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

E-file 2012

1040ez Free Online FilingFile State Taxes OnlineFreetaxusa2011Do I File 2008 Tax ReturnHow Do You File A Tax AmendmentFiling Late Tax ReturnsFree H And R Block OnlineIrs Where Mail 1040ezHow Do You Amend A Tax Return1040 Ez Tax Return FormTaxact SignSelf Employment TaxesTurbo Tax 1040nrEz Form 20122010 Free Tax Filing1040x Amendment FormHow To File State Taxes OnlyE File State Taxes FreeMilitary Tax Calculator1040ez Fillable FormFreefile TaxesAmend 1040Tax Breaks For UnemployedFree Irs Tax FilingHow Many Years Can You File Back Taxes2012 1040a Tax Form1040 Ez OnlineEz State Tax FormFree Taxes PreparationHow To Do An Amended Tax ReturnDownload Tax Forms 2011How Do I File My 2011 Taxes Late1040ez 2014Free State Tax Preparation Online1040x FormFile Taxes For 2012 FreeFillable Form 1040ez2010 Free Tax Software Download2011 Form 1040ezTax Forms For Students

E-file 2012

E-file 2012 Index Symbols 529 program (see Qualified tuition program (QTP)) A Academic period American opportunity credit, Academic period. E-file 2012 Lifetime learning credit, Academic period. E-file 2012 Student loan interest deduction, Academic period. E-file 2012 Tuition and fees deduction, Academic period. E-file 2012 Accountable plans, Accountable Plans, Allocating your reimbursements for meals. E-file 2012 Additional tax Coverdell ESA On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. E-file 2012 On taxable distributions, Additional Tax on Taxable Distributions IRA distributions, education exception, Education Exception to Additional Tax on Early IRA Distributions Qualified tuition program (QTP), on taxable distributions, Additional Tax on Taxable Distributions Adjusted qualified education expenses (see Qualified education expenses) American opportunity credit Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses, Tuition reduction. E-file 2012 Tuition reduction, Tuition reduction. E-file 2012 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 2-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. E-file 2012 Eligible student, Who Is an Eligible Student Requirements (Figure 2-2), Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the credit, Figuring the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. E-file 2012 Income limits, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. E-file 2012 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 Worksheet 2-1, Claiming the Credit Overview of American opportunity credit (Table 2-1), Introduction Phaseout, Phaseout. E-file 2012 Qualified education expenses, Qualified Education Expenses Tax benefit of, What is the tax benefit of the American opportunity credit. E-file 2012 Armed Forces Health Professions Scholarship and Financial Assistance Program, Exceptions. E-file 2012 Assistance (see Tax help) Athletic scholarships, Athletic Scholarships B Bar review course, Bar or CPA Review Course Bonds, education savings (see Education savings bond program) Business deduction for work-related education, Business Deduction for Work-Related Education, Illustrated Example Accountable plans, Accountable Plans, Allocating your reimbursements for meals. E-file 2012 Adjustments to qualifying work-related education expenses, Adjustments to Qualifying Work-Related Education Expenses Allocating meal reimbursements, Allocating your reimbursements for meals. E-file 2012 Deductible education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Deducting business expenses, Deducting Business Expenses, Impairment-Related Work Expenses Double benefit not allowed, No Double Benefit Allowed Education required by employer or by law, Education Required by Employer or by Law Education to maintain or improve skills, Education To Maintain or Improve Skills Education to meet minimum requirements, Education To Meet Minimum Requirements, Certification in a new state. E-file 2012 Education to qualify for new trade or business, Education That Qualifies You for a New Trade or Business, Teaching and Related Duties Excess expenses, accountable plan, Excess expenses. E-file 2012 , Allocating your reimbursements for meals. E-file 2012 Indefinite absence, Education during indefinite absence. E-file 2012 Maintaining skills vs. E-file 2012 qualifying for new job, Maintaining skills vs. E-file 2012 qualifying for new job. E-file 2012 Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Nondeductible expenses. E-file 2012 Qualified education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Recordkeeping requirements, Recordkeeping, Examples of records to keep. E-file 2012 Reimbursements, treatment of, How To Treat Reimbursements, Reimbursements for nondeductible expenses. E-file 2012 Tax benefit of, What is the tax benefit of taking a business deduction for work-related education. E-file 2012 Tax-free educational assistance, Tax-free educational assistance. E-file 2012 Teachers, Requirements for Teachers, Teaching and Related Duties Temporary absence to acquire education, Education during temporary absence. E-file 2012 Transportation expenses, Transportation Expenses, Using your car. E-file 2012 Travel expenses, Travel Expenses C Cancellation of student loan (see Student loan cancellation) Candidate for a degree Scholarships and fellowships, Candidate for a degree. E-file 2012 Change of designated beneficiary Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program, Changing the Designated Beneficiary Collapsed loans, Interest on refinanced student loans. E-file 2012 Comprehensive or bundled fees American opportunity credit, Comprehensive or bundled fees. E-file 2012 Lifetime learning credit, Comprehensive or bundled fees. E-file 2012 Tuition and fees deduction, Comprehensive or bundled fees. E-file 2012 Consolidated loans used to refinance student loans, Interest on refinanced student loans. E-file 2012 Conventions outside U. E-file 2012 S. E-file 2012 , Cruises and conventions. E-file 2012 Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits, Worksheet 7-3. E-file 2012 Coverdell ESA—Taxable Distributions and Basis Additional tax On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. E-file 2012 On taxable distributions, Additional Tax on Taxable Distributions Assets to be distributed at age 30 or death of beneficiary, When Assets Must Be Distributed Contribution limits, Contribution Limits, Figuring the limit. E-file 2012 Figuring the limit (Worksheet 6-2), Figuring the limit. E-file 2012 Contributions to, Contributions, Figuring and reporting the additional tax. E-file 2012 Table 7-2, Contributions Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP), Coordination With Qualified Tuition Program (QTP) Distributions Defined, What Is a Coverdell ESA Distributions, Distributions, How To Figure the Taxable Earnings Overview (Table 7-3), Distributions Divorce, transfer due to, Transfer Because of Divorce Eligible educational institution, Eligible Educational Institution Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution Worksheet 7-3, Worksheet 7-3. E-file 2012 Coverdell ESA—Taxable Distributions and Basis Figuring the taxable earnings in required distribution, How To Figure the Taxable Earnings Losses, Losses on Coverdell ESA Investments Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 , MAGI when using Form 1040NR-EZ. E-file 2012 Worksheet 6-1, Worksheet 7-1. E-file 2012 MAGI for a Coverdell ESA Overview (Table 6-1), Coverdell Education Savings Account (ESA) Qualified education expenses, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Rollovers, Rollovers Tax benefit of, What is the tax benefit of the Coverdell ESA. E-file 2012 Tax-free distributions, Tax-Free Distributions Taxable distributions, Taxable Distributions, Figuring the additional tax. E-file 2012 Worksheet 7-3 to figure, Worksheet 7-3. E-file 2012 Coverdell ESA—Taxable Distributions and Basis Transfers, Rollovers CPA review course, Bar or CPA Review Course Credits American opportunity (see American opportunity credit) Lifetime learning (see Lifetime learning credit) Cruises, educational, Cruises and conventions. E-file 2012 D Deductions (see Business deduction for work-related education) Designated beneficiary Coverdell ESA, What Is a Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program (QTP), Designated beneficiary. E-file 2012 , Changing the Designated Beneficiary Disabilities, persons with Impairment-related work expenses, Impairment-Related Work Expenses Distributions (see specific benefit ) Divorce Coverdell ESA transfer due to, Transfer Because of Divorce Expenses paid under decree American opportunity credit, Expenses paid by dependent. E-file 2012 Lifetime learning credit, Expenses paid by dependent. E-file 2012 Tuition and fees deduction, Expenses paid under divorce decree. E-file 2012 Double benefit not allowed American opportunity credit, No Double Benefit Allowed Lifetime learning credit, No Double Benefit Allowed Student loan interest deduction, No Double Benefit Allowed Tuition and fees deduction, No Double Benefit Allowed Work-related education, No Double Benefit Allowed E Early distributions from IRAs, Education Exception to Additional Tax on Early IRA Distributions, Reporting Early Distributions Eligible educational institution, Eligible educational institution. E-file 2012 Figuring amount not subject to 10% tax, Figuring the Amount Not Subject to the 10% Tax Qualified education expenses, Qualified education expenses. E-file 2012 Reporting, Reporting Early Distributions Education IRA (see Coverdell education savings account (ESA)) Education loans (see Student loan interest deduction) Education savings account (see Coverdell education savings account (ESA)) Education savings bond program Cashing in bonds tax free, Who Can Cash In Bonds Tax Free, MAGI when using Form 1040. E-file 2012 Claiming dependent's exemption, Dependent for whom you claim an exemption. E-file 2012 Claiming exclusion, Claiming the Exclusion Eligible educational institution, Eligible educational institution. E-file 2012 Figuring tax-free amount, Figuring the Tax-Free Amount Income level, effect on amount of exclusion, Effect of the Amount of Your Income on the Amount of Your Exclusion Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 , MAGI when using Form 1040. E-file 2012 Phaseout, Effect of the Amount of Your Income on the Amount of Your Exclusion Qualified education expenses, Qualified education expenses. E-file 2012 Educational assistance, employer-provided (see Employer-provided educational assistance) Eligible educational institution American opportunity credit, Eligible educational institution. E-file 2012 Cancellation of student loan, Eligible educational institution. E-file 2012 Coverdell ESA, Eligible Educational Institution Early distributions from IRAs, Eligible educational institution. E-file 2012 Education savings bond program, Eligible educational institution. E-file 2012 Lifetime learning credit, Eligible educational institution. E-file 2012 Qualified tuition program (QTP), Eligible educational institution. E-file 2012 Qualified tuition reduction, Qualified Tuition Reduction Scholarships and fellowships, Eligible educational institution. E-file 2012 , Eligible educational institution. E-file 2012 Student loan cancellation, Eligible educational institution. E-file 2012 Student loan interest deduction, Eligible educational institution. E-file 2012 Tuition and fees deduction, Eligible educational institution. E-file 2012 Eligible elementary or secondary school Coverdell ESA, Eligible elementary or secondary school. E-file 2012 Eligible student American opportunity credit, Who Is an Eligible Student Lifetime learning credit, Who Is an Eligible Student Student loan interest deduction, Eligible student. E-file 2012 Tuition and fees deduction, Who Is an Eligible Student Employees Deducting work-related education expenses, Employees Employer-provided educational assistance, Employer-Provided Educational Assistance, Working condition fringe benefit. E-file 2012 ESAs (see Coverdell education savings account (ESA)) Estimated tax, Reminders Excess contributions Coverdell ESA, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. E-file 2012 Excess expenses, accountable plan, Excess expenses. E-file 2012 , Allocating your reimbursements for meals. E-file 2012 Expenses (see specific benefit ) F Family members, beneficiary Coverdell ESA, Members of the beneficiary's family. E-file 2012 Qualified tuition program (QTP), Members of the beneficiary's family. E-file 2012 Fee-basis officials, work-related education deduction, Performing Artists and Fee-Basis Officials Fellowships (see Scholarships and fellowships) Figures (see Tables and figures) Financial aid (see Scholarships and fellowships) Form 1098-E Student loan interest deduction, Loan origination fee. E-file 2012 , Form 1098-E. E-file 2012 Form 1098-T, Reminders American opportunity credit, Form 1098-T. E-file 2012 Lifetime learning credit, Form 1098-T. E-file 2012 Tuition and fees deduction, Form 1098-T. E-file 2012 Form 1099-Q Coverdell ESA, Exceptions. E-file 2012 , Earnings and basis. E-file 2012 Qualified tuition program (QTP), Earnings and return of investment. E-file 2012 Form 1099-R Early distributions from IRAs, Reporting Early Distributions Form 2106, 50% limit on meals. E-file 2012 , Form 2106 or 2106-EZ. E-file 2012 Form 2106-EZ, 50% limit on meals. E-file 2012 , Form 2106 or 2106-EZ. E-file 2012 , Using Form 2106-EZ. E-file 2012 Filled-in example, Form 5329 Coverdell ESA, Figuring the additional tax. E-file 2012 Early distributions from IRAs, Reporting Early Distributions Qualified tuition program (QTP), Figuring the additional tax. E-file 2012 Form 8815, MAGI when using Form 1040. E-file 2012 , Claiming the Exclusion Form 8863 Filled-in examples, Form 8917 Filled-in examples, Form W-9S, Form 1098-T. E-file 2012 , Form 1098-T. E-file 2012 , Form 1098-E. E-file 2012 , Form 1098-T. E-file 2012 Free tax services, Free help with your tax return. E-file 2012 Fulbright grants, Fulbright Grants G Glossary, Glossary. E-file 2012 , Glossary, Transfer: Graduate education tuition reduction, Graduate Education Grants Fulbright, Fulbright Grants Pell, Pell Grants and Other Title IV Need-Based Education Grants Title IV need-based education, Pell Grants and Other Title IV Need-Based Education Grants H Half-time student American opportunity credit, Enrolled at least half-time. E-file 2012 Coverdell ESA, Half-time student. E-file 2012 Early distributions from IRAs, Half-time student. E-file 2012 Student loan interest deduction, Enrolled at least half-time. E-file 2012 Help (see Tax help) I Illustrated example of education credits (Appendix A), Appendix A. E-file 2012 Illustrated Example of Education Credits, Impairment-related work expenses Work-related education deduction, Impairment-Related Work Expenses Individual retirement arrangements (IRAs), Coverdell Education Savings Account (ESA) Early distributions (see Early distributions from IRAs) L Lifetime learning credit, Differences between the American opportunity and lifetime learning credits. E-file 2012 Academic period, Academic period. E-file 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Tuition reduction, Tuition reduction. E-file 2012 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 3-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. E-file 2012 Eligible student, Who Is an Eligible Student Expenses qualifying for, What Expenses Qualify, Amounts that do not reduce qualified education expenses. E-file 2012 Figuring the credit, Figuring the Credit, Claiming the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit Income limits, Effect of the Amount of Your Income on the Amount of Your Credit Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 Worksheet 3-1, MAGI when using Form 1040. E-file 2012 Overview (Table 3-1), Table 3-1. E-file 2012 Overview of the Lifetime Learning Credit Phaseout, Phaseout. E-file 2012 Qualified education expenses, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. E-file 2012 Qualifying to claim (Figure 3-1), Tax benefit of, What is the tax benefit of the lifetime learning credit. E-file 2012 Loans Cancellation (see Student loan cancellation) Capitalized interest on student loan, Capitalized interest. E-file 2012 Origination fees on student loan, Loan origination fee. E-file 2012 Qualified education expenses paid with American opportunity credit, Academic period. E-file 2012 Lifetime learning credit, Paid with borrowed funds. E-file 2012 Student loan repayment assistance, Student Loan Repayment Assistance Losses, deducting Coverdell ESA, Losses on Coverdell ESA Investments Qualified tuition program (QTP), Losses on QTP Investments Luxury water transportation, Cruises and conventions. E-file 2012 M Mileage deduction for work-related education, What's New, Using your car. E-file 2012 Military academy cadets, Payment to Service Academy Cadets Missing children, photographs of, Reminders Modified adjusted gross income (MAGI) American opportunity credit Worksheet 2-1, Claiming the Credit Coverdell ESA, Modified adjusted gross income (MAGI). E-file 2012 , MAGI when using Form 1040NR-EZ. E-file 2012 Worksheet 6-1, Worksheet 7-1. E-file 2012 MAGI for a Coverdell ESA Education savings bond program, Modified adjusted gross income (MAGI). E-file 2012 , MAGI when using Form 1040. E-file 2012 Lifetime learning credit, Modified adjusted gross income (MAGI). E-file 2012 Worksheet 3-1, MAGI when using Form 1040. E-file 2012 Student loan interest deduction, Modified adjusted gross income (MAGI). E-file 2012 Table 4-2, Table 4-2. E-file 2012 Effect of MAGI on Student Loan Interest Deduction Tuition and fees deduction, Modified adjusted gross income (MAGI). E-file 2012 Table 6-2, Table 6-2. E-file 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. E-file 2012 MAGI for the Tuition and Fees Deduction N National Health Service Corps Scholarship Program, Exceptions. E-file 2012 , Exceptions. E-file 2012 Nonaccountable plans Work-related education, Nonaccountable Plans P Pell grants, Pell Grants and Other Title IV Need-Based Education Grants, Coordination with Pell grants and other scholarships. E-file 2012 , Coordination with Pell grants and other scholarships. E-file 2012 Performing artists, work-related education deduction, Performing Artists and Fee-Basis Officials Phaseout American opportunity credit, Phaseout. E-file 2012 Education savings bond program, Effect of the Amount of Your Income on the Amount of Your Exclusion Lifetime learning credit, Phaseout. E-file 2012 Student loan interest deduction, Phaseout. E-file 2012 , Effect of the Amount of Your Income on the Amount of Your Deduction Publications (see Tax help) Q Qualified education expenses Adjustments to American opportunity credit, Adjustments to Qualified Education Expenses Coverdell ESA, Adjusted qualified education expenses. E-file 2012 Education savings bond program, Adjusted qualified education expenses. E-file 2012 Lifetime learning credit, Adjustments to Qualified Education Expenses Qualified tuition program (QTP), Adjusted qualified education expenses. E-file 2012 Student loan interest deduction, Adjustments to Qualified Education Expenses Tuition and fees deduction, Adjustments to Qualified Education Expenses Work-related education, Adjustments to Qualifying Work-Related Education Expenses American opportunity credit, Qualified Education Expenses, Adjustments to Qualified Education Expenses Coverdell ESA, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Early distributions from IRAs, Qualified education expenses. E-file 2012 Education savings bond program, Qualified education expenses. E-file 2012 Expenses not qualified American opportunity credit, Expenses That Do Not Qualify, Comprehensive or bundled fees. E-file 2012 Lifetime learning credit, Expenses That Do Not Qualify Tuition and fees deduction, Expenses That Do Not Qualify Lifetime learning credit, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. E-file 2012 Qualified tuition program (QTP), Qualified education expenses. E-file 2012 Scholarships and fellowships, Qualified education expenses. E-file 2012 Student loan interest deduction, Qualified Education Expenses Tuition and fees deduction, What Expenses Qualify, Adjustments to Qualified Education Expenses Work-related education, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Qualified elementary and secondary education expenses Coverdell ESAs, Qualified Elementary and Secondary Education Expenses Qualified employer plans Student loan interest deduction not allowed, Qualified employer plan. E-file 2012 Qualified student loans, Qualified Student Loan, Qualified employer plan. E-file 2012 Qualified tuition program (QTP), Qualified Tuition Program (QTP), Changing the Designated Beneficiary Additional tax on taxable distributions, Additional Tax on Taxable Distributions Change of designated beneficiary, Changing the Designated Beneficiary Contributions to, How Much Can You Contribute Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with Coverdell ESA distributions, Coordination With Coverdell ESA Distributions Defined, What Is a Qualified Tuition Program Eligible educational institution, Eligible educational institution. E-file 2012 Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution, Losses on QTP Investments Losses, Losses on QTP Investments Qualified education expenses, Qualified education expenses. E-file 2012 Rollovers, Rollovers and Other Transfers, Changing the Designated Beneficiary Tax benefit of, What is the tax benefit of a QTP. E-file 2012 Taxability of distributions, Are Distributions Taxable, Figuring the additional tax. E-file 2012 Taxable earnings, Taxable earnings. E-file 2012 Transfers, Rollovers and Other Transfers, Changing the Designated Beneficiary Qualified tuition reduction, Qualified Tuition Reduction, How To Report Qualified U. E-file 2012 S. E-file 2012 savings bonds, Qualified U. E-file 2012 S. E-file 2012 savings bonds. E-file 2012 Qualifying work-related education, Qualifying Work-Related Education, Teaching and Related Duties Determining if qualified (Figure 11-1), R Recapture American opportunity credit, Credit recapture. E-file 2012 Lifetime learning credit, Credit recapture. E-file 2012 Tuition and fees deduction, Credit recapture. E-file 2012 Recordkeeping requirements Work-related education, Recordkeeping, Examples of records to keep. E-file 2012 Refinanced student loans, Interest on refinanced student loans. E-file 2012 , Refinanced Loan Reimbursements Nondeductible expenses, Reimbursements for nondeductible expenses. E-file 2012 Work-related education, How To Treat Reimbursements, Reimbursements for nondeductible expenses. E-file 2012 Related persons Coverdell ESA, Members of the beneficiary's family. E-file 2012 Qualified tuition program (QTP), Members of the beneficiary's family. E-file 2012 Student loan interest deduction, Related person. E-file 2012 Repayment programs (see Student loan repayment assistance) Reporting American opportunity credit, Claiming the Credit Coverdell ESA, Exceptions. E-file 2012 , Figuring and reporting the additional tax. E-file 2012 , Figuring the Taxable Portion of a Distribution, Figuring the additional tax. E-file 2012 Early distributions from IRAs, Reporting Early Distributions Education savings bond program, Claiming the Exclusion Lifetime learning credit, Claiming the Credit Qualified tuition program (QTP), Taxable earnings. E-file 2012 , Losses on QTP Investments, Rollovers Scholarships and fellowships, taxable, Reporting Scholarships and Fellowships Student loan interest deduction, Claiming the Deduction Tuition and fees deduction, Claiming the Deduction Tuition reduction, taxable, How To Report Work-related education expenses, Deducting Business Expenses, Impairment-Related Work Expenses Revolving lines of credit, interest on, Interest on revolving lines of credit. E-file 2012 Rollovers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary S Scholarships and fellowships, Scholarships and Fellowships, Form 1040NR-EZ. E-file 2012 , Coordination with Pell grants and other scholarships. E-file 2012 , Coordination with Pell grants and other scholarships. E-file 2012 Athletic scholarships, Athletic Scholarships Eligible educational institution, Eligible educational institution. E-file 2012 , Eligible educational institution. E-file 2012 Figuring tax-free and taxable parts (Worksheet 1-1), Worksheet 1-1. E-file 2012 Qualified education expenses, Qualified education expenses. E-file 2012 Reporting, Reporting Scholarships and Fellowships Scholarship, defined, Scholarships and Fellowships Tax treatment of (Table 1-1), Tax-Free Scholarships and Fellowships Tax-free, Tax-Free Scholarships and Fellowships, Athletic Scholarships Taxable, Taxable Scholarships and Fellowships Section 501(c)(3) organizations (see Student loan cancellation) Section 529 program (see Qualified tuition program (QTP)) Self-employed persons Deducting work-related education expenses, Self-Employed Persons Service academy cadets, Payment to Service Academy Cadets Sports, games, hobbies, and noncredit courses American opportunity credit, Sports, games, hobbies, and noncredit courses. E-file 2012 Education savings bond program, Qualified education expenses. E-file 2012 Lifetime learning credit, Sports, games, hobbies, and noncredit courses. E-file 2012 Tuition and fees deduction, Sports, games, hobbies, and noncredit courses. E-file 2012 Standard mileage rate Work-related education, What's New, Using your car. E-file 2012 State prepaid education accounts (see Qualified tuition program (QTP)) Student loan cancellation, Student Loan Cancellation Eligible educational institution, Eligible educational institution. E-file 2012 Section 501(c)(3) organizations, Section 501(c)(3) organization. E-file 2012 Student loan interest deduction Academic period, Academic period. E-file 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Allocation between interest and principal, Allocating Payments Between Interest and Principal Claiming the deduction, Claiming the Deduction Eligible educational institution, Eligible educational institution. E-file 2012 Eligible student, Eligible student. E-file 2012 Figuring the deduction, Figuring the Deduction, Which Worksheet To Use Include as interest, Include As Interest Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan repayment assistance, Do Not Include As Interest Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 , Which Worksheet To Use Table 4-2, Table 4-2. E-file 2012 Effect of MAGI on Student Loan Interest Deduction Not included as interest, Do Not Include As Interest Phaseout, Phaseout. E-file 2012 , Effect of the Amount of Your Income on the Amount of Your Deduction Qualified education expenses, Qualified Education Expenses Qualified employer plans, Qualified employer plan. E-file 2012 Qualified student loans, Qualified Student Loan, Qualified employer plan. E-file 2012 Reasonable period of time, Reasonable period of time. E-file 2012 Related persons, Related person. E-file 2012 Student loan interest, defined, Student Loan Interest Defined, When Must Interest Be Paid Third party interest payments, Interest paid by others. E-file 2012 When interest must be paid, When Must Interest Be Paid Worksheet 4-1, Worksheet 4-1. E-file 2012 Student Loan Interest Deduction Worksheet Student loan repayment assistance, Student Loan Repayment Assistance Surviving spouse Coverdell ESA transfer to, Exception for Transfer to Surviving Spouse or Family Member T Tables and figures American opportunity credit Eligible student requirements (Figure 2-2), Overview (Table 2-1), Introduction Qualifying to claim (Figure 2-1), Comparison of education tax benefits (Appendix B), Coverdell ESAs Contributions to (Table 7-2), Contribution Limits Distributions (Table 7-3), Distributions Overview (Table 6-1), Coverdell Education Savings Account (ESA) Education credits Overview of American opportunity credit (Table 2-1), Introduction Overview of lifetime learning credit (Table 3-1), Table 3-1. E-file 2012 Overview of the Lifetime Learning Credit Lifetime learning credit Overview (Table 3-1), Table 3-1. E-file 2012 Overview of the Lifetime Learning Credit Qualifying to claim (Figure 3-1), Scholarships and fellowships, taxability of (Table 1-1), Tax-Free Scholarships and Fellowships Student loan interest deduction MAGI, effect of (Table 4-2), Table 4-2. E-file 2012 Effect of MAGI on Student Loan Interest Deduction Overview (Table 4-1), Table 4-1. E-file 2012 Student Loan Interest Deduction at a Glance Summary chart of differences between education tax benefits (Appendix B), Tuition and fees deduction MAGI, effect of (Table 6-2), Table 6-2. E-file 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Overview (Table 6-1), Table 6-1. E-file 2012 Tuition and Fees Deduction at a Glance Work-related education, qualifying (Figure 112-1), Tax help, How To Get Tax Help Tax-free educational assistance American opportunity credit, Tax-free educational assistance. E-file 2012 Coverdell ESA, Adjusted qualified education expenses. E-file 2012 Early distributions from IRAs, Figuring the Amount Not Subject to the 10% Tax Education savings bond program, Adjusted qualified education expenses. E-file 2012 Lifetime learning credit, Tax-free educational assistance. E-file 2012 Qualified tuition program (QTP), Adjusted qualified education expenses. E-file 2012 Tuition and fees deduction, Tax-free educational assistance. E-file 2012 Work-related education, Tax-free educational assistance. E-file 2012 Taxable scholarships and fellowships, Taxable Scholarships and Fellowships Teachers, Requirements for Teachers, Teaching and Related Duties Temporary-basis student, transportation expenses of, Temporary basis. E-file 2012 Title IV need-based education grants, Pell Grants and Other Title IV Need-Based Education Grants Transfers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary Transportation expenses Work-related education, Transportation Expenses, Using your car. E-file 2012 Travel expenses 50% limit on meals, 50% limit on meals. E-file 2012 Not deductible as form of education, Travel as Education Work-related education, Travel Expenses TTY/TDD information, How To Get Tax Help Tuition and fees deduction, Tuition and Fees Deduction, Illustrated Example Academic period, Academic period. E-file 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Can you claim the deduction, Can You Claim the Deduction Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Claiming the deduction, Claiming the Deduction Double benefit not allowed, No Double Benefit Allowed Eligible educational institution, Eligible educational institution. E-file 2012 Eligible student, Who Is an Eligible Student Expenses not qualifying for, Expenses That Do Not Qualify Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the deduction, Figuring the Deduction, MAGI when using Form 1040. E-file 2012 Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan used to pay tuition and fees, Paid with borrowed funds. E-file 2012 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). E-file 2012 Table 6-2, Table 6-2. E-file 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. E-file 2012 MAGI for the Tuition and Fees Deduction Overview (Table 4-1), Table 4-1. E-file 2012 Student Loan Interest Deduction at a Glance Overview (Table 6-1), Table 6-1. E-file 2012 Tuition and Fees Deduction at a Glance Qualified education expenses, What Expenses Qualify, Adjustments to Qualified Education Expenses Qualifying for deduction, Can You Claim the Deduction Tax benefit of, What is the tax benefit of the tuition and fees deduction. E-file 2012 Tax-free educational assistance, Tax-free educational assistance. E-file 2012 Tuition reduction American opportunity credit, Tuition reduction. E-file 2012 Lifetime learning credit, Tuition reduction. E-file 2012 Qualified, Qualified Tuition Reduction, How To Report Tuition and fees deduction, Tuition reduction. E-file 2012 U U. E-file 2012 S. E-file 2012 savings bonds, Qualified U. E-file 2012 S. E-file 2012 savings bonds. E-file 2012 Unclaimed reimbursement Work-related education, Unclaimed reimbursement. E-file 2012 V Veterans' benefits, Veterans' Benefits Voluntary interest payments, Voluntary interest payments. E-file 2012 W Withholding, Analyzing your tax withholding. E-file 2012 Work-related education (see Business deduction for work-related education) Working condition fringe benefit, Working condition fringe benefit. E-file 2012 Worksheets Coverdell ESA Contribution limit (Worksheet 6-2), Figuring the limit. E-file 2012 MAGI, calculation of (Worksheet 6-1), Worksheet 7-1. E-file 2012 MAGI for a Coverdell ESA Taxable distributions and basis (Worksheet 6-3), Worksheet 7-3. E-file 2012 Coverdell ESA—Taxable Distributions and Basis Taxable distributions and basis (Worksheet 7-3), Worksheet 7-3. E-file 2012 Coverdell ESA—Taxable Distributions and Basis Lifetime learning credit MAGI calculation (Worksheet 3-1), MAGI when using Form 1040. E-file 2012 Scholarships and fellowships, taxable income (Worksheet 1-1), Worksheet 1-1. E-file 2012 Student loan interest deduction (Worksheet 4-1), Worksheet 4-1. E-file 2012 Student Loan Interest Deduction Worksheet Tuition and fees deduction, MAGI calculation (Worksheet 6-1), Worksheet 6-1. E-file 2012 MAGI for the Tuition and Fees Deduction Prev  Up     Home   More Online Publications
Español

Diploma Mills

If you're ever tempted by an e-mail or ad claiming you can "earn a degree based on life experience," don't fall for it. Any company that offers degrees for a flat fee and requires little course work is a diploma mill. If your school is not recognized as an accredited institution by the Secretary of Education, you may not be able to receive financial aid and employers won't recognize it. You can check on a school's accreditation by contacting the Department of Education or search the Council for Higher Education Accreditation's database.

Beware: Scholarship and Financial Aid Scams

Scholarships and financial aid do not require upfront fees. While there are legitimate companies who will help guide you through the financial aid and college application process for a fee, disreputable companies may ask you for money up-front and provide nothing in return. Red flags to watch out for include the following:

  • A "money-back guarantee" to secure a scholarship. Don't believe it. Unscrupulous companies attach conditions that make it impossible to get the refund.
  • "Secret scholarships." If a company claims to have inside knowledge of scholarship money, they're lying. Information on scholarships is available freely to the public. Ask you librarian or school counselor.
  • Telling students they've been selected as "finalists" for awards. If they ask for an up-front fee, head for the nearest exit.
  • Asking for a student's checking account to "confirm eligibility." If they want bank account information or your credit card number to confirm or reserve a scholarship, it's a scam.
  • Quoting a relatively small "monthly" or "weekly" fee. Then asking for authorization to debit your checking account for an unspecified length of time. Ongoing fees are a sure sign of a scam.
  • Unsolicited offers. Whether it's an e-mail, phone call, or it arrived in your mailbox, if you didn't request the information, ignore the offer.

The E-file 2012

E-file 2012 Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. E-file 2012 For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. E-file 2012 If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. E-file 2012 Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. E-file 2012 A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. E-file 2012 Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. E-file 2012 Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). E-file 2012 It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. E-file 2012 A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. E-file 2012 Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. E-file 2012 It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. E-file 2012 Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. E-file 2012 Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. E-file 2012 Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. E-file 2012 Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. E-file 2012 Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. E-file 2012 Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. E-file 2012 Listed property placed in service before 1987. E-file 2012   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. E-file 2012 Listed property placed in service after 1986. E-file 2012   For information on listed property placed in service after 1986, see Publication 946. E-file 2012 Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. E-file 2012 You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. E-file 2012 The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. E-file 2012 However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. E-file 2012 Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. E-file 2012 Example. E-file 2012 Sarah Bradley uses a home computer 50% of the time to manage her investments. E-file 2012 She also uses the computer 40% of the time in her part-time consumer research business. E-file 2012 Sarah's home computer is listed property because it is not used at a regular business establishment. E-file 2012 Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. E-file 2012 Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. E-file 2012 Her combined rate of business/investment use for determining her depreciation deduction is 90%. E-file 2012 Qualified Business Use A qualified business use is any use in your trade or business. E-file 2012 However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. E-file 2012 See Employees, later. E-file 2012 5% owner. E-file 2012   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. E-file 2012   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. E-file 2012 Related person. E-file 2012   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. E-file 2012 Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. E-file 2012 See Publication 463. E-file 2012 Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. E-file 2012 Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. E-file 2012 Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. E-file 2012 Any payment to you for the use of the automobile is treated as a rent payment for 3). E-file 2012 Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. E-file 2012 Use for the employer's convenience. E-file 2012   Whether the use of listed property is for the employer's convenience must be determined from all the facts. E-file 2012 The use is for the employer's convenience if it is for a substantial business reason of the employer. E-file 2012 The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. E-file 2012 Use required as a condition of employment. E-file 2012   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. E-file 2012 The use of property must be required for the employee to perform duties properly. E-file 2012 The employer need not explicitly require the employee to use the property. E-file 2012 A mere statement by the employer that the use of the property is a condition of employment is not sufficient. E-file 2012 Example 1. E-file 2012 Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. E-file 2012 She owns and uses a motorcycle to deliver packages to downtown offices. E-file 2012 We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. E-file 2012 The company reimburses delivery persons for their costs. E-file 2012 Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. E-file 2012 Example 2. E-file 2012 Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. E-file 2012 He must travel to these sites on a regular basis. E-file 2012 Uplift does not furnish an automobile or explicitly require him to use his own automobile. E-file 2012 However, it reimburses him for any costs he incurs in traveling to the various sites. E-file 2012 The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. E-file 2012 Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. E-file 2012 You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. E-file 2012 For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. E-file 2012 For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. E-file 2012 Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. E-file 2012 First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. E-file 2012 Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. E-file 2012 It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. E-file 2012 Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. E-file 2012 Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. E-file 2012 See Recapture of excess depreciation, next. E-file 2012 Recapture of excess depreciation. E-file 2012   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. E-file 2012 Any excess depreciation must also be added to the adjusted basis of your property. E-file 2012 Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. E-file 2012 This means you figure your depreciation using the percentages fromTable 16 or 17. E-file 2012 For information on investment credit recapture, see the instructions for Form 4255. E-file 2012 Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. E-file 2012 In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. E-file 2012 To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. E-file 2012 See Car Used 50% or Less for Business in Publication 917. E-file 2012 Leased Property The limitations on cost recovery deductions apply to the rental of listed property. E-file 2012 The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). E-file 2012 SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. E-file 2012 Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. E-file 2012 A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. E-file 2012 This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. E-file 2012 Occasional or incidental leasing activity is insufficient. E-file 2012 For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. E-file 2012 An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. E-file 2012 Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. E-file 2012 Inclusion amount for property leased before 1987. E-file 2012   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. E-file 2012 You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. E-file 2012   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. E-file 2012 For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. E-file 2012 You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. E-file 2012 Special rules. E-file 2012   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. E-file 2012 The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. E-file 2012   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. E-file 2012 Maximum inclusion amount. E-file 2012   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. E-file 2012 What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. E-file 2012 How long to keep records. E-file 2012   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). E-file 2012 Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. E-file 2012 It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. E-file 2012 However, your records should back up your receipts in an orderly manner. E-file 2012 Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. E-file 2012 Written documents of your expenditure or use are generally better evidence than oral statements alone. E-file 2012 A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. E-file 2012 A daily log is not required. E-file 2012 However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. E-file 2012 Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. E-file 2012 An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. E-file 2012 For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. E-file 2012 Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. E-file 2012 However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. E-file 2012 A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. E-file 2012 For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. E-file 2012 Business Use Supported An adequate record contains enough information on each element of every business or investment use. E-file 2012 The amount of detail required to support the use depends on the facts and circumstances. E-file 2012 For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. E-file 2012 Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. E-file 2012 Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. E-file 2012 However, repeated uses can be combined as a single item. E-file 2012 Each expenditure is recorded as a separate item and not combined with other expenditures. E-file 2012 If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. E-file 2012 If these expenses are combined, you do not need to support the business purpose of each expense. E-file 2012 Instead, you can divide the expenses based on the total business use of the listed property. E-file 2012 Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. E-file 2012 For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. E-file 2012 Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. E-file 2012 Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. E-file 2012 Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. E-file 2012 It must be kept elsewhere and made available as support to the district director on request. E-file 2012 Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. E-file 2012 If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. E-file 2012 If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. E-file 2012 If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. E-file 2012 Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. E-file 2012 Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. E-file 2012 Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. E-file 2012 If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. E-file 2012 Employees. E-file 2012   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. E-file 2012 Employees claiming the standard mileage rate may be able to use Form 2106–EZ. E-file 2012 Employer who provides vehicles to employees. E-file 2012   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. E-file 2012   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. E-file 2012 Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. E-file 2012   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. E-file 2012 See the instructions for Form 4562. E-file 2012 Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. E-file 2012 In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. E-file 2012 In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. E-file 2012 For more information about deductions after the recovery period for automobiles, see Publication 917. E-file 2012 Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. E-file 2012 Table 1. E-file 2012 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. E-file 2012 Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications