Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040ez Forms And Instructions

Where Can I File My State Taxes For FreeH&r Block Advantage E FileI Need To Amend My 2009 Tax ReturnHow To Do An Amendment Tax ReturnFederal Tax Forms 2009Free Military TaxesFile 2010 Taxes With TurbotaxAmend Tax Return For FreeAmend My 2012 Tax ReturnFile Taxes Online For Free1040 Ez FormFree State And Federal Tax Filing2005 Tax Preparation1040ez 2010 Tax Form1040 Com1040ez Amended FormIrs Gov 1040x InstructionsState Taxes OnlyMyfreetaxes 2013Can You File State Taxes For FreeWww.myfreetaxes.comIrs Gov Form 1040Taxact Returning UserHow To Do A Tax AmendmentFree Tax Usa 20121040v1040ez Form 2010File 2012 Tax ReturnsWww Irs GovFree File Amended Tax ReturnEfile State TaxIrs Tax Form 1040ezHow To Amend Your Taxes OnlineIrs 2011 Tax Forms 1040ezTurbotax 2007Amend Taxes OnlineFile Taxes Online For Free1040xformTax Act Amended ReturnState Taxes Free Online

1040ez Forms And Instructions

1040ez forms and instructions 12. 1040ez forms and instructions   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. 1040ez forms and instructions Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. 1040ez forms and instructions  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. 1040ez forms and instructions 5 cents per mile. 1040ez forms and instructions For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. 1040ez forms and instructions Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. 1040ez forms and instructions To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. 1040ez forms and instructions What is the tax benefit of taking a business deduction for work-related education. 1040ez forms and instructions   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. 1040ez forms and instructions Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. 1040ez forms and instructions An itemized deduction reduces the amount of your income subject to tax. 1040ez forms and instructions   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. 1040ez forms and instructions This reduces the amount of your income subject to both income tax and self-employment tax. 1040ez forms and instructions   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. 1040ez forms and instructions You may qualify for these other benefits even if you do not meet the requirements listed above. 1040ez forms and instructions   Also, your work-related education expenses may qualify you to claim more than one tax benefit. 1040ez forms and instructions Generally, you may claim any number of benefits as long as you use different expenses to figure each one. 1040ez forms and instructions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. 1040ez forms and instructions This is education that meets at least one of the following two tests. 1040ez forms and instructions The education is required by your employer or the law to keep your present salary, status, or job. 1040ez forms and instructions The required education must serve a bona fide business purpose of your employer. 1040ez forms and instructions The education maintains or improves skills needed in your present work. 1040ez forms and instructions However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. 1040ez forms and instructions You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. 1040ez forms and instructions Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. 1040ez forms and instructions Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. 1040ez forms and instructions This additional education is qualifying work-related education if all three of the following requirements are met. 1040ez forms and instructions It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. 1040ez forms and instructions When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. 1040ez forms and instructions See Education To Maintain or Improve Skills , later. 1040ez forms and instructions Example. 1040ez forms and instructions You are a teacher who has satisfied the minimum requirements for teaching. 1040ez forms and instructions Your employer requires you to take an additional college course each year to keep your teaching job. 1040ez forms and instructions If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. 1040ez forms and instructions This image is too large to be displayed in the current screen. 1040ez forms and instructions Please click the link to view the image. 1040ez forms and instructions Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. 1040ez forms and instructions This could include refresher courses, courses on current developments, and academic or vocational courses. 1040ez forms and instructions Example. 1040ez forms and instructions You repair televisions, radios, and stereo systems for XYZ Store. 1040ez forms and instructions To keep up with the latest changes, you take special courses in radio and stereo service. 1040ez forms and instructions These courses maintain and improve skills required in your work. 1040ez forms and instructions Maintaining skills vs. 1040ez forms and instructions qualifying for new job. 1040ez forms and instructions   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. 1040ez forms and instructions Education during temporary absence. 1040ez forms and instructions   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. 1040ez forms and instructions Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. 1040ez forms and instructions Example. 1040ez forms and instructions You quit your biology research job to become a full-time biology graduate student for 1 year. 1040ez forms and instructions If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. 1040ez forms and instructions Education during indefinite absence. 1040ez forms and instructions   If you stop work for more than a year, your absence from your job is considered indefinite. 1040ez forms and instructions Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. 1040ez forms and instructions Therefore, it is not qualifying work-related education. 1040ez forms and instructions Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. 1040ez forms and instructions The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. 1040ez forms and instructions Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. 1040ez forms and instructions This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. 1040ez forms and instructions You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. 1040ez forms and instructions Example 1. 1040ez forms and instructions You are a full-time engineering student. 1040ez forms and instructions Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. 1040ez forms and instructions Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. 1040ez forms and instructions The education is not qualifying work-related education. 1040ez forms and instructions Example 2. 1040ez forms and instructions You are an accountant and you have met the minimum educational requirements of your employer. 1040ez forms and instructions Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. 1040ez forms and instructions These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. 1040ez forms and instructions Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. 1040ez forms and instructions The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. 1040ez forms and instructions If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. 1040ez forms and instructions The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. 1040ez forms and instructions You generally will be considered a faculty member when one or more of the following occurs. 1040ez forms and instructions You have tenure. 1040ez forms and instructions Your years of service count toward obtaining tenure. 1040ez forms and instructions You have a vote in faculty decisions. 1040ez forms and instructions Your school makes contributions for you to a retirement plan other than social security or a similar program. 1040ez forms and instructions Example 1. 1040ez forms and instructions The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. 1040ez forms and instructions In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. 1040ez forms and instructions If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. 1040ez forms and instructions However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. 1040ez forms and instructions Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. 1040ez forms and instructions If you have all the required education except the fifth year, you have met the minimum educational requirements. 1040ez forms and instructions The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. 1040ez forms and instructions Example 2. 1040ez forms and instructions Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. 1040ez forms and instructions The additional four education courses can be qualifying work-related education. 1040ez forms and instructions Although you do not have all the required courses, you have already met the minimum educational requirements. 1040ez forms and instructions Example 3. 1040ez forms and instructions Assume the same facts as in Example 1 except that you are hired with only 3 years of college. 1040ez forms and instructions The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. 1040ez forms and instructions They are needed to meet the minimum educational requirements for employment as a teacher. 1040ez forms and instructions Example 4. 1040ez forms and instructions You have a bachelor's degree and you work as a temporary instructor at a university. 1040ez forms and instructions At the same time, you take graduate courses toward an advanced degree. 1040ez forms and instructions The rules of the university state that you can become a faculty member only if you get a graduate degree. 1040ez forms and instructions Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. 1040ez forms and instructions You have not met the minimum educational requirements to qualify you as a faculty member. 1040ez forms and instructions The graduate courses are not qualifying work-related education. 1040ez forms and instructions Certification in a new state. 1040ez forms and instructions   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. 1040ez forms and instructions This is true even if you must get additional education to be certified in another state. 1040ez forms and instructions Any additional education you need is qualifying work-related education. 1040ez forms and instructions You have already met the minimum requirements for teaching. 1040ez forms and instructions Teaching in another state is not a new trade or business. 1040ez forms and instructions Example. 1040ez forms and instructions You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. 1040ez forms and instructions You move to State B and are promptly hired as a teacher. 1040ez forms and instructions You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. 1040ez forms and instructions These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. 1040ez forms and instructions Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. 1040ez forms and instructions This is true even if you do not plan to enter that trade or business. 1040ez forms and instructions If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. 1040ez forms and instructions Example 1. 1040ez forms and instructions You are an accountant. 1040ez forms and instructions Your employer requires you to get a law degree at your own expense. 1040ez forms and instructions You register at a law school for the regular curriculum that leads to a law degree. 1040ez forms and instructions Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. 1040ez forms and instructions Example 2. 1040ez forms and instructions You are a general practitioner of medicine. 1040ez forms and instructions You take a 2-week course to review developments in several specialized fields of medicine. 1040ez forms and instructions The course does not qualify you for a new profession. 1040ez forms and instructions It is qualifying work- related education because it maintains or improves skills required in your present profession. 1040ez forms and instructions Example 3. 1040ez forms and instructions While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. 1040ez forms and instructions The program will lead to qualifying you to practice psychoanalysis. 1040ez forms and instructions The psychoanalytic training does not qualify you for a new profession. 1040ez forms and instructions It is qualifying work-related education because it maintains or improves skills required in your present profession. 1040ez forms and instructions Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. 1040ez forms and instructions They are part of a program of study that can qualify you for a new profession. 1040ez forms and instructions Teaching and Related Duties All teaching and related duties are considered the same general kind of work. 1040ez forms and instructions A change in duties in any of the following ways is not considered a change to a new business. 1040ez forms and instructions Elementary school teacher to secondary school teacher. 1040ez forms and instructions Teacher of one subject, such as biology, to teacher of another subject, such as art. 1040ez forms and instructions Classroom teacher to guidance counselor. 1040ez forms and instructions Classroom teacher to school administrator. 1040ez forms and instructions What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. 1040ez forms and instructions If you are not self-employed, you can deduct business expenses only if you itemize your deductions. 1040ez forms and instructions You cannot deduct expenses related to tax-exempt and excluded income. 1040ez forms and instructions Deductible expenses. 1040ez forms and instructions   The following education expenses can be deducted. 1040ez forms and instructions Tuition, books, supplies, lab fees, and similar items. 1040ez forms and instructions Certain transportation and travel costs. 1040ez forms and instructions Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. 1040ez forms and instructions Nondeductible expenses. 1040ez forms and instructions   You cannot deduct personal or capital expenses. 1040ez forms and instructions For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. 1040ez forms and instructions This amount is a personal expense. 1040ez forms and instructions Unclaimed reimbursement. 1040ez forms and instructions   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. 1040ez forms and instructions Example. 1040ez forms and instructions Your employer agrees to pay your education expenses if you file a voucher showing your expenses. 1040ez forms and instructions You do not file a voucher and you do not get reimbursed. 1040ez forms and instructions Because you did not file a voucher, you cannot deduct the expenses on your tax return. 1040ez forms and instructions Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. 1040ez forms and instructions If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. 1040ez forms and instructions Temporary basis. 1040ez forms and instructions   You go to school on a temporary basis if either of the following situations applies to you. 1040ez forms and instructions Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. 1040ez forms and instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. 1040ez forms and instructions Your attendance is temporary up to the date you determine it will last more than 1 year. 1040ez forms and instructions If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. 1040ez forms and instructions Attendance not on a temporary basis. 1040ez forms and instructions   You do not go to school on a temporary basis if either of the following situations apply to you. 1040ez forms and instructions Your attendance at school is realistically expected to last more than 1 year. 1040ez forms and instructions It does not matter how long you actually attend. 1040ez forms and instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. 1040ez forms and instructions Your attendance is not temporary after the date you determine it will last more than 1 year. 1040ez forms and instructions Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. 1040ez forms and instructions This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. 1040ez forms and instructions Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. 1040ez forms and instructions Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. 1040ez forms and instructions Example 1. 1040ez forms and instructions You regularly work in a nearby town, and go directly from work to home. 1040ez forms and instructions You also attend school every work night for 3 months to take a course that improves your job skills. 1040ez forms and instructions Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. 1040ez forms and instructions This is true regardless of the distance traveled. 1040ez forms and instructions Example 2. 1040ez forms and instructions Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. 1040ez forms and instructions You can deduct your transportation expenses from your regular work site to school and then home. 1040ez forms and instructions Example 3. 1040ez forms and instructions Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. 1040ez forms and instructions Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. 1040ez forms and instructions Example 4. 1040ez forms and instructions Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. 1040ez forms and instructions Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. 1040ez forms and instructions If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. 1040ez forms and instructions If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. 1040ez forms and instructions Using your car. 1040ez forms and instructions    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. 1040ez forms and instructions The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. 1040ez forms and instructions 5 cents per mile. 1040ez forms and instructions Whichever method you use, you can also deduct parking fees and tolls. 1040ez forms and instructions See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. 1040ez forms and instructions Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. 1040ez forms and instructions Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. 1040ez forms and instructions For more information, see chapter 1 of Publication 463. 1040ez forms and instructions You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. 1040ez forms and instructions Mainly personal travel. 1040ez forms and instructions   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. 1040ez forms and instructions You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. 1040ez forms and instructions   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. 1040ez forms and instructions An important factor is the comparison of time spent on personal activities with time spent on educational activities. 1040ez forms and instructions If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. 1040ez forms and instructions Example 1. 1040ez forms and instructions John works in Newark, New Jersey. 1040ez forms and instructions He traveled to Chicago to take a deductible 1-week course at the request of his employer. 1040ez forms and instructions His main reason for going to Chicago was to take the course. 1040ez forms and instructions While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. 1040ez forms and instructions Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. 1040ez forms and instructions He cannot deduct his transportation expenses of going to Pleasantville. 1040ez forms and instructions He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. 1040ez forms and instructions Example 2. 1040ez forms and instructions Sue works in Boston. 1040ez forms and instructions She went to a university in Michigan to take a course for work. 1040ez forms and instructions The course is qualifying work-related education. 1040ez forms and instructions She took one course, which is one-fourth of a full course load of study. 1040ez forms and instructions She spent the rest of the time on personal activities. 1040ez forms and instructions Her reasons for taking the course in Michigan were all personal. 1040ez forms and instructions Sue's trip is mainly personal because three-fourths of her time is considered personal time. 1040ez forms and instructions She cannot deduct the cost of her round-trip train ticket to Michigan. 1040ez forms and instructions She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. 1040ez forms and instructions Example 3. 1040ez forms and instructions Dave works in Nashville and recently traveled to California to take a 2-week seminar. 1040ez forms and instructions The seminar is qualifying work-related education. 1040ez forms and instructions While there, he spent an extra 8 weeks on personal activities. 1040ez forms and instructions The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. 1040ez forms and instructions Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. 1040ez forms and instructions He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. 1040ez forms and instructions Cruises and conventions. 1040ez forms and instructions   Certain cruises and conventions offer seminars or courses as part of their itinerary. 1040ez forms and instructions Even if the seminars or courses are work related, your deduction for travel may be limited. 1040ez forms and instructions This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. 1040ez forms and instructions   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. 1040ez forms and instructions 50% limit on meals. 1040ez forms and instructions   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. 1040ez forms and instructions If you were reimbursed for the meals, see How To Treat Reimbursements , later. 1040ez forms and instructions   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. 1040ez forms and instructions Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. 1040ez forms and instructions Example. 1040ez forms and instructions You are a French language teacher. 1040ez forms and instructions While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. 1040ez forms and instructions You chose your itinerary and most of your activities to improve your French language skills. 1040ez forms and instructions You cannot deduct your travel expenses as education expenses. 1040ez forms and instructions This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. 1040ez forms and instructions No Double Benefit Allowed You cannot do either of the following. 1040ez forms and instructions Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. 1040ez forms and instructions Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. 1040ez forms and instructions See Adjustments to Qualifying Work-Related Education Expenses, next. 1040ez forms and instructions Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. 1040ez forms and instructions You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. 1040ez forms and instructions Tax-free educational assistance. 1040ez forms and instructions   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 1040ez forms and instructions Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 1040ez forms and instructions Amounts that do not reduce qualifying work-related education expenses. 1040ez forms and instructions   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 1040ez forms and instructions Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. 1040ez forms and instructions How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. 1040ez forms and instructions There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. 1040ez forms and instructions You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. 1040ez forms and instructions Note. 1040ez forms and instructions The following rules about reimbursement arrangements also apply to expense allowances received from your employer. 1040ez forms and instructions Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. 1040ez forms and instructions Your expenses must have a business connection. 1040ez forms and instructions This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. 1040ez forms and instructions You must adequately account to your employer for your expenses within a reasonable period of time. 1040ez forms and instructions You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. 1040ez forms and instructions If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. 1040ez forms and instructions If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. 1040ez forms and instructions Accountable plan rules not met. 1040ez forms and instructions   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. 1040ez forms and instructions Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). 1040ez forms and instructions Expenses equal reimbursement. 1040ez forms and instructions   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. 1040ez forms and instructions Because your expenses and reimbursements are equal, you do not have a deduction. 1040ez forms and instructions Excess expenses. 1040ez forms and instructions   If your expenses are more than your reimbursement, you can deduct your excess expenses. 1040ez forms and instructions This is discussed later, under Deducting Business Expenses . 1040ez forms and instructions Allocating your reimbursements for meals. 1040ez forms and instructions   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. 1040ez forms and instructions If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. 1040ez forms and instructions Make the allocation as follows. 1040ez forms and instructions Divide your meal expenses by your total expenses. 1040ez forms and instructions Multiply your total reimbursement by the result from (1). 1040ez forms and instructions This is the allocated reimbursement for your meal expenses. 1040ez forms and instructions Subtract the amount figured in (2) from your total reimbursement. 1040ez forms and instructions The difference is the allocated reimbursement for your other expenses of qualifying work-related education. 1040ez forms and instructions Example. 1040ez forms and instructions Your employer paid you an expense allowance of $2,000 under an accountable plan. 1040ez forms and instructions The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. 1040ez forms and instructions There was no indication of how much of the reimbursement was for each type of expense. 1040ez forms and instructions Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). 1040ez forms and instructions Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. 1040ez forms and instructions   1. 1040ez forms and instructions $425 meal expenses  $2,500 total expenses = . 1040ez forms and instructions 17   2. 1040ez forms and instructions $2,000 (reimbursement)×. 1040ez forms and instructions 17     =$340 (allocated reimbursement for meal expenses)   3. 1040ez forms and instructions $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). 1040ez forms and instructions After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). 1040ez forms and instructions Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. 1040ez forms and instructions You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. 1040ez forms and instructions This is discussed later under Deducting Business Expenses . 1040ez forms and instructions An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. 1040ez forms and instructions Reimbursements for nondeductible expenses. 1040ez forms and instructions   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. 1040ez forms and instructions You must include them in your income. 1040ez forms and instructions For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. 1040ez forms and instructions   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. 1040ez forms and instructions Deducting Business Expenses Self-employed persons and employees report their business expenses differently. 1040ez forms and instructions The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. 1040ez forms and instructions Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). 1040ez forms and instructions If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. 1040ez forms and instructions See the instructions for the form you file for information on how to complete it. 1040ez forms and instructions Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. 1040ez forms and instructions If either (1) or (2) applies, you can deduct the total qualifying cost. 1040ez forms and instructions If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. 1040ez forms and instructions In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 1040ez forms and instructions (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. 1040ez forms and instructions ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. 1040ez forms and instructions Form 2106 or 2106-EZ. 1040ez forms and instructions   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. 1040ez forms and instructions Form not required. 1040ez forms and instructions   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. 1040ez forms and instructions   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 1040ez forms and instructions (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. 1040ez forms and instructions ) Using Form 2106-EZ. 1040ez forms and instructions   This form is shorter and easier to use than Form 2106. 1040ez forms and instructions Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. 1040ez forms and instructions   If you do not meet both of these requirements, use Form 2106. 1040ez forms and instructions Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. 1040ez forms and instructions Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. 1040ez forms and instructions You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040ez forms and instructions You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . 1040ez forms and instructions For more information on qualified performing artists, see chapter 6 of Publication 463. 1040ez forms and instructions Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. 1040ez forms and instructions They are not subject to the 2%-of-adjusted-gross-income limit. 1040ez forms and instructions To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . 1040ez forms and instructions For more information on impairment-related work expenses, see chapter 6 of Publication 463. 1040ez forms and instructions Recordkeeping You must keep records as proof of any deduction claimed on your tax return. 1040ez forms and instructions Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. 1040ez forms and instructions If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. 1040ez forms and instructions However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. 1040ez forms and instructions Examples of records to keep. 1040ez forms and instructions   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. 1040ez forms and instructions You should keep adequate records or have sufficient evidence that will support your expenses. 1040ez forms and instructions Estimates or approximations do not qualify as proof of an expense. 1040ez forms and instructions Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. 1040ez forms and instructions , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. 1040ez forms and instructions Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. 1040ez forms and instructions Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. 1040ez forms and instructions Complete information about any scholarship or fellowship grants, including amounts you received during the year. 1040ez forms and instructions Illustrated Example Victor Jones teaches math at a private high school in North Carolina. 1040ez forms and instructions He was selected to attend a 3-week math seminar at a university in California. 1040ez forms and instructions The seminar will improve his skills in his current job and is qualifying work-related education. 1040ez forms and instructions He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. 1040ez forms and instructions Victor will file Form 1040. 1040ez forms and instructions His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. 1040ez forms and instructions He shows his expenses for the seminar in Part I of the form. 1040ez forms and instructions He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. 1040ez forms and instructions He enters $400 on line 4 for his tuition and books. 1040ez forms and instructions On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. 1040ez forms and instructions He multiplies that amount by 50% and enters the result, $263, on line 5. 1040ez forms and instructions On line 6, Victor totals the amounts from lines 3 through 5. 1040ez forms and instructions He carries the total, $2,313, to Schedule A (Form 1040), line 21. 1040ez forms and instructions Since he does not claim any vehicle expenses, Victor leaves Part II blank. 1040ez forms and instructions His filled-in form is shown on the next page. 1040ez forms and instructions This image is too large to be displayed in the current screen. 1040ez forms and instructions Please click the link to view the image. 1040ez forms and instructions Form 2106-EZ for V. 1040ez forms and instructions Jones Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Contact My Local Office in Delaware

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Dover  611 S. Dupont Hwy. 
Dover, DE 19901 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(302) 678-2784 
Georgetown  21309 Berlin Rd. Unit 13
Georgetown, DE 19947 

Monday-Friday - 8:30 a.m.- 4:30 
(Closed for lunch 12:30 p.m.- 1:30 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(301) 695-7615 
Wilmington  844 King St.
Wilmington, DE 19801 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(302) 573-6343 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If  face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call 302-286-1654 in Wilmington or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
Silver Side Corp Ctr.
409 Silverside Rd
Wilmington DE 19809

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The 1040ez Forms And Instructions

1040ez forms and instructions 4. 1040ez forms and instructions   Transportation Table of Contents Parking fees. 1040ez forms and instructions Advertising display on car. 1040ez forms and instructions Car pools. 1040ez forms and instructions Hauling tools or instruments. 1040ez forms and instructions Union members' trips from a union hall. 1040ez forms and instructions Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. 1040ez forms and instructions These expenses include the cost of transportation by air, rail, bus, taxi, etc. 1040ez forms and instructions , and the cost of driving and maintaining your car. 1040ez forms and instructions Transportation expenses include the ordinary and necessary costs of all of the following. 1040ez forms and instructions Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. 1040ez forms and instructions Tax home is defined in chapter 1. 1040ez forms and instructions Visiting clients or customers. 1040ez forms and instructions Going to a business meeting away from your regular workplace. 1040ez forms and instructions Getting from your home to a temporary workplace when you have one or more regular places of work. 1040ez forms and instructions These temporary workplaces can be either within the area of your tax home or outside that area. 1040ez forms and instructions Transportation expenses do not include expenses you have while traveling away from home overnight. 1040ez forms and instructions Those expenses are travel expenses discussed in chapter 1 . 1040ez forms and instructions However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. 1040ez forms and instructions See Car Expenses , later. 1040ez forms and instructions Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. 1040ez forms and instructions However, there may be exceptions to this general rule. 1040ez forms and instructions You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. 1040ez forms and instructions Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. 1040ez forms and instructions Illustration of transportation expenses. 1040ez forms and instructions    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. 1040ez forms and instructions You may want to refer to it when deciding whether you can deduct your transportation expenses. 1040ez forms and instructions Temporary work location. 1040ez forms and instructions   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. 1040ez forms and instructions   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. 1040ez forms and instructions   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. 1040ez forms and instructions   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. 1040ez forms and instructions It will not be treated as temporary after the date you determine it will last more than 1 year. 1040ez forms and instructions   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. 1040ez forms and instructions You may have deductible travel expenses as discussed in chapter 1 . 1040ez forms and instructions No regular place of work. 1040ez forms and instructions   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. 1040ez forms and instructions   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. 1040ez forms and instructions   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. 1040ez forms and instructions These are nondeductible commuting expenses. 1040ez forms and instructions Two places of work. 1040ez forms and instructions   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. 1040ez forms and instructions However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. 1040ez forms and instructions   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. 1040ez forms and instructions You cannot deduct them. 1040ez forms and instructions Armed Forces reservists. 1040ez forms and instructions   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. 1040ez forms and instructions You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . 1040ez forms and instructions   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. 1040ez forms and instructions In this case, your transportation generally is a nondeductible commuting expense. 1040ez forms and instructions However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. 1040ez forms and instructions   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. 1040ez forms and instructions   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. 1040ez forms and instructions These expenses are discussed in chapter 1 . 1040ez forms and instructions   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. 1040ez forms and instructions For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. 1040ez forms and instructions Commuting expenses. 1040ez forms and instructions   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. 1040ez forms and instructions These costs are personal commuting expenses. 1040ez forms and instructions You cannot deduct commuting expenses no matter how far your home is from your regular place of work. 1040ez forms and instructions You cannot deduct commuting expenses even if you work during the commuting trip. 1040ez forms and instructions Example. 1040ez forms and instructions You sometimes use your cell phone to make business calls while commuting to and from work. 1040ez forms and instructions Sometimes business associates ride with you to and from work, and you have a business discussion in the car. 1040ez forms and instructions These activities do not change the trip from personal to business. 1040ez forms and instructions You cannot deduct your commuting expenses. 1040ez forms and instructions Parking fees. 1040ez forms and instructions    Fees you pay to park your car at your place of business are nondeductible commuting expenses. 1040ez forms and instructions You can, however, deduct business-related parking fees when visiting a customer or client. 1040ez forms and instructions Advertising display on car. 1040ez forms and instructions   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. 1040ez forms and instructions If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. 1040ez forms and instructions Car pools. 1040ez forms and instructions   You cannot deduct the cost of using your car in a nonprofit car pool. 1040ez forms and instructions Do not include payments you receive from the passengers in your income. 1040ez forms and instructions These payments are considered reimbursements of your expenses. 1040ez forms and instructions However, if you operate a car pool for a profit, you must include payments from passengers in your income. 1040ez forms and instructions You can then deduct your car expenses (using the rules in this publication). 1040ez forms and instructions Hauling tools or instruments. 1040ez forms and instructions   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. 1040ez forms and instructions However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). 1040ez forms and instructions Union members' trips from a union hall. 1040ez forms and instructions   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. 1040ez forms and instructions Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. 1040ez forms and instructions Office in the home. 1040ez forms and instructions   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. 1040ez forms and instructions (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. 1040ez forms and instructions ) Examples of deductible transportation. 1040ez forms and instructions   The following examples show when you can deduct transportation expenses based on the location of your work and your home. 1040ez forms and instructions Example 1. 1040ez forms and instructions You regularly work in an office in the city where you live. 1040ez forms and instructions Your employer sends you to a 1-week training session at a different office in the same city. 1040ez forms and instructions You travel directly from your home to the training location and return each day. 1040ez forms and instructions You can deduct the cost of your daily round-trip transportation between your home and the training location. 1040ez forms and instructions Example 2. 1040ez forms and instructions Your principal place of business is in your home. 1040ez forms and instructions You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. 1040ez forms and instructions Example 3. 1040ez forms and instructions You have no regular office, and you do not have an office in your home. 1040ez forms and instructions In this case, the location of your first business contact inside the metropolitan area is considered your office. 1040ez forms and instructions Transportation expenses between your home and this first contact are nondeductible commuting expenses. 1040ez forms and instructions Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. 1040ez forms and instructions While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. 1040ez forms and instructions Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. 1040ez forms and instructions You generally can use one of the two following methods to figure your deductible expenses. 1040ez forms and instructions Standard mileage rate. 1040ez forms and instructions Actual car expenses. 1040ez forms and instructions If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. 1040ez forms and instructions See Leasing a Car , later. 1040ez forms and instructions In this publication, “car” includes a van, pickup, or panel truck. 1040ez forms and instructions For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. 1040ez forms and instructions Rural mail carriers. 1040ez forms and instructions   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. 1040ez forms and instructions Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. 1040ez forms and instructions   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). 1040ez forms and instructions You must complete Form 2106 and attach it to your Form 1040, U. 1040ez forms and instructions S. 1040ez forms and instructions Individual Income Tax Return. 1040ez forms and instructions   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. 1040ez forms and instructions It is given as an equipment maintenance allowance (EMA) to employees of the U. 1040ez forms and instructions S. 1040ez forms and instructions Postal Service. 1040ez forms and instructions It is at the rate contained in the 1991 collective bargaining agreement. 1040ez forms and instructions Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. 1040ez forms and instructions See your employer for information on your reimbursement. 1040ez forms and instructions    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. 1040ez forms and instructions Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. 1040ez forms and instructions For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. 1040ez forms and instructions If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. 1040ez forms and instructions You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. 1040ez forms and instructions See Choosing the standard mileage rate and Standard mileage rate not allowed, later. 1040ez forms and instructions You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. 1040ez forms and instructions See chapter 6 for more information on reimbursements . 1040ez forms and instructions Choosing the standard mileage rate. 1040ez forms and instructions   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. 1040ez forms and instructions Then, in later years, you can choose to use either the standard mileage rate or actual expenses. 1040ez forms and instructions   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. 1040ez forms and instructions For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. 1040ez forms and instructions   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. 1040ez forms and instructions You cannot revoke the choice. 1040ez forms and instructions However, in later years, you can switch from the standard mileage rate to the actual expenses method. 1040ez forms and instructions If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. 1040ez forms and instructions Example. 1040ez forms and instructions Larry is an employee who occasionally uses his own car for business purposes. 1040ez forms and instructions He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. 1040ez forms and instructions Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. 1040ez forms and instructions   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. 1040ez forms and instructions Standard mileage rate not allowed. 1040ez forms and instructions   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. 1040ez forms and instructions (See Rural mail carriers , earlier. 1040ez forms and instructions ) Note. 1040ez forms and instructions You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. 1040ez forms and instructions Five or more cars. 1040ez forms and instructions   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. 1040ez forms and instructions However, you may be able to deduct your actual expenses for operating each of the cars in your business. 1040ez forms and instructions See Actual Car Expenses , later, for information on how to figure your deduction. 1040ez forms and instructions   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. 1040ez forms and instructions   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. 1040ez forms and instructions Example 1. 1040ez forms and instructions Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. 1040ez forms and instructions She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. 1040ez forms and instructions Example 2. 1040ez forms and instructions Tony and his employees use his four pickup trucks in his landscaping business. 1040ez forms and instructions During the year, he traded in two of his old trucks for two newer ones. 1040ez forms and instructions Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. 1040ez forms and instructions Example 3. 1040ez forms and instructions Chris owns a repair shop and an insurance business. 1040ez forms and instructions He and his employees use his two pickup trucks and van for the repair shop. 1040ez forms and instructions Chris alternates using his two cars for the insurance business. 1040ez forms and instructions No one else uses the cars for business purposes. 1040ez forms and instructions Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. 1040ez forms and instructions Example 4. 1040ez forms and instructions Maureen owns a car and four vans that are used in her housecleaning business. 1040ez forms and instructions Her employees use the vans, and she uses the car to travel to various customers. 1040ez forms and instructions Maureen cannot use the standard mileage rate for the car or the vans. 1040ez forms and instructions This is because all five vehicles are used in Maureen's business at the same time. 1040ez forms and instructions She must use actual expenses for all vehicles. 1040ez forms and instructions Interest. 1040ez forms and instructions   If you are an employee, you cannot deduct any interest paid on a car loan. 1040ez forms and instructions This applies even if you use the car 100% for business as an employee. 1040ez forms and instructions   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. 1040ez forms and instructions For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). 1040ez forms and instructions You cannot deduct the part of the interest expense that represents your personal use of the car. 1040ez forms and instructions    If you use a home equity loan to purchase your car, you may be able to deduct the interest. 1040ez forms and instructions See Publication 936, Home Mortgage Interest Deduction, for more information. 1040ez forms and instructions Personal property taxes. 1040ez forms and instructions   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. 1040ez forms and instructions You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. 1040ez forms and instructions   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). 1040ez forms and instructions If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). 1040ez forms and instructions Parking fees and tolls. 1040ez forms and instructions   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. 1040ez forms and instructions (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. 1040ez forms and instructions ) Sale, trade-in, or other disposition. 1040ez forms and instructions   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. 1040ez forms and instructions See Disposition of a Car , later. 1040ez forms and instructions Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. 1040ez forms and instructions If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. 1040ez forms and instructions Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. 1040ez forms and instructions Continue to keep records, as explained later in chapter 5 . 1040ez forms and instructions Business and personal use. 1040ez forms and instructions   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. 1040ez forms and instructions You can divide your expense based on the miles driven for each purpose. 1040ez forms and instructions Example. 1040ez forms and instructions You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. 1040ez forms and instructions You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. 1040ez forms and instructions Employer-provided vehicle. 1040ez forms and instructions   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. 1040ez forms and instructions You cannot use the standard mileage rate. 1040ez forms and instructions See Vehicle Provided by Your Employer in chapter 6. 1040ez forms and instructions Interest on car loans. 1040ez forms and instructions   If you are an employee, you cannot deduct any interest paid on a car loan. 1040ez forms and instructions This interest is treated as personal interest and is not deductible. 1040ez forms and instructions If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. 1040ez forms and instructions Taxes paid on your car. 1040ez forms and instructions   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. 1040ez forms and instructions Enter the amount paid on line 7 of Schedule A (Form 1040). 1040ez forms and instructions Sales taxes. 1040ez forms and instructions   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. 1040ez forms and instructions Fines and collateral. 1040ez forms and instructions   You cannot deduct fines you pay or collateral you forfeit for traffic violations. 1040ez forms and instructions Casualty and theft losses. 1040ez forms and instructions   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. 1040ez forms and instructions See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. 1040ez forms and instructions Depreciation and section 179 deductions. 1040ez forms and instructions   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. 1040ez forms and instructions Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. 1040ez forms and instructions However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. 1040ez forms and instructions Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. 1040ez forms and instructions The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. 1040ez forms and instructions   Generally, there are limits on these deductions. 1040ez forms and instructions Special rules apply if you use your car 50% or less in your work or business. 1040ez forms and instructions   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. 1040ez forms and instructions   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. 1040ez forms and instructions Car defined. 1040ez forms and instructions   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. 1040ez forms and instructions Its unloaded gross vehicle weight must not be more than 6,000 pounds. 1040ez forms and instructions A car includes any part, component, or other item physically attached to it or usually included in the purchase price. 1040ez forms and instructions   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. 1040ez forms and instructions Qualified nonpersonal use vehicles. 1040ez forms and instructions   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. 1040ez forms and instructions They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. 1040ez forms and instructions Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. 1040ez forms and instructions More information. 1040ez forms and instructions   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. 1040ez forms and instructions Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. 1040ez forms and instructions If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. 1040ez forms and instructions There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. 1040ez forms and instructions See Depreciation Limits, later. 1040ez forms and instructions You can claim the section 179 deduction only in the year you place the car in service. 1040ez forms and instructions For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. 1040ez forms and instructions Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. 1040ez forms and instructions A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. 1040ez forms and instructions Example. 1040ez forms and instructions In 2012, you bought a new car and used it for personal purposes. 1040ez forms and instructions In 2013, you began to use it for business. 1040ez forms and instructions Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. 1040ez forms and instructions However, you can claim a depreciation deduction for the business use of the car starting in 2013. 1040ez forms and instructions See Depreciation Deduction , later. 1040ez forms and instructions More than 50% business use requirement. 1040ez forms and instructions   You must use the property more than 50% for business to claim any section 179 deduction. 1040ez forms and instructions If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. 1040ez forms and instructions The result is the cost of the property that can qualify for the section 179 deduction. 1040ez forms and instructions Example. 1040ez forms and instructions Peter purchased a car in April 2013 for $24,500 and used it 60% for business. 1040ez forms and instructions Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). 1040ez forms and instructions But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. 1040ez forms and instructions Limits. 1040ez forms and instructions   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. 1040ez forms and instructions Limit on the amount of the section 179 deduction. 1040ez forms and instructions   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. 1040ez forms and instructions   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. 1040ez forms and instructions If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. 1040ez forms and instructions   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. 1040ez forms and instructions   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. 1040ez forms and instructions   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. 1040ez forms and instructions You must allocate the dollar limit (after any reduction) between you. 1040ez forms and instructions   For more information on the above section 179 deduction limits, see Publication 946. 1040ez forms and instructions Limit for sport utility and certain other vehicles. 1040ez forms and instructions   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. 1040ez forms and instructions This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. 1040ez forms and instructions However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. 1040ez forms and instructions    Limit on total section 179, special depreciation allowance, and depreciation deduction. 1040ez forms and instructions   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. 1040ez forms and instructions The limit is reduced if your business use of the car is less than 100%. 1040ez forms and instructions See Depreciation Limits , later, for more information. 1040ez forms and instructions Example. 1040ez forms and instructions In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. 1040ez forms and instructions However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). 1040ez forms and instructions Cost of car. 1040ez forms and instructions   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. 1040ez forms and instructions For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. 1040ez forms and instructions Your cost includes only the cash you paid. 1040ez forms and instructions Basis of car for depreciation. 1040ez forms and instructions   The amount of the section 179 deduction reduces your basis in your car. 1040ez forms and instructions If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. 1040ez forms and instructions The resulting amount is the basis in your car you use to figure your depreciation deduction. 1040ez forms and instructions When to choose. 1040ez forms and instructions   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. 1040ez forms and instructions How to choose. 1040ez forms and instructions    Employees use Form 2106 to make this choice and report the section 179 deduction. 1040ez forms and instructions All others use Form 4562. 1040ez forms and instructions   File the appropriate form with either of the following. 1040ez forms and instructions Your original tax return filed for the year the property was placed in service (whether or not you file it timely). 1040ez forms and instructions An amended return filed within the time prescribed by law. 1040ez forms and instructions An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. 1040ez forms and instructions The amended return must also include any resulting adjustments to taxable income. 1040ez forms and instructions    You must keep records that show the specific identification of each piece of qualifying section 179 property. 1040ez forms and instructions These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. 1040ez forms and instructions Revoking an election. 1040ez forms and instructions   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. 1040ez forms and instructions Recapture of section 179 deduction. 1040ez forms and instructions   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. 1040ez forms and instructions If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. 1040ez forms and instructions Any section 179 deduction claimed on the car is included in calculating the excess depreciation. 1040ez forms and instructions For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. 1040ez forms and instructions Dispositions. 1040ez forms and instructions   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. 1040ez forms and instructions You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). 1040ez forms and instructions For information on the disposition of a car, see Disposition of a Car , later. 1040ez forms and instructions Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. 1040ez forms and instructions The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). 1040ez forms and instructions The special depreciation allowance applies only for the first year the car is placed in service. 1040ez forms and instructions To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). 1040ez forms and instructions Combined depreciation. 1040ez forms and instructions   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). 1040ez forms and instructions For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). 1040ez forms and instructions See Depreciation Limits , later in this chapter. 1040ez forms and instructions Qualified car. 1040ez forms and instructions   To be a qualified car (including trucks and vans), the car must meet all of the following tests. 1040ez forms and instructions You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. 1040ez forms and instructions Election not to claim the special depreciation allowance. 1040ez forms and instructions   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. 1040ez forms and instructions If you make this election, it applies to all 5-year property placed in service during the year. 1040ez forms and instructions   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. 1040ez forms and instructions    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. 1040ez forms and instructions Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. 1040ez forms and instructions This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. 1040ez forms and instructions You generally need to know the following things about the car you intend to depreciate. 1040ez forms and instructions Your basis in the car. 1040ez forms and instructions The date you place the car in service. 1040ez forms and instructions The method of depreciation and recovery period you will use. 1040ez forms and instructions Basis. 1040ez forms and instructions   Your basis in a car for figuring depreciation is generally its cost. 1040ez forms and instructions This includes any amount you borrow or pay in cash, other property, or services. 1040ez forms and instructions   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). 1040ez forms and instructions However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). 1040ez forms and instructions For one of these situations see Exception under Methods of depreciation, later. 1040ez forms and instructions   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. 1040ez forms and instructions Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . 1040ez forms and instructions Placed in service. 1040ez forms and instructions   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. 1040ez forms and instructions Depreciation begins when the car is placed in service for use in your work or business or for the production of income. 1040ez forms and instructions   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. 1040ez forms and instructions Car placed in service and disposed of in the same year. 1040ez forms and instructions   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. 1040ez forms and instructions Methods of depreciation. 1040ez forms and instructions   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). 1040ez forms and instructions MACRS is discussed later in this chapter. 1040ez forms and instructions Exception. 1040ez forms and instructions   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. 1040ez forms and instructions You must use straight line depreciation over the estimated remaining useful life of the car. 1040ez forms and instructions   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. 1040ez forms and instructions The rate per mile varies depending on the year(s) you used the standard mileage rate. 1040ez forms and instructions For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. 1040ez forms and instructions   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . 1040ez forms and instructions You must use your adjusted basis in your car to figure your depreciation deduction. 1040ez forms and instructions For additional information on the straight line method of depreciation, see Publication 946. 1040ez forms and instructions More-than-50%-use test. 1040ez forms and instructions   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. 1040ez forms and instructions You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. 1040ez forms and instructions   If your business use is 50% or less, you must use the straight line method to depreciate your car. 1040ez forms and instructions This is explained later under Car Used 50% or Less for Business . 1040ez forms and instructions Qualified business use. 1040ez forms and instructions   A qualified business use is any use in your trade or business. 1040ez forms and instructions It does not include use for the production of income (investment use). 1040ez forms and instructions However, you do combine your business and investment use to compute your depreciation deduction for the tax year. 1040ez forms and instructions Use of your car by another person. 1040ez forms and instructions   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. 1040ez forms and instructions It is directly connected with your business. 1040ez forms and instructions It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). 1040ez forms and instructions It results in a payment of fair market rent. 1040ez forms and instructions This includes any payment to you for the use of your car. 1040ez forms and instructions Business use changes. 1040ez forms and instructions   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. 1040ez forms and instructions See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. 1040ez forms and instructions    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. 1040ez forms and instructions Use for more than one purpose. 1040ez forms and instructions   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. 1040ez forms and instructions You do this on the basis of mileage. 1040ez forms and instructions Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. 1040ez forms and instructions Change from personal to business use. 1040ez forms and instructions   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. 1040ez forms and instructions In this case, you figure the percentage of business use for the year as follows. 1040ez forms and instructions Determine the percentage of business use for the period following the change. 1040ez forms and instructions Do this by dividing business miles by total miles driven during that period. 1040ez forms and instructions Multiply the percentage in (1) by a fraction. 1040ez forms and instructions The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. 1040ez forms and instructions Example. 1040ez forms and instructions You use a car only for personal purposes during the first 6 months of the year. 1040ez forms and instructions During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. 1040ez forms and instructions This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. 1040ez forms and instructions Your business use for the year is 40% (80% × 6/12). 1040ez forms and instructions Limits. 1040ez forms and instructions   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. 1040ez forms and instructions The maximum amount you can claim depends on the year in which you placed your car in service. 1040ez forms and instructions You have to reduce the maximum amount if you did not use the car exclusively for business. 1040ez forms and instructions See Depreciation Limits , later. 1040ez forms and instructions Unadjusted basis. 1040ez forms and instructions   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . 1040ez forms and instructions Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. 1040ez forms and instructions   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. 1040ez forms and instructions Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. 1040ez forms and instructions Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. 1040ez forms and instructions Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. 1040ez forms and instructions 1, 2006), and alternative motor vehicle credit. 1040ez forms and instructions   See Form 8910 for information on the alternative motor vehicle credit. 1040ez forms and instructions If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. 1040ez forms and instructions See Car Used 50% or Less for Business, later, for more information. 1040ez forms and instructions If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. 1040ez forms and instructions Improvements. 1040ez forms and instructions   A major improvement to a car is treated as a new item of 5-year recovery property. 1040ez forms and instructions It is treated as placed in service in the year the improvement is made. 1040ez forms and instructions It does not matter how old the car is when the improvement is added. 1040ez forms and instructions Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. 1040ez forms and instructions However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. 1040ez forms and instructions Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. 1040ez forms and instructions See Depreciation Limits , later. 1040ez forms and instructions Car trade-in. 1040ez forms and instructions   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. 1040ez forms and instructions You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. 1040ez forms and instructions If you make this election, you treat the old car as disposed of at the time of the trade-in. 1040ez forms and instructions The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. 1040ez forms and instructions You then figure your depreciation deduction for the new car beginning with the date you placed it in service. 1040ez forms and instructions You make this election by completing Form 2106, Part II, Section D. 1040ez forms and instructions This method is explained later, beginning at Effect of trade-in on basis . 1040ez forms and instructions If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. 1040ez forms and instructions You must apply two depreciation limits (see Depreciation Limits , later). 1040ez forms and instructions The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. 1040ez forms and instructions The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. 1040ez forms and instructions You must use Form 4562 to compute your depreciation deduction. 1040ez forms and instructions You cannot use Form 2106, Part II, Section D. 1040ez forms and instructions This method is explained in Publication 946. 1040ez forms and instructions   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). 1040ez forms and instructions Otherwise, you must use the method described in (2). 1040ez forms and instructions Effect of trade-in on basis. 1040ez forms and instructions   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. 1040ez forms and instructions For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. 1040ez forms and instructions 168(i)-6(d)(3). 1040ez forms and instructions Traded car used only for business. 1040ez forms and instructions   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. 1040ez forms and instructions Example. 1040ez forms and instructions Paul trades in a car that has an adjusted basis of $5,000 for a new car. 1040ez forms and instructions In addition, he pays cash of $20,000 for the new car. 1040ez forms and instructions His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). 1040ez forms and instructions Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. 1040ez forms and instructions Traded car used partly in business. 1040ez forms and instructions   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. 1040ez forms and instructions This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. 1040ez forms and instructions (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. 1040ez forms and instructions See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. 1040ez forms and instructions )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. 1040ez forms and instructions Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. 1040ez forms and instructions For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. 1040ez forms and instructions Modified Accelerated Cost Recovery System (MACRS). 1040ez forms and instructions   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. 1040ez forms and instructions   The maximum amount you can deduct is limited, depending on the year you placed your car in service. 1040ez forms and instructions See Depreciation Limits , later. 1040ez forms and instructions Recovery period. 1040ez forms and instructions   Under MACRS, cars are classified as 5-year property. 1040ez forms and instructions You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. 1040ez forms and instructions This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. 1040ez forms and instructions Depreciation deduction for certain Indian reservation property. 1040ez forms and instructions   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. 1040ez forms and instructions The recovery that applies for a business-use car is 3 years instead of 5 years. 1040ez forms and instructions However, the depreciation limits, discussed later, will still apply. 1040ez forms and instructions   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. 1040ez forms and instructions Depreciation methods. 1040ez forms and instructions   You can use one of the following methods to depreciate your car. 1040ez forms and instructions The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. 1040ez forms and instructions The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. 1040ez forms and instructions The straight line method (SL) over a 5-year recovery period. 1040ez forms and instructions    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. 1040ez forms and instructions This is because the chart has the switch to the straight line method built into its rates. 1040ez forms and instructions   Before choosing a method, you may wish to consider the following facts. 1040ez forms and instructions Using the straight line method provides equal yearly deductions throughout the recovery period. 1040ez forms and instructions Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. 1040ez forms and instructions MACRS depreciation chart. 1040ez forms and instructions   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . 1040ez forms and instructions Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. 1040ez forms and instructions A similar chart appears in the Instructions for Form 2106. 1040ez forms and instructions    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. 1040ez forms and instructions   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. 1040ez forms and instructions You file your return on a fiscal year basis. 1040ez forms and instructions You file your return for a short tax year (less than 12 months). 1040ez forms and instructions During the year, all of the following conditions apply. 1040ez forms and instructions You placed some property in service from January through September. 1040ez forms and instructions You placed some property in service from October through December. 1040ez forms and instructions Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. 1040ez forms and instructions   You placed qualified property in service on an Indian reservation. 1040ez forms and instructions Depreciation in future years. 1040ez forms and instructions   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. 1040ez forms and instructions However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. 1040ez forms and instructions In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. 1040ez forms and instructions See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. 1040ez forms and instructions    In future years, do not use the chart in this edition of the publication. 1040ez forms and instructions Instead, use the chart in the publication or the form instructions for those future years. 1040ez forms and instructions Disposition of car during recovery period. 1040ez forms and instructions   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. 1040ez forms and instructions See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. 1040ez forms and instructions How to use the 2013 chart. 1040ez forms and instructions   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. 1040ez forms and instructions Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. 1040ez forms and instructions If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. 1040ez forms and instructions    Your deduction cannot be more than the maximum depreciation limit for cars. 1040ez forms and instructions See Depreciation Limits, later. 1040ez forms and instructions Example. 1040ez forms and instructions Phil bought a used truck in February 2012 to use exclusively in his landscape business. 1040ez forms and instructions He paid $9,200 for the truck with no trade-in. 1040ez forms and instructions Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. 1040ez forms and instructions Phil used the MACRS depreciation chart in 2012 to find his percentage. 1040ez forms and instructions The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. 1040ez forms and instructions He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. 1040ez forms and instructions In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. 1040ez forms and instructions His records show that the business use of his truck was 90% in 2013. 1040ez forms and instructions Phil used Table 4-1 to find his percentage. 1040ez forms and instructions Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. 1040ez forms and instructions He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. 1040ez forms and instructions Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. 1040ez forms and instructions The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. 1040ez forms and instructions The maximum amount you can deduct each year depends on the year you place the car in service. 1040ez forms and instructions These limits are shown in the following tables. 1040ez forms and instructions   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. 1040ez forms and instructions 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. 1040ez forms and instructions 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. 1040ez forms and instructions 4$7,660 if you acquired the car before 5/6/2003. 1040ez forms and instructions $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. 1040ez forms and instructions 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. 1040ez forms and instructions Trucks and vans. 1040ez forms and instructions   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. 1040ez forms and instructions A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. 1040ez forms and instructions For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. 1040ez forms and instructions Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. 1040ez forms and instructions 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. 1040ez forms and instructions Car used less than full year. 1040ez forms and instructions   The depreciation limits are not reduced if you use a car for less than a full year. 1040ez forms and instructions This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. 1040ez forms and instructions However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. 1040ez forms and instructions See Reduction for personal use , next. 1040ez forms and instructions Reduction for personal use. 1040ez forms and instructions   The depreciation limits are reduced based on your percentage of personal use. 1040ez forms and instructions If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. 1040ez forms and instructions Section 179 deduction. 1040ez forms and instructions   The section 179 deduction is treated as a depreciation deduction. 1040ez forms and instructions If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. 1040ez forms and instructions Example. 1040ez forms and instructions On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. 1040ez forms and instructions He used it 80% for his business, and he chooses to take a section 179 deduction for the car. 1040ez forms and instructions The car is not qualified property for purposes of the special depreciation allowance. 1040ez forms and instructions Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. 1040ez forms and instructions This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). 1040ez forms and instructions Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). 1040ez forms and instructions He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. 1040ez forms and instructions Jack has reached his maximum depreciation deduction for 2013. 1040ez forms and instructions For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. 1040ez forms and instructions Deductions in years after the recovery period. 1040ez forms and instructions   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. 1040ez forms and instructions If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. 1040ez forms and instructions Unrecovered basis. 1040ez forms and instructions   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. 1040ez forms and instructions The recovery period. 1040ez forms and instructions   For 5-year property, your recovery period is 6 calendar years. 1040ez forms and instructions A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. 1040ez forms and instructions   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. 1040ez forms and instructions You determine your unrecovered basis in the 7th year after you placed the car in service. 1040ez forms and instructions How to treat unrecovered basis. 1040ez forms and instructions   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. 1040ez forms and instructions The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. 1040ez forms and instructions For example, no deduction is allowed for a year you use your car 100% for personal purposes. 1040ez forms and instructions Example. 1040ez forms and instructions In April 2007, Bob bought and placed in service a car he used exclusively in his business. 1040ez forms and instructions The car cost $31,500. 1040ez forms and instructions Bob did not claim a section 179 deduction or the special depreciation allowance for the car. 1040ez forms and instructions He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). 1040ez forms and instructions For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. 1040ez forms and instructions Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. 1040ez forms and instructions      MACRS     Deprec. 1040ez forms and instructions Year % Amount Limit Allowed 2007 20. 1040ez forms and instructions 00 $6,300 $3,060 $ 3,060 2008 32. 1040ez forms and instructions 00 10,080 4,900 4,900 2009 19. 1040ez forms and instructions 20 6,048 2,850 2,850 2010 11. 1040ez forms and instructions 52 3,629 1,775 1,775 2011 11. 1040ez forms and instructions 52 3,629 1,775 1,775 2012 5. 1040ez forms and instructions 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. 1040ez forms and instructions   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). 1040ez forms and instructions If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. 1040ez forms and instructions   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. 1040ez forms and instructions However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. 1040ez forms and instructions For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. 1040ez forms and instructions Table 4-1. 1040ez forms and instructions 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. 1040ez forms and instructions ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. 1040ez forms and instructions   First, using the left column, find the date you first placed the car in service in 2013. 1040ez forms and instructions Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. 1040ez forms and instructions For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. 1040ez forms and instructions Refer back to the MACRS Depreciation Chart for the year you placed the car in service. 1040ez forms and instructions (See Car Used 50% or Less for Business . 1040ez forms and instructions )  Multiply the unadjusted basis of your car by your business use percentage. 1040ez forms and instructions Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. 1040ez forms and instructions (Also see Depreciation Limits . 1040ez forms and instructions )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. 1040ez forms and instructions 1—Sept. 1040ez forms and instructions 30 percentage instead of the Oct. 1040ez forms and instructions 1—Dec. 1040ez forms and instructions 31 percentage for your car. 1040ez forms and instructions               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. 1040ez forms and instructions If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. 1040ez forms and instructions 1—Sept. 1040ez forms and instructions 30 for figuring depreciation for your car. 1040ez forms and instructions See Which Convention Applies? in chapter 4 of Publication 946 for more details. 1040ez forms and instructions               Example. 1040ez forms and instructions You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. 1040ez forms and instructions You