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How To Make A Tax Amendment

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How To Make A Tax Amendment

How to make a tax amendment Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. How to make a tax amendment Publication 946, How To Depreciate Property, contains information on depreciation. How to make a tax amendment However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. How to make a tax amendment The new provisions are in the Supplement to Publication 946, which is reprinted below. How to make a tax amendment Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. How to make a tax amendment The new law made several changes in the tax rules explained in the publication. How to make a tax amendment Some of the changes apply to property placed in service during 2001. How to make a tax amendment This supplemental publication describes those changes and explains what you should do if you are affected by them. How to make a tax amendment The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. How to make a tax amendment The new law contains the following provisions. How to make a tax amendment 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. How to make a tax amendment An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. How to make a tax amendment A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. How to make a tax amendment An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. How to make a tax amendment If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. How to make a tax amendment If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. How to make a tax amendment See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. How to make a tax amendment Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. How to make a tax amendment The allowance is an additional deduction of 30% of the property's depreciable basis. How to make a tax amendment To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to make a tax amendment See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to make a tax amendment The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to make a tax amendment There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to make a tax amendment In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to make a tax amendment Example 1. How to make a tax amendment On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. How to make a tax amendment You did not elect to claim a section 179 deduction. How to make a tax amendment You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. How to make a tax amendment You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to make a tax amendment Example 2. How to make a tax amendment The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. How to make a tax amendment You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). How to make a tax amendment You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. How to make a tax amendment Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. How to make a tax amendment It is new property of one of the following types. How to make a tax amendment Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. How to make a tax amendment See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to make a tax amendment Water utility property. How to make a tax amendment See 25-year property on page 22 in Publication 946. How to make a tax amendment Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to make a tax amendment (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to make a tax amendment ) Qualified leasehold improvement property (defined later). How to make a tax amendment It meets the following tests (explained later under Tests To Be Met). How to make a tax amendment Acquisition date test. How to make a tax amendment Placed in service date test. How to make a tax amendment Original use test. How to make a tax amendment It is not excepted property (explained later under Excepted Property). How to make a tax amendment Qualified leasehold improvement property. How to make a tax amendment    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. How to make a tax amendment The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. How to make a tax amendment That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. How to make a tax amendment The improvement is placed in service more than 3 years after the date the building was first placed in service. How to make a tax amendment   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. How to make a tax amendment The enlargement of the building. How to make a tax amendment Any elevator or escalator. How to make a tax amendment Any structural component benefiting a common area. How to make a tax amendment The internal structural framework of the building. How to make a tax amendment   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. How to make a tax amendment However, a binding commitment between related persons is not treated as a lease. How to make a tax amendment Related persons. How to make a tax amendment   For this purpose, the following are related persons. How to make a tax amendment Members of an affiliated group. How to make a tax amendment The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). How to make a tax amendment An executor and a beneficiary of the same estate. How to make a tax amendment Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. How to make a tax amendment Acquisition date test. How to make a tax amendment    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. How to make a tax amendment   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. How to make a tax amendment Placed in service date test. How to make a tax amendment   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. How to make a tax amendment   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to make a tax amendment Original use test. How to make a tax amendment   The original use of the property must have begun with you after September 10, 2001. How to make a tax amendment “Original use” means the first use to which the property is put, whether or not by you. How to make a tax amendment Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. How to make a tax amendment Excepted Property The following property does not qualify for the special depreciation allowance. How to make a tax amendment Property used by any person before September 11, 2001. How to make a tax amendment Property required to be depreciated using ADS. How to make a tax amendment This includes listed property used 50% or less in a qualified business use. How to make a tax amendment Qualified New York Liberty Zone leasehold improvement property (defined next). How to make a tax amendment Qualified New York Liberty Zone leasehold improvement property. How to make a tax amendment   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. How to make a tax amendment The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). How to make a tax amendment The improvement is placed in service after September 10, 2001, and before January 1, 2007. How to make a tax amendment No written binding contract for the improvement was in effect before September 11, 2001. How to make a tax amendment Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. How to make a tax amendment If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to make a tax amendment To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to make a tax amendment When to make election. How to make a tax amendment   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 to make a tax amendment   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to make a tax amendment Attach the election statement to the amended return. How to make a tax amendment At the top of the election statement, write “Filed pursuant to section 301. How to make a tax amendment 9100–2. How to make a tax amendment ” Revoking an election. How to make a tax amendment   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to make a tax amendment A request to revoke the election is subject to a user fee. How to make a tax amendment Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. How to make a tax amendment The rules apply to returns for the following years. How to make a tax amendment 2000 fiscal years that end after September 10, 2001. How to make a tax amendment 2001 calendar and fiscal years. How to make a tax amendment Claiming the allowance. How to make a tax amendment   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. How to make a tax amendment File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. How to make a tax amendment Write “Filed Pursuant to Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33” at the top of the amended return. How to make a tax amendment File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. How to make a tax amendment Your return must be filed by the due date (including extensions). How to make a tax amendment Write “Automatic Change Filed Under Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33” on the appropriate line of Form 3115. How to make a tax amendment You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. How to make a tax amendment For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. How to make a tax amendment Example 1. How to make a tax amendment You are an individual and you use the calendar year. How to make a tax amendment You placed qualified property in service for your business in December 2001. How to make a tax amendment You filed your 2001 income tax return before April 15, 2002. How to make a tax amendment You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. How to make a tax amendment You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33” at the top of the amended return. How to make a tax amendment You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. How to make a tax amendment Example 2. How to make a tax amendment The facts concerning your 2001 return are the same as in Example 1. How to make a tax amendment In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. How to make a tax amendment You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. How to make a tax amendment You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. How to make a tax amendment Electing not to claim the allowance. How to make a tax amendment   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. How to make a tax amendment The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. How to make a tax amendment The statement can be either attached to or written on the return. How to make a tax amendment You can, for example, write “not deducting 30%” on Form 4562. How to make a tax amendment Deemed election. How to make a tax amendment   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. How to make a tax amendment You will be treated as making the election if you meet both of the following conditions. How to make a tax amendment You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. How to make a tax amendment You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. How to make a tax amendment See Claiming the allowance, earlier. How to make a tax amendment Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. How to make a tax amendment Generally, the limit is increased from $3,060 to $7,660. How to make a tax amendment However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). How to make a tax amendment Table 1 shows the maximum deduction amounts for 2001. How to make a tax amendment Table 1. How to make a tax amendment Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. How to make a tax amendment 11 Placed in Service After Sept. How to make a tax amendment 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. How to make a tax amendment Election not to claim the allowance. How to make a tax amendment   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. How to make a tax amendment New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). How to make a tax amendment They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. How to make a tax amendment Area defined. How to make a tax amendment   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. How to make a tax amendment Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. How to make a tax amendment The allowance is an additional deduction of 30% of the property's depreciable basis. How to make a tax amendment To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. How to make a tax amendment See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. How to make a tax amendment The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. How to make a tax amendment There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. How to make a tax amendment In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. How to make a tax amendment You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to make a tax amendment Qualified property is eligible for only one special depreciation allowance. How to make a tax amendment Example 1. How to make a tax amendment On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. How to make a tax amendment You did not elect to claim a section 179 deduction. How to make a tax amendment You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. How to make a tax amendment You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. How to make a tax amendment Example 2. How to make a tax amendment The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. How to make a tax amendment (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). How to make a tax amendment You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). How to make a tax amendment You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. How to make a tax amendment Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. How to make a tax amendment It is one of the following types of property. How to make a tax amendment Used property depreciated under MACRS with a recovery period of 20 years or less. How to make a tax amendment See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. How to make a tax amendment Used water utility property. How to make a tax amendment See 25-year property on page 22 in Publication 946. How to make a tax amendment Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. How to make a tax amendment (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. How to make a tax amendment ) Certain nonresidential real property and residential rental property (defined later). How to make a tax amendment It meets the following tests (explained later under Tests to be met). How to make a tax amendment Acquisition date test. How to make a tax amendment Placed in service date test. How to make a tax amendment Substantial use test. How to make a tax amendment Original use test. How to make a tax amendment It is not excepted property (explained later under Excepted property). How to make a tax amendment Nonresidential real property and residential rental property. How to make a tax amendment   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. How to make a tax amendment Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. How to make a tax amendment   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. How to make a tax amendment Otherwise, the property is considered damaged real property. How to make a tax amendment For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. How to make a tax amendment Tests to be met. How to make a tax amendment   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. How to make a tax amendment Acquisition date test. How to make a tax amendment   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. How to make a tax amendment   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. How to make a tax amendment   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. How to make a tax amendment Placed in service date test. How to make a tax amendment   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). How to make a tax amendment   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. How to make a tax amendment Substantial use test. How to make a tax amendment   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. How to make a tax amendment Original use test. How to make a tax amendment   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. How to make a tax amendment   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. How to make a tax amendment Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. How to make a tax amendment Excepted property. How to make a tax amendment   The following property does not qualify for the special Liberty Zone depreciation allowance. How to make a tax amendment Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. How to make a tax amendment Property required to be depreciated using ADS. How to make a tax amendment This includes listed property used 50% or less in a qualified business use. How to make a tax amendment Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). How to make a tax amendment Example. How to make a tax amendment In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. How to make a tax amendment New office furniture with a MACRS recovery period of 7 years. How to make a tax amendment A used computer with a MACRS recovery period of 5 years. How to make a tax amendment The computer had not previously been used within the Liberty Zone. How to make a tax amendment Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. How to make a tax amendment Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. How to make a tax amendment Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. How to make a tax amendment If you make this election for any property, it applies to all property in the same property class placed in service during the year. How to make a tax amendment To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. How to make a tax amendment When to make the election. How to make a tax amendment   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 to make a tax amendment   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). How to make a tax amendment Attach the election statement to the amended return. How to make a tax amendment At the top of the election statement, write “Filed pursuant to section 301. How to make a tax amendment 9100–2. How to make a tax amendment ” Revoking an election. How to make a tax amendment   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. How to make a tax amendment A request to revoke the election is subject to a user fee. How to make a tax amendment Returns filed before June 1, 2002. How to make a tax amendment   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. How to make a tax amendment Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose 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 to make a tax amendment For tax years beginning in 2000, that limit was $20,000. How to make a tax amendment For tax years beginning in 2001 and 2002, that limit is generally $24,000. How to make a tax amendment If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. How to make a tax amendment Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. How to make a tax amendment The increase is the smaller of the following amounts. How to make a tax amendment $35,000. How to make a tax amendment The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. How to make a tax amendment If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. How to make a tax amendment Qualified property. How to make a tax amendment   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. How to make a tax amendment Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. How to make a tax amendment Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. How to make a tax amendment For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. How to make a tax amendment Example 1. How to make a tax amendment In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. How to make a tax amendment Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). How to make a tax amendment Example 2. How to make a tax amendment In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. How to make a tax amendment Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). How to make a tax amendment Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. How to make a tax amendment However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. How to make a tax amendment Example. How to make a tax amendment In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. How to make a tax amendment Your increased dollar limit is $59,000 ($35,000 + $24,000). How to make a tax amendment Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). How to make a tax amendment Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. How to make a tax amendment Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. How to make a tax amendment This rule applies to returns for the following years. How to make a tax amendment 2000 fiscal years that end after September 10, 2001. How to make a tax amendment 2001 calendar and fiscal years. How to make a tax amendment On the amended return, write “Filed Pursuant to Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33. How to make a tax amendment ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. How to make a tax amendment This means that it is depreciated over a recovery period of 5 years. How to make a tax amendment For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. How to make a tax amendment The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. How to make a tax amendment Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. How to make a tax amendment Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. How to make a tax amendment Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). How to make a tax amendment Your 2001 calendar or fiscal year return. How to make a tax amendment On the amended return, write “Filed Pursuant to Rev. How to make a tax amendment Proc. How to make a tax amendment 2002–33. How to make a tax amendment ” Table 2. How to make a tax amendment Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. How to make a tax amendment See the text for definitions and examples. How to make a tax amendment Do not rely on this chart alone. How to make a tax amendment IF you want to. How to make a tax amendment . How to make a tax amendment . How to make a tax amendment THEN you. How to make a tax amendment . How to make a tax amendment . How to make a tax amendment BY. How to make a tax amendment . How to make a tax amendment . How to make a tax amendment claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. How to make a tax amendment elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). How to make a tax amendment deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. How to make a tax amendment use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. How to make a tax amendment 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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The How To Make A Tax Amendment

How to make a tax amendment Index A Adjusted basis defined, Adjusted basis defined. How to make a tax amendment Administrative or management activities, Administrative or management activities. How to make a tax amendment Assistance (see Tax help) Attorneys, Place To Meet Patients, Clients, or Customers B Business expenses not for use of home, Business expenses not for use of your home. How to make a tax amendment Business furniture and equipment, Business Furniture and Equipment Business percentage, Business Percentage Business use of the home requirements (see Qualifying for a deduction) C Carryover of expenses, Carryover of unallowed expenses. How to make a tax amendment Casualty losses, Casualty losses. How to make a tax amendment Child and Adult Care Food Program reimbursements, Meals. How to make a tax amendment Computer Listed property, Listed Property D Daycare facilities, Daycare Facility, Standard meal and snack rates. How to make a tax amendment (see also Family daycare providers) Eligible children for standard meal and snack rates, Standard meal and snack rates. How to make a tax amendment Exceptions for regular use requirement, Daycare Facility Family daycare, Standard meal and snack rates. How to make a tax amendment Family daycare provider, Standard meal and snack rates. How to make a tax amendment Meals, Meals. How to make a tax amendment , Standard meal and snack rates. How to make a tax amendment Regular use, Daycare Facility Standard meal and snack rates, Meals. How to make a tax amendment , Standard meal and snack rates. How to make a tax amendment Deduction limit, Deduction Limit Deduction requirements Employee use, Additional tests for employee use. How to make a tax amendment Exceptions to exclusive use, Exceptions to Exclusive Use Exclusive use, Exclusive Use More than one trade or business, More Than One Trade or Business Place to meet clients, Place To Meet Patients, Clients, or Customers Principal place of business, Principal Place of Business Regular use, Regular Use Separate structure, Separate Structure Storage of inventory or product samples, Storage of inventory or product samples. How to make a tax amendment Trade or business use, Trade or Business Use Deductions Figuring, Figuring the Deduction, Part 2—Figure Your Allowable Deduction Limit, Deduction Limit Part-year use, Part-year use. How to make a tax amendment Qualifying for, Qualifying for a Deduction, Separate Structure Rental to employer, Rental to employer. How to make a tax amendment Unreimbursed partnership expenses, Deducting unreimbursed partnership expenses. How to make a tax amendment Using Actual Expenses, Using Actual Expenses Dentists, Place To Meet Patients, Clients, or Customers Depreciation, Property Bought for Business Use 5-year property, Depreciation 7-year property, Depreciation Adjusted basis, Adjusted basis defined. How to make a tax amendment Fair market value, Fair market value defined. How to make a tax amendment Figuring depreciation for the current year, Figuring the depreciation deduction for the current year. How to make a tax amendment Furniture and equipment, Business Furniture and Equipment, Depreciation Home, Depreciating Your Home Nonresidential real property, Figuring the depreciation deduction for the current year. How to make a tax amendment Percentage table for 39-year nonresidential real property, Depreciation table. How to make a tax amendment Permanent improvements, Permanent improvements. How to make a tax amendment , Depreciating permanent improvements. How to make a tax amendment Depreciation of home, Depreciating Your Home Basis adjustment, Basis Adjustment MACRS (Table 2), Depreciation table. How to make a tax amendment Property bought for business use, Depreciation Sale or exchange of home, Depreciation Doctors, Place To Meet Patients, Clients, or Customers E Employee use of home, Additional tests for employee use. How to make a tax amendment Employees Adequately accounting to employer, Adequately accounting to employer. How to make a tax amendment Casualty losses, Casualty losses. How to make a tax amendment Mortgage interest, Deductible mortgage interest. How to make a tax amendment Other expenses, Other expenses. How to make a tax amendment Real estate taxes, Real estate taxes. How to make a tax amendment Exclusive use, Exclusive Use Expenses Casualty losses, Casualty losses. How to make a tax amendment Direct, Actual Expenses Indirect, Actual Expenses Insurance, Insurance. How to make a tax amendment Mortgage interest, Deductible mortgage interest. How to make a tax amendment , Qualified mortgage insurance premiums. How to make a tax amendment Real estate taxes, Real estate taxes. How to make a tax amendment Related to tax-exempt income, Expenses related to tax-exempt income. How to make a tax amendment Rent, Rent. How to make a tax amendment Repairs, Repairs. How to make a tax amendment Security system, Security system. How to make a tax amendment Telephone, Telephone. How to make a tax amendment Types of, Actual Expenses Unrelated, Actual Expenses Utilities and services, Utilities and services. How to make a tax amendment Where to deduct, Where To Deduct F Fair market value, Fair market value defined. How to make a tax amendment Family daycare providers Meal and snack log (Exhibit A), Standard meal and snack rates. How to make a tax amendment Standard meal and snack rates, Standard meal and snack rates. How to make a tax amendment Standard meal and snack rates (Table 3), Standard meal and snack rates. How to make a tax amendment Figuring the deduction Business percentage, Business Percentage Deduction limit, Deduction Limit Form, Useful Items - You may want to see:, Self-Employed Persons, Real estate taxes. How to make a tax amendment 1040, Schedule F, Casualty losses. How to make a tax amendment 2106, Employees 4562, Reporting and recordkeeping requirements. How to make a tax amendment 4684, Casualty losses. How to make a tax amendment 8829, Actual Expenses, Casualty losses. How to make a tax amendment , Business Percentage, Daycare Facility W-2 Reimbursed expenses, Employees Free tax services, Free help with your tax return. How to make a tax amendment Furniture and equipment, Business Furniture and Equipment H Help (see Tax help) Home Business percentage, Business Percentage Depreciation, Depreciating Your Home Sale of, Sale or Exchange of Your Home Home expenses, Can you deduct business use of, Figure A, , Principal Place of Business I Improvements (see Permanent improvements) Insurance, Insurance. How to make a tax amendment Inventory, storage of, Storage of inventory or product samples. How to make a tax amendment L Listed property Computers, Listed Property Defined, Listed Property Employee requirements, Employee. How to make a tax amendment Reporting and recordkeeping requirements, Reporting and recordkeeping requirements. How to make a tax amendment Years following the year placed in service, Years following the year placed in service. How to make a tax amendment M MACRS percentage table 39-year nonresidential real property, Depreciation table. How to make a tax amendment Meals, Meals. How to make a tax amendment Meeting with patients, clients, or customers on premises, Place To Meet Patients, Clients, or Customers More than one place of business, More than one place of business. How to make a tax amendment More than one trade or business, More Than One Trade or Business More-than-50%-use test, More-than-50%-use test. How to make a tax amendment Mortgage interest, Deductible mortgage interest. How to make a tax amendment , Qualified mortgage insurance premiums. How to make a tax amendment P Partners, Partners Partnership expenses, unreimbursed, Deducting unreimbursed partnership expenses. How to make a tax amendment Permanent improvements, Permanent improvements. How to make a tax amendment , Depreciating permanent improvements. How to make a tax amendment Personal property converted to business use, Personal Property Converted to Business Use Place of business, more than one, More than one place of business. How to make a tax amendment Principal place of business, Principal Place of Business Product samples, Storage of inventory or product samples. How to make a tax amendment Property bought for business use Depreciation, Depreciation Section 179 deduction, Property Bought for Business Use, Section 179 Deduction Property converted to business use, Personal, Personal Property Converted to Business Use Publications, Useful Items - You may want to see: (see Tax help) Q Qualifying for a deduction, Qualifying for a Deduction R Real estate taxes, Real estate taxes. How to make a tax amendment Recordkeeping, Recordkeeping Recordkeeping requirements Business furniture and equipment, Reporting and recordkeeping requirements. How to make a tax amendment Family daycare provider meal and snack log (Exhibit A), Standard meal and snack rates. How to make a tax amendment Regular use, Regular Use Reminders, Reminders Rent, Rent. How to make a tax amendment Repairs, Repairs. How to make a tax amendment Reporting requirements Business furniture and equipment, Reporting and recordkeeping requirements. How to make a tax amendment S Sale or exchange of your home, Sale or Exchange of Your Home Basis adjustment, Basis Adjustment Depreciation taken, Depreciation Ownership and use tests, Ownership and use tests. How to make a tax amendment Section 179, Section 179 Deduction Furniture and equipment, Business Furniture and Equipment, Listed Property Listed property, Business Furniture and Equipment, Listed Property Personal property converted to business use, Personal Property Converted to Business Use Property bought for business use, Property Bought for Business Use Security system, Security system. How to make a tax amendment Self-employed persons Deduction of expenses, Self-Employed Persons Separate structure, Separate Structure Simplified Method Actual expenses and depreciation of your home, Actual expenses and depreciation of your home. How to make a tax amendment Allowable area, Allowable area. How to make a tax amendment Business expenses not related to use of the home, Business expenses not related to use of the home. How to make a tax amendment Electing the simplified method, Electing the Simplified Method More than one home, More than one home. How to make a tax amendment More than one qualified business use, More than one qualified business use. How to make a tax amendment Shared use, Shared use. How to make a tax amendment Expenses deductible without regard to business use, Expenses deductible without regard to business use. How to make a tax amendment No carryover of unallowed expenses, No deduction of carryover of actual expenses. How to make a tax amendment Simplified amount, Simplified Amount Space used regularly for daycare, Space used regularly for daycare. How to make a tax amendment Using the simplified method, Using the Simplified Method Standard meal and snack rates, Standard meal and snack rates. How to make a tax amendment Storage of inventory, Storage of inventory or product samples. How to make a tax amendment T Tables and figures MACRS Depreciation of home (Table 2), Depreciation table. How to make a tax amendment Qualifying for deduction (Figure A), Standard meal and snack rates (Table 3), Table 3. How to make a tax amendment Standard Meal and Snack Rates1 Types of expenses (Table 1), Actual Expenses Tax help, How To Get Tax Help Telephone, Telephone. How to make a tax amendment Trade or business use, Trade or Business Use TTY/TDD information, How To Get Tax Help Types of expenses, Actual Expenses U Utilities, Utilities and services. How to make a tax amendment W Where to deduct expenses, Where To Deduct Employees, Employees Self-employed, Self-Employed Persons Worksheets Area Adjustment Worksheet (for simplified method), Area Adjustment Worksheet (for simplified method) Worksheets to figure the deduction for business use of your home (simplified method), Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Daycare facility worksheet (for simplified method), Daycare Facility Worksheet (for simplified method) Simplified method worksheet, Simplified Method Worksheet Prev  Up     Home   More Online Publications