and D apply to you. How do i file an amendment to my tax return If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. How do i file an amendment to my tax return  If, after reading all the rules in each part that applies to you, you think you may qualify for the credit, see Publication 596, Earned Income Credit, for more details about the EIC. How do i file an amendment to my tax return You can also find information about the EIC in the instructions for Form 1040 (line 64a), Form 1040A (line 38a), or Form 1040EZ (line 8a). How do i file an amendment to my tax return The sections that follow provide additional information for some of the rules. How do i file an amendment to my tax return Adjusted gross income (AGI). How do i file an amendment to my tax return   Under Rule 1, you cannot claim the EIC unless your AGI is less than the applicable limit shown in Part A of Table 5-1. How do i file an amendment to my tax return Your AGI is the amount on line 37 (Form 1040), line 21 (Form 1040A), or line 4 (Form 1040EZ). How do i file an amendment to my tax return Table 5-1. How do i file an amendment to my tax return Earned Income Credit (EIC) in a Nutshell First, you must meet all the rules in this column. How do i file an amendment to my tax return Second, you must meet all the rules in one of these columns, whichever applies. How do i file an amendment to my tax return Third, you must meet the rule in this column. How do i file an amendment to my tax return Part A. How do i file an amendment to my tax return  Rules for Everyone Part B. How do i file an amendment to my tax return  Rules If You Have a Qualifying Child Part C. How do i file an amendment to my tax return  Rules If You Do Not Have a Qualifying Child Part D. How do i file an amendment to my tax return  Figuring and Claiming the EIC 1. How do i file an amendment to my tax return Your adjusted gross income (AGI) must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How do i file an amendment to my tax return 2. How do i file an amendment to my tax return You must have a valid social security number. How do i file an amendment to my tax return  3. How do i file an amendment to my tax return Your filing status cannot be “Married filing separately. How do i file an amendment to my tax return ” 4. How do i file an amendment to my tax return You must be a U. How do i file an amendment to my tax return S. How do i file an amendment to my tax return citizen or resident alien all year. How do i file an amendment to my tax return  5. How do i file an amendment to my tax return You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). How do i file an amendment to my tax return  6. How do i file an amendment to my tax return Your investment income must be $3,300 or less. How do i file an amendment to my tax return  7. How do i file an amendment to my tax return You must have earned income. How do i file an amendment to my tax return 8. How do i file an amendment to my tax return Your child must meet the relationship, age, residency, and joint return tests. How do i file an amendment to my tax return  9. How do i file an amendment to my tax return Your qualifying child cannot be used by more than one person to claim the EIC. How do i file an amendment to my tax return  10. How do i file an amendment to my tax return You generally cannot be a qualifying child of another person. How do i file an amendment to my tax return 11. How do i file an amendment to my tax return You must be at least age 25 but under age 65. How do i file an amendment to my tax return  12. How do i file an amendment to my tax return You cannot be the dependent of another person. How do i file an amendment to my tax return  13. How do i file an amendment to my tax return You generally cannot be a qualifying child of another person. How do i file an amendment to my tax return  14. How do i file an amendment to my tax return You must have lived in the United States more than half of the year. How do i file an amendment to my tax return 15. How do i file an amendment to my tax return Your earned income must be less than: •$46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, •$43,038 ($48,378 for married filing jointly) if you have two qualifying children, •$37,870 ($43,210 for married filing jointly) if you have one qualifying child, or •$14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. How do i file an amendment to my tax return Social security number. How do i file an amendment to my tax return   Under Rule 2, you (and your spouse if you are married filing jointly) must have a valid social security number (SSN) issued by the Social Security Administration (SSA). How do i file an amendment to my tax return Any qualifying child listed on Schedule EIC also must have a valid SSN. How do i file an amendment to my tax return (See Qualifying child , later, if you have a qualifying child. How do i file an amendment to my tax return )   If your social security card (or your spouse's if you are married filing jointly) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. How do i file an amendment to my tax return An example of a federally funded benefit is Medicaid. How do i file an amendment to my tax return Investment income. How do i file an amendment to my tax return   Under Rule 6, you cannot claim the EIC unless your investment income is $3,300 or less. How do i file an amendment to my tax return If your investment income is more than $3,300, you cannot claim the credit. How do i file an amendment to my tax return For most people, investment income is the total of the following amounts. How do i file an amendment to my tax return Taxable interest (line 8a of Form 1040 or 1040A). How do i file an amendment to my tax return Tax-exempt interest (line 8b of Form 1040 or 1040A). How do i file an amendment to my tax return Dividend income (line 9a of Form 1040 or 1040A). How do i file an amendment to my tax return Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). How do i file an amendment to my tax return  If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. How do i file an amendment to my tax return   For more information about investment income, see Publication 596, Earned Income Credit. How do i file an amendment to my tax return Earned income. How do i file an amendment to my tax return   Under Rule 7, you must have earned income to claim the EIC. How do i file an amendment to my tax return Under Rule 15, you cannot claim the EIC unless your earned income is less than the applicable limit shown in Table 5-1, Part D. How do i file an amendment to my tax return Earned income includes all of the following types of income. How do i file an amendment to my tax return Wages, salaries, tips, and other taxable employee pay. How do i file an amendment to my tax return Employee pay is earned income only if it is taxable. How do i file an amendment to my tax return Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. How do i file an amendment to my tax return But there is an exception for nontaxable combat pay, which you can choose to include in earned income. How do i file an amendment to my tax return Net earnings from self-employment. How do i file an amendment to my tax return Gross income received as a statutory employee. How do i file an amendment to my tax return Gross income defined. How do i file an amendment to my tax return   Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). How do i file an amendment to my tax return Do not include any social security benefits unless (a) you are married filing a separate tax return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). How do i file an amendment to my tax return If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b to figure the taxable part of social security benefits you must include in gross income. How do i file an amendment to my tax return Self-employed persons. How do i file an amendment to my tax return   If you are self-employed and your net earnings are $400 or more, be sure to correctly fill out Schedule SE (Form 1040), Self-Employment Tax, and pay the proper amount of self-employment tax. How do i file an amendment to my tax return If you do not, you may not get all the credit to which you are entitled. How do i file an amendment to my tax return Disability benefits. How do i file an amendment to my tax return   If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. How do i file an amendment to my tax return Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. How do i file an amendment to my tax return Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. How do i file an amendment to my tax return   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. How do i file an amendment to my tax return It does not matter whether you have reached minimum retirement age. How do i file an amendment to my tax return If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code J. How do i file an amendment to my tax return Income that is not earned income. How do i file an amendment to my tax return   Examples of items that are not earned income under Rule 7 include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits — except for payments covered under Disability benefits earlier), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. How do i file an amendment to my tax return Do not include any of these items in your earned income. How do i file an amendment to my tax return Workfare payments. How do i file an amendment to my tax return   Nontaxable workfare payments are not earned income for the EIC. How do i file an amendment to my tax return These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. How do i file an amendment to my tax return Qualifying child. How do i file an amendment to my tax return   Under Rule 8, your child is a qualifying child if your child meets four tests. How do i file an amendment to my tax return The four tests are: Relationship, Age, Residency, and Joint return. How do i file an amendment to my tax return   The four tests are illustrated in Figure 5-C. How do i file an amendment to my tax return See Publication 596 for more information about each test. How do i file an amendment to my tax return Figure 5-C. How do i file an amendment to my tax return Tests for Qualifying Child A qualifying child for the EIC is a child who is your. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return Son, daughter, stepchild, foster child,  or a descendant of any of them (for example, your grandchild) OR Brother, sister, half brother, half sister, stepbrother,  stepsister, or a descendant of any of them (for example, your  niece or nephew) was . How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return Under age 19 at the end of 2013 and younger than you (or your spouse if filing jointly) OR Under age 24 at the end of 2013, a student, and younger than you (or your spouse if filing jointly) OR Permanently and totally disabled at any time during the year, regardless of age who. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return Is not filing a joint return for 2013  (or is filing a joint return for 2013 only as a claim for refund of income tax withheld or estimated tax paid) who. How do i file an amendment to my tax return . How do i file an amendment to my tax return . How do i file an amendment to my tax return Lived with you in the United States for more than half of 2013. How do i file an amendment to my tax return  If the child did not live with you for the required time, see Publication 596 for more information. How do i file an amendment to my tax return Figuring the EIC To figure the amount of your credit, you have two choices. How do i file an amendment to my tax return Have the IRS figure the EIC for you. How do i file an amendment to my tax return If you want to do this, see IRS Will Figure the EIC for You in Publication 596. How do i file an amendment to my tax return Figure the EIC yourself. How do i file an amendment to my tax return If you want to do this, see How To Figure the EIC Yourself in Publication 596. How do i file an amendment to my tax return Prev  Up  Next   Home   More Online Publications