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Taxact 2010 Return

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Taxact 2010 Return

Taxact 2010 return Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. Taxact 2010 return Tax questions. Taxact 2010 return Useful Items - You may want to see: Note. Taxact 2010 return After 2013, Publication 590 will be split into two separate publications as follows. Taxact 2010 return Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. Taxact 2010 return This publication will include the rules for rollover and conversion contributions. Taxact 2010 return Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. Taxact 2010 return This publication will include the rules for required minimum distributions and IRA beneficiaries. Taxact 2010 return What's New for 2013 Traditional IRA contribution and deduction limit. Taxact 2010 return  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Taxact 2010 return If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Taxact 2010 return For more information, see How Much Can Be Contributed? in chapter 1. Taxact 2010 return Roth IRA contribution limit. Taxact 2010 return  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Taxact 2010 return If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Taxact 2010 return However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Taxact 2010 return For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. Taxact 2010 return Modified AGI limit for traditional IRA contributions increased. Taxact 2010 return  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact 2010 return If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Taxact 2010 return If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact 2010 return See How Much Can You Deduct? in chapter 1. Taxact 2010 return Modified AGI limit for Roth IRA contributions increased. Taxact 2010 return  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Taxact 2010 return Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Taxact 2010 return Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Taxact 2010 return Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Taxact 2010 return See Can You Contribute to a Roth IRA? in chapter 2. Taxact 2010 return Net Investment Income Tax. Taxact 2010 return  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Taxact 2010 return However, these distributions are taken into account when determining the modified adjusted gross income threshold. Taxact 2010 return Distributions from a nonqualified retirement plan are included in net investment income. Taxact 2010 return See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Taxact 2010 return Kay Bailey Hutchison Spousal IRA. Taxact 2010 return . Taxact 2010 return  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. Taxact 2010 return There are no changes to the rules regarding these IRAs. Taxact 2010 return See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. Taxact 2010 return What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Taxact 2010 return  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact 2010 return If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Taxact 2010 return If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact 2010 return Modified AGI limit for Roth IRA contributions increased. Taxact 2010 return  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Taxact 2010 return Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Taxact 2010 return Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Taxact 2010 return Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Taxact 2010 return You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Taxact 2010 return Reminders Future developments. Taxact 2010 return  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. Taxact 2010 return irs. Taxact 2010 return gov/pub590. Taxact 2010 return Simplified employee pension (SEP). Taxact 2010 return  SEP IRAs are not covered in this publication. Taxact 2010 return They are covered in Publication 560, Retirement Plans for Small Business. Taxact 2010 return Deemed IRAs. Taxact 2010 return  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Taxact 2010 return If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Taxact 2010 return An employee's account can be treated as a traditional IRA or a Roth IRA. Taxact 2010 return For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Taxact 2010 return Contributions to both traditional and Roth IRAs. Taxact 2010 return  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. Taxact 2010 return Statement of required minimum distribution (RMD). Taxact 2010 return  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. Taxact 2010 return The report or offer must include the date by which the amount must be distributed. Taxact 2010 return The report is due January 31 of the year in which the minimum distribution is required. Taxact 2010 return It can be provided with the year-end fair market value statement that you normally get each year. Taxact 2010 return No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. Taxact 2010 return IRA interest. Taxact 2010 return  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Taxact 2010 return Tax on your traditional IRA is generally deferred until you take a distribution. Taxact 2010 return Do not report this interest on your return as tax-exempt interest. Taxact 2010 return For more information on tax-exempt interest, see the instructions for your tax return. Taxact 2010 return Photographs of missing children. Taxact 2010 return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Taxact 2010 return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxact 2010 return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Taxact 2010 return Introduction This publication discusses individual retirement arrangements (IRAs). Taxact 2010 return An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Taxact 2010 return What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. Taxact 2010 return In some cases, amounts are not taxed at all if distributed according to the rules. Taxact 2010 return What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. Taxact 2010 return It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. Taxact 2010 return   It also explains the penalties and additional taxes that apply when the rules are not followed. Taxact 2010 return To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. Taxact 2010 return How to use this publication. Taxact 2010 return   The rules that you must follow depend on which type of IRA you have. Taxact 2010 return Use Table I-1 to help you determine which parts of this publication to read. Taxact 2010 return Also use Table I-1 if you were referred to this publication from instructions to a form. Taxact 2010 return Comments and suggestions. Taxact 2010 return   We welcome your comments about this publication and your suggestions for future editions. Taxact 2010 return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Taxact 2010 return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Taxact 2010 return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxact 2010 return   You can send your comments from www. Taxact 2010 return irs. Taxact 2010 return gov/formspubs/. Taxact 2010 return Click on “More Information” and then on “Comment on Tax Forms and Publications”. Taxact 2010 return   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Taxact 2010 return Ordering forms and publications. Taxact 2010 return   Visit www. Taxact 2010 return irs. Taxact 2010 return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Taxact 2010 return Internal Revenue Service 1201 N. Taxact 2010 return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Taxact 2010 return   If you have a tax question, check the information available on IRS. Taxact 2010 return gov or call 1-800-829-1040. Taxact 2010 return We cannot answer tax questions sent to either of the above addresses. Taxact 2010 return Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Taxact 2010 return 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. Taxact 2010 return S. Taxact 2010 return Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. Taxact 2010 return Table I-1. Taxact 2010 return Using This Publication IF you need information on . Taxact 2010 return . Taxact 2010 return . Taxact 2010 return THEN see . Taxact 2010 return . Taxact 2010 return . Taxact 2010 return traditional IRAs chapter 1. Taxact 2010 return Roth IRAs chapter 2, and parts of  chapter 1. Taxact 2010 return SIMPLE IRAs chapter 3. Taxact 2010 return the credit for qualified retirement savings contributions (the saver's credit) chapter 4. Taxact 2010 return how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. Taxact 2010 return SEP IRAs and 401(k) plans Publication 560. Taxact 2010 return Coverdell education savings accounts (formerly called education IRAs) Publication 970. Taxact 2010 return IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. Taxact 2010 return . Taxact 2010 return . Taxact 2010 return THEN see . Taxact 2010 return . Taxact 2010 return . Taxact 2010 return first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. Taxact 2010 return then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. Taxact 2010 return and finally figure how much of your social security is taxable appendix B, worksheet 3. Taxact 2010 return Table I-2. Taxact 2010 return How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. Taxact 2010 return Answers in the middle column apply to traditional IRAs. Taxact 2010 return Answers in the right column apply to Roth IRAs. Taxact 2010 return Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. Taxact 2010 return You must not have reached age  70½ by the end of the year. Taxact 2010 return See Who Can Open a Traditional IRA? in chapter 1. Taxact 2010 return No. Taxact 2010 return You can be any age. Taxact 2010 return See Can You Contribute to a Roth IRA? in chapter 2. Taxact 2010 return If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. Taxact 2010 return For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. Taxact 2010 return  There is no upper limit on how much you can earn and still contribute. Taxact 2010 return See How Much Can Be Contributed? in chapter 1. Taxact 2010 return Yes. Taxact 2010 return For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. Taxact 2010 return See How Much Can Be Contributed? and Table 2-1 in chapter 2. Taxact 2010 return Can I deduct contributions to a Yes. Taxact 2010 return You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. Taxact 2010 return See How Much Can You Deduct? in chapter 1. Taxact 2010 return No. Taxact 2010 return You can never deduct contributions to a Roth IRA. Taxact 2010 return See What Is a Roth IRA? in chapter 2. Taxact 2010 return Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. Taxact 2010 return In that case, you must file Form 8606. Taxact 2010 return See Nondeductible Contributions in chapter 1. Taxact 2010 return No. Taxact 2010 return You do not have to file a form if you contribute to a Roth IRA. Taxact 2010 return See Contributions not reported in chapter 2. Taxact 2010 return Do I have to start taking distributions when I reach a certain age from a Yes. Taxact 2010 return You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. Taxact 2010 return See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Taxact 2010 return No. Taxact 2010 return If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. Taxact 2010 return See Are Distributions Taxable? in chapter 2. Taxact 2010 return However, if you are the beneficiary of a Roth IRA, you may have to take distributions. Taxact 2010 return See Distributions After Owner's Death in chapter 2. Taxact 2010 return How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. Taxact 2010 return See Are Distributions Taxable? in chapter 1. Taxact 2010 return Distributions from a Roth IRA are not taxed as long as you meet certain criteria. Taxact 2010 return See Are Distributions Taxable? in chapter 2. Taxact 2010 return Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. Taxact 2010 return If you have, file Form 8606. Taxact 2010 return See Nondeductible Contributions in chapter 1. Taxact 2010 return Yes. Taxact 2010 return File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). Taxact 2010 return Prev  Up  Next   Home   More Online Publications
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Forms & Publications

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Form 1040, U.S. Individual Income Tax Return (PDF)
Annual income tax return filed by citizens or residents of the United States
Related: Instructions for Form 1040 (PDF)  Tax Tables (PDF)

Additional forms and schedules for filing Form 1040  

Form 1040A, U.S. Individual Income Tax Return (PDF)
Shorter version of Form 1040 allows you to report limited types of income and to claim certain adjustments. You cannot itemize deductions if you file Form 1040-A
Related: Instructions for Form 1040A (PDF)

Form 1040-ES, Estimated Tax for Individuals (PDF)
Figure and pay your estimated tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.)
Related: Instructions for Form 1040-ES (PDF)

Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents (PDF)
Simplest individual income tax return form to fill out. If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).
Related: Instructions for 1040EZ (PDF)

Need help choosing the right 1040 for your situation? Use the Interactive Tax Assistant (ITA) or read Which Form - 1040, 1040-A, or 1040-EZ?

Form W-4, Employee's Withholding Allowance Certificate (PDF)
Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes.
Related: Withholding Calculator

Form W-9, Request for Taxpayer Identification Number (TIN) and Certification (PDF)
Provide your correct SSN or other TIN to the person who is required to file an information return with the IRS to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA.
Related: Instructions for the Requestor of Form W-9 (PDF)  

Publication 15 (Circular E), Employer's Tax Guide (PDF)
Explains your tax responsibilities as an employer. It also includes tax tables that you need to figure the taxes to withhold from each employee.
Related: Read Pub 15 Online

Publication 17, Your Federal Income Tax (PDF)
Explains the general rules for filing a federal income tax return. It supplements the information contained in your tax form instruction booklet. It explains the tax law to make sure you pay only the tax you owe and no more.
Related: Read Pub 17 Online

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Page Last Reviewed or Updated: 28-Jan-2014

The Taxact 2010 Return

Taxact 2010 return Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. Taxact 2010 return For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. Taxact 2010 return If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. Taxact 2010 return Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. Taxact 2010 return A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. Taxact 2010 return Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. Taxact 2010 return Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). Taxact 2010 return It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. Taxact 2010 return A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. Taxact 2010 return Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Taxact 2010 return It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. Taxact 2010 return Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. Taxact 2010 return Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. Taxact 2010 return Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Taxact 2010 return Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Taxact 2010 return Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. Taxact 2010 return Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. Taxact 2010 return Listed property placed in service before 1987. Taxact 2010 return   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. Taxact 2010 return Listed property placed in service after 1986. Taxact 2010 return   For information on listed property placed in service after 1986, see Publication 946. Taxact 2010 return Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. Taxact 2010 return You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. Taxact 2010 return The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. Taxact 2010 return However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. Taxact 2010 return Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. Taxact 2010 return Example. Taxact 2010 return Sarah Bradley uses a home computer 50% of the time to manage her investments. Taxact 2010 return She also uses the computer 40% of the time in her part-time consumer research business. Taxact 2010 return Sarah's home computer is listed property because it is not used at a regular business establishment. Taxact 2010 return Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. Taxact 2010 return Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. Taxact 2010 return Her combined rate of business/investment use for determining her depreciation deduction is 90%. Taxact 2010 return Qualified Business Use A qualified business use is any use in your trade or business. Taxact 2010 return However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. Taxact 2010 return See Employees, later. Taxact 2010 return 5% owner. Taxact 2010 return   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. Taxact 2010 return   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Taxact 2010 return Related person. Taxact 2010 return   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. Taxact 2010 return Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. Taxact 2010 return See Publication 463. Taxact 2010 return Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. Taxact 2010 return Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. Taxact 2010 return Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. Taxact 2010 return Any payment to you for the use of the automobile is treated as a rent payment for 3). Taxact 2010 return Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. Taxact 2010 return Use for the employer's convenience. Taxact 2010 return   Whether the use of listed property is for the employer's convenience must be determined from all the facts. Taxact 2010 return The use is for the employer's convenience if it is for a substantial business reason of the employer. Taxact 2010 return The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. Taxact 2010 return Use required as a condition of employment. Taxact 2010 return   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. Taxact 2010 return The use of property must be required for the employee to perform duties properly. Taxact 2010 return The employer need not explicitly require the employee to use the property. Taxact 2010 return A mere statement by the employer that the use of the property is a condition of employment is not sufficient. Taxact 2010 return Example 1. Taxact 2010 return Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. Taxact 2010 return She owns and uses a motorcycle to deliver packages to downtown offices. Taxact 2010 return We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. Taxact 2010 return The company reimburses delivery persons for their costs. Taxact 2010 return Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Taxact 2010 return Example 2. Taxact 2010 return Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Taxact 2010 return He must travel to these sites on a regular basis. Taxact 2010 return Uplift does not furnish an automobile or explicitly require him to use his own automobile. Taxact 2010 return However, it reimburses him for any costs he incurs in traveling to the various sites. Taxact 2010 return The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Taxact 2010 return Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Taxact 2010 return You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. Taxact 2010 return For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. Taxact 2010 return For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. Taxact 2010 return Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. Taxact 2010 return First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. Taxact 2010 return Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. Taxact 2010 return It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Taxact 2010 return Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. Taxact 2010 return Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. Taxact 2010 return See Recapture of excess depreciation, next. Taxact 2010 return Recapture of excess depreciation. Taxact 2010 return   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. Taxact 2010 return Any excess depreciation must also be added to the adjusted basis of your property. Taxact 2010 return Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. Taxact 2010 return This means you figure your depreciation using the percentages fromTable 16 or 17. Taxact 2010 return For information on investment credit recapture, see the instructions for Form 4255. Taxact 2010 return Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. Taxact 2010 return In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. Taxact 2010 return To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. Taxact 2010 return See Car Used 50% or Less for Business in Publication 917. Taxact 2010 return Leased Property The limitations on cost recovery deductions apply to the rental of listed property. Taxact 2010 return The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). Taxact 2010 return SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. Taxact 2010 return Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Taxact 2010 return A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. Taxact 2010 return This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. Taxact 2010 return Occasional or incidental leasing activity is insufficient. Taxact 2010 return For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. Taxact 2010 return An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Taxact 2010 return Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. Taxact 2010 return Inclusion amount for property leased before 1987. Taxact 2010 return   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. Taxact 2010 return You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. Taxact 2010 return   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. Taxact 2010 return For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. Taxact 2010 return You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. Taxact 2010 return Special rules. Taxact 2010 return   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. Taxact 2010 return The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. Taxact 2010 return   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. Taxact 2010 return Maximum inclusion amount. Taxact 2010 return   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. Taxact 2010 return What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. Taxact 2010 return How long to keep records. Taxact 2010 return   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). Taxact 2010 return Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Taxact 2010 return It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. Taxact 2010 return However, your records should back up your receipts in an orderly manner. Taxact 2010 return Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. Taxact 2010 return Written documents of your expenditure or use are generally better evidence than oral statements alone. Taxact 2010 return A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. Taxact 2010 return A daily log is not required. Taxact 2010 return However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. Taxact 2010 return Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. Taxact 2010 return An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. Taxact 2010 return For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. Taxact 2010 return Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. Taxact 2010 return However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. Taxact 2010 return A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Taxact 2010 return For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Taxact 2010 return Business Use Supported An adequate record contains enough information on each element of every business or investment use. Taxact 2010 return The amount of detail required to support the use depends on the facts and circumstances. Taxact 2010 return For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Taxact 2010 return Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. Taxact 2010 return Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. Taxact 2010 return However, repeated uses can be combined as a single item. Taxact 2010 return Each expenditure is recorded as a separate item and not combined with other expenditures. Taxact 2010 return If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. Taxact 2010 return If these expenses are combined, you do not need to support the business purpose of each expense. Taxact 2010 return Instead, you can divide the expenses based on the total business use of the listed property. Taxact 2010 return Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. Taxact 2010 return For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. Taxact 2010 return Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. Taxact 2010 return Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Taxact 2010 return Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. Taxact 2010 return It must be kept elsewhere and made available as support to the district director on request. Taxact 2010 return Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. Taxact 2010 return If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. Taxact 2010 return If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Taxact 2010 return If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Taxact 2010 return Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. Taxact 2010 return Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Taxact 2010 return Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. Taxact 2010 return If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. Taxact 2010 return Employees. Taxact 2010 return   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. Taxact 2010 return Employees claiming the standard mileage rate may be able to use Form 2106–EZ. Taxact 2010 return Employer who provides vehicles to employees. Taxact 2010 return   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. Taxact 2010 return   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. Taxact 2010 return Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. Taxact 2010 return   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. Taxact 2010 return See the instructions for Form 4562. Taxact 2010 return Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. Taxact 2010 return In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. Taxact 2010 return In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. Taxact 2010 return For more information about deductions after the recovery period for automobiles, see Publication 917. Taxact 2010 return Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. Taxact 2010 return Table 1. Taxact 2010 return 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. Taxact 2010 return Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications