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File 1040x online 5. File 1040x online   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. File 1040x online Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. File 1040x online Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. File 1040x online Deduction for employees. File 1040x online If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. File 1040x online Business-use requirement. File 1040x online If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. File 1040x online In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. File 1040x online You may also have to recapture (include in income) any excess depreciation claimed in previous years. File 1040x online A similar inclusion amount applies to certain leased property. File 1040x online Passenger automobile limits and rules. File 1040x online Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. File 1040x online You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. File 1040x online This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. File 1040x online It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. File 1040x online Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. File 1040x online What Is Listed Property? Listed property is any of the following. File 1040x online Passenger automobiles (as defined later). File 1040x online Any other property used for transportation, unless it is an excepted vehicle. File 1040x online Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). File 1040x online Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. File 1040x online A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. File 1040x online Improvements to listed property. File 1040x online   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. File 1040x online The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. File 1040x online For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. File 1040x online Passenger Automobiles 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 (6,000 pounds or less of gross vehicle weight for trucks and vans). File 1040x online It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. File 1040x online The following vehicles are not considered passenger automobiles for these purposes. File 1040x online An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. File 1040x online A vehicle used directly in the trade or business of transporting persons or property for pay or hire. File 1040x online A truck or van that is a qualified nonpersonal use vehicle. File 1040x online Qualified nonpersonal use vehicles. File 1040x online   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. File 1040x online They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. File 1040x online They also 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. File 1040x online For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. File 1040x online Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. File 1040x online Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. File 1040x online Excepted vehicles. File 1040x online   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). File 1040x online Clearly marked police and fire vehicles. File 1040x online Unmarked vehicles used by law enforcement officers if the use is officially authorized. File 1040x online Ambulances used as such and hearses used as such. File 1040x online Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. File 1040x online Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. File 1040x online Combines, cranes and derricks, and forklifts. File 1040x online Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. File 1040x online Qualified moving vans. File 1040x online Qualified specialized utility repair trucks. File 1040x online School buses used in transporting students and employees of schools. File 1040x online Other buses with a capacity of at least 20 passengers that are used as passenger buses. File 1040x online Tractors and other special purpose farm vehicles. File 1040x online Clearly marked police and fire vehicle. File 1040x online   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. File 1040x online It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. File 1040x online It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. File 1040x online It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. File 1040x online It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. File 1040x online A marking on a license plate is not a clear marking for these purposes. File 1040x online Qualified moving van. File 1040x online   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. File 1040x online No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. File 1040x online Personal use for travel to and from a move site happens no more than five times a month on average. File 1040x online Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. File 1040x online Qualified specialized utility repair truck. File 1040x online   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. File 1040x online The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. File 1040x online Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. File 1040x online The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. File 1040x online Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. File 1040x online It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. File 1040x online Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. File 1040x online The following are neither computers nor related peripheral equipment. File 1040x online Any equipment that is an integral part of other property that is not a computer. File 1040x online Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. File 1040x online Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. File 1040x online Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. File 1040x online The use of your property in performing services as an employee is a business use only if both the following requirements are met. File 1040x online The use is for your employer's convenience. File 1040x online The use is required as a condition of your employment. File 1040x online If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. File 1040x online Employer's convenience. File 1040x online   Whether the use of listed property is for your employer's convenience must be determined from all the facts. File 1040x online The use is for your employer's convenience if it is for a substantial business reason of the employer. File 1040x online The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. File 1040x online Condition of employment. File 1040x online   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. File 1040x online The use of property must be required for you to perform your duties properly. File 1040x online Your employer does not have to require explicitly that you use the property. File 1040x online However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. File 1040x online Example 1. File 1040x online Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. File 1040x online She owns and uses a motorcycle to deliver packages to downtown offices. File 1040x online We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. File 1040x online Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. File 1040x online Example 2. File 1040x online Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. File 1040x online He must travel to these sites on a regular basis. File 1040x online Uplift does not furnish an automobile or explicitly require him to use his own automobile. File 1040x online However, it pays him for any costs he incurs in traveling to the various sites. File 1040x online The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. File 1040x online Example 3. File 1040x online Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. File 1040x online The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. File 1040x online Example 4. File 1040x online Marilyn Lee is a pilot for Y Company, a small charter airline. File 1040x online Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. File 1040x online Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. File 1040x online Marilyn owns her own airplane. File 1040x online The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. File 1040x online Example 5. File 1040x online David Rule is employed as an engineer with Zip, an engineering contracting firm. File 1040x online He occasionally takes work home at night rather than work late in the office. File 1040x online He owns and uses a home computer which is virtually identical to the office model. File 1040x online His use of the computer is neither for the convenience of his employer nor required as a condition of employment. File 1040x online What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. File 1040x online To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. File 1040x online If this requirement is not met, the following rules apply. File 1040x online Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. File 1040x online Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. File 1040x online Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. File 1040x online This rule applies each year of the recovery period. File 1040x online Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. File 1040x online A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. File 1040x online Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. File 1040x online 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. File 1040x online Exception for leased property. File 1040x online   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. File 1040x online   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. File 1040x online This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. File 1040x online Occasional or incidental leasing activity is insufficient. File 1040x online For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. File 1040x online 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. File 1040x online How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. File 1040x online For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. File 1040x online You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. File 1040x online For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). File 1040x online For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. File 1040x online Entertainment use. File 1040x online   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. File 1040x online Commuting use. File 1040x online   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. File 1040x online For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. File 1040x online This is also true for a business meeting held in a car while commuting to work. File 1040x online Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. File 1040x online The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. File 1040x online Use of your automobile by another person. File 1040x online   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. File 1040x online That use is directly connected with your business. File 1040x online You properly report the value of the use as income to the other person and withhold tax on the income where required. File 1040x online You are paid a fair market rent. File 1040x online Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). File 1040x online Employee deductions. File 1040x online   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. File 1040x online See Can Employees Claim a Deduction , earlier. File 1040x online Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. File 1040x online However, it does not include the following uses. File 1040x online The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). File 1040x online The use of property as pay for the services of a 5% owner or related person. File 1040x online The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. File 1040x online Property does not stop being used predominantly for qualified business use because of a transfer at death. File 1040x online Exception for leasing or compensatory use of aircraft. File 1040x online   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. File 1040x online 5% owner. File 1040x online   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. File 1040x online   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. File 1040x online More than 5% of the outstanding stock of the corporation. File 1040x online Stock possessing more than 5% of the total combined voting power of all stock in the corporation. File 1040x online Related persons. File 1040x online   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . File 1040x online For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. File 1040x online Examples. File 1040x online   The following examples illustrate whether the use of business property is qualified business use. File 1040x online Example 1. File 1040x online John Maple is the sole proprietor of a plumbing contracting business. File 1040x online John employs his brother, Richard, in the business. File 1040x online As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. File 1040x online The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. File 1040x online The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. File 1040x online Example 2. File 1040x online John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. File 1040x online He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. File 1040x online This use of company automobiles by employees is not a qualified business use. File 1040x online Example 3. File 1040x online James Company Inc. File 1040x online owns several automobiles that its employees use for business purposes. File 1040x online The employees also are allowed to take the automobiles home at night. File 1040x online The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. File 1040x online This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. File 1040x online Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. File 1040x online However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. File 1040x online Example 1. File 1040x online Sarah Bradley uses a home computer 50% of the time to manage her investments. File 1040x online She also uses the computer 40% of the time in her part-time consumer research business. File 1040x online Sarah's home computer is listed property because it is not used at a regular business establishment. File 1040x online She does not use the computer predominantly for qualified business use. File 1040x online Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. File 1040x online She must depreciate it using the straight line method over the ADS recovery period. File 1040x online Her combined business/investment use for determining her depreciation deduction is 90%. File 1040x online Example 2. File 1040x online If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. File 1040x online She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. File 1040x online Her combined business/investment use for determining her depreciation deduction is 90%. File 1040x online Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. File 1040x online You also increase the adjusted basis of your property by the same amount. File 1040x online Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. File 1040x online To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. File 1040x online Example. File 1040x online In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. File 1040x online She used it only for qualified business use for 2009 through 2012. File 1040x online Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. File 1040x online She began depreciating it using the 200% DB method over a 5-year GDS recovery period. File 1040x online The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. File 1040x online During 2013, she used the truck 50% for business and 50% for personal purposes. File 1040x online She includes $4,018 excess depreciation in her gross income for 2013. File 1040x online The excess depreciation is determined as follows. File 1040x online Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. File 1040x online (Depreciation is from Table A-1. File 1040x online ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. File 1040x online The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. File 1040x online Where to figure and report recapture. File 1040x online   Use Form 4797, Part IV, to figure the recapture amount. File 1040x online Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. File 1040x online For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. File 1040x online If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. File 1040x online Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. File 1040x online Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). File 1040x online For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. File 1040x online The inclusion amount is the sum of Amount A and Amount B, described next. File 1040x online However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. File 1040x online Amount A. File 1040x online   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . File 1040x online   The fair market value of the property is the value on the first day of the lease term. File 1040x online If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. File 1040x online Amount B. File 1040x online   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . File 1040x online Maximum inclusion amount. File 1040x online   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. File 1040x online Inclusion amount worksheet. File 1040x online   The following worksheet is provided to help you figure the inclusion amount for leased listed property. File 1040x online Inclusion Amount Worksheet for Leased Listed Property 1. File 1040x online Fair market value   2. File 1040x online Business/investment use for first year business use is 50% or less   3. File 1040x online Multiply line 1 by line 2. File 1040x online   4. File 1040x online Rate (%) from Table A-19   5. File 1040x online Multiply line 3 by line 4. File 1040x online This is Amount A. File 1040x online   6. File 1040x online Fair market value   7. File 1040x online Average business/investment use for years property leased before the first year business use is 50% or less . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online . File 1040x online   8. File 1040x online Multiply line 6 by line 7   9. File 1040x online Rate (%) from Table A-20   10. File 1040x online Multiply line 8 by line 9. File 1040x online This is Amount B. File 1040x online   11. File 1040x online Add line 5 and line 10. File 1040x online This is your inclusion amount. File 1040x online Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File 1040x online )         Example. File 1040x online On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. File 1040x online The lease is for a period of 5 years. File 1040x online Larry does not use the computer at a regular business establishment, so it is listed property. File 1040x online His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. File 1040x online He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. File 1040x online The computer has a 5-year recovery period under both GDS and ADS. File 1040x online 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. File 1040x online 8%. File 1040x online The applicable percentage from Table A-20 is 22. File 1040x online 0%. File 1040x online Larry's deductible rent for the computer for 2013 is $800. File 1040x online Larry uses the Inclusion amount worksheet. File 1040x online to figure the amount he must include in income for 2013. File 1040x online His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). File 1040x online Inclusion Amount Worksheet for Leased Listed Property 1. File 1040x online Fair market value $3,000   2. File 1040x online Business/investment use for first year business use is 50% or less 40 % 3. File 1040x online Multiply line 1 by line 2. File 1040x online 1,200   4. File 1040x online Rate (%) from Table A-19 −19. File 1040x online 8 % 5. File 1040x online Multiply line 3 by line 4. File 1040x online This is Amount A. File 1040x online −238   6. File 1040x online Fair market value 3,000   7. File 1040x online Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. File 1040x online Multiply line 6 by line 7 2,100   9. File 1040x online Rate (%) from Table A-20 22. File 1040x online 0 % 10. File 1040x online Multiply line 8 by line 9. File 1040x online This is Amount B. File 1040x online 462   11. File 1040x online Add line 5 and line 10. File 1040x online This is your inclusion amount. File 1040x online Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File 1040x online ) $224           Lease beginning in the last 9 months of your tax year. File 1040x online    The inclusion amount is subject to a special rule if all the following apply. File 1040x online The lease term begins within 9 months before the close of your tax year. File 1040x online You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. File 1040x online The lease term continues into your next tax year. File 1040x online Under this special rule, add the inclusion amount to income in the next tax year. File 1040x online Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. File 1040x online Skip lines 6 through 9 of the worksheet and enter zero on line 10. File 1040x online Example 1. File 1040x online On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. File 1040x online The property is 5-year property with a fair market value of $10,000. File 1040x online Her property has a recovery period of 5 years under ADS. File 1040x online The lease is for 5 years. File 1040x online Her business use of the property was 50% in 2012 and 90% in 2013. File 1040x online She paid rent of $3,600 for 2012, of which $3,240 is deductible. File 1040x online She must include $147 in income in 2013. File 1040x online The $147 is the sum of Amount A and Amount B. File 1040x online Amount A is $147 ($10,000 × 70% × 2. File 1040x online 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . File 1040x online Amount B is zero. File 1040x online Lease for less than one year. File 1040x online   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. File 1040x online The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. File 1040x online The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). File 1040x online   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. File 1040x online If you have 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, treat them as one lease. File 1040x online Example 2. File 1040x online On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. File 1040x online This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. File 1040x online The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. File 1040x online He must include $71 in income in 2013. File 1040x online The $71 is the sum of Amount A and Amount B. File 1040x online Amount A is $71 ($15,000 × 45% × 2. File 1040x online 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. File 1040x online Amount B is zero. File 1040x online Where to report inclusion amount. File 1040x online   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. File 1040x online For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. File 1040x online If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. File 1040x online Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. File 1040x online This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. File 1040x online Exception for leased cars. File 1040x online   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. File 1040x online For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . File 1040x online Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. File 1040x online They are based on the date you placed the automobile in service. File 1040x online Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. File 1040x online Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 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 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File 1040x online 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. File 1040x online 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. File 1040x online 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. File 1040x online 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. File 1040x online If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File 1040x online 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File 1040x online If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. File 1040x online If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. File 1040x online The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. File 1040x online Example. File 1040x online On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. File 1040x online She used the car only in her business. File 1040x online She files her tax return based on the calendar year. File 1040x online She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File 1040x online Under MACRS, a car is 5-year property. File 1040x online Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. File 1040x online Virginia multiplies the $14,500 unadjusted basis of her car by 0. File 1040x online 20 to get her MACRS depreciation of $2,900 for 2013. File 1040x online This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. File 1040x online She can deduct the full $2,900. File 1040x online Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. File 1040x online The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. File 1040x online Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. File 1040x online Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. File 1040x online 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. File 1040x online If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File 1040x online 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File 1040x online Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. File 1040x online The maximum deduction amounts for trucks and vans are shown in the following table. File 1040x online 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 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. File 1040x online 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. File 1040x online 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File 1040x online 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. File 1040x online 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. File 1040x online 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. File 1040x online 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. File 1040x online If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File 1040x online 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File 1040x online Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. File 1040x online Then use the information from this worksheet to prepare Form 4562. File 1040x online Depreciation Worksheet for Passenger Automobiles   Part I   1. File 1040x online MACRS system (GDS or ADS)     2. File 1040x online Property class     3. File 1040x online Date placed in service     4. File 1040x online Recovery period     5. File 1040x online Method and convention     6. File 1040x online Depreciation rate (from tables)     7. File 1040x online Maximum depreciation deduction for this year from the appropriate table       8. File 1040x online Business/investment-use percentage       9. File 1040x online Multiply line 7 by line 8. File 1040x online This is your adjusted maximum depreciation deduction       10. File 1040x online Section 179 deduction claimed this year (not more than line 9). File 1040x online Enter -0- if this is not the year you placed the car in service. File 1040x online         Note. File 1040x online  1) If line 10 is equal to line 9, stop here. File 1040x online Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. File 1040x online  2) If line 10 is less than line 9, complete Part II. File 1040x online   Part II   11. File 1040x online Subtract line 10 from line 9. File 1040x online This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. File 1040x online Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. File 1040x online Multiply line 12 by line 8. File 1040x online This is your business/investment cost       14. File 1040x online Section 179 deduction claimed in the year you placed the car in service       15. File 1040x online Subtract line 14 from line 13. File 1040x online This is your tentative basis for depreciation       16. File 1040x online Multiply line 15 by . File 1040x online 50 if the 50% special depreciation allowance applies. File 1040x online This is your special depreciation allowance. File 1040x online Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. File 1040x online Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. File 1040x online  2) If line 16 is less than line 11, complete Part III. File 1040x online   Part III   17. File 1040x online Subtract line 16 from 11. File 1040x online This is the limit on the amount you can deduct for MACRS depreciation       18. File 1040x online Subtract line 16 from line 15. File 1040x online This is your basis for depreciation. File 1040x online       19. File 1040x online Multiply line 18 by line 6. File 1040x online This is your tentative MACRS depreciation deduction. File 1040x online       20. File 1040x online Enter the lesser of line 17 or line 19. File 1040x online This is your MACRS depreciation deduction. File 1040x online     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. File 1040x online 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. File 1040x online             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. File 1040x online If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. File 1040x online You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. File 1040x online The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. File 1040x online See Maximum Depreciation Deduction , earlier. File 1040x online Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. File 1040x online You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. File 1040x online There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. File 1040x online Example. File 1040x online In May 2007, you bought and placed in service a car costing $31,500. File 1040x online The car was 5-year property under GDS (MACRS). File 1040x online You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File 1040x online You used the car exclusively for business during the recovery period (2007 through 2012). File 1040x online You figured your depreciation as shown below. File 1040x online Year Percentage Amount Limit   Allowed 2007 20. File 1040x online 0% $6,300 $2,960   $2,960 2008 32. File 1040x online 0 10,080 4,800   4,800 2009 19. File 1040x online 2 6,048 2,850   2,850 2010 11. File 1040x online 52 3,629 1,675   1,675 2011 11. File 1040x online 52 3,629 1,675   1,675 2012 5. File 1040x online 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). File 1040x online If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. File 1040x online If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. File 1040x online However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. File 1040x online For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. File 1040x online Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. File 1040x online Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. File 1040x online This excess basis is the additional cash paid for the new automobile in the trade-in. File 1040x online The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. File 1040x online Special rules apply in determining the passenger automobile limits. File 1040x online These rules and examples are discussed in section 1. File 1040x online 168(i)-6(d)(3) of the regulations. File 1040x online Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. File 1040x online For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. File 1040x online 168(i)-6(i) and 1. File 1040x online 168(i)-6(j) of the regulations. File 1040x online What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. File 1040x online For listed property, you must keep records for as long as any recapture can still occur. File 1040x online Recapture can occur in any tax year of the recovery period. File 1040x online 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. File 1040x online You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. File 1040x online However, your records should back up your receipts in an orderly manner. File 1040x online Elements of expenditure or use. File 1040x online   Your records or other documentary evidence must support all the following. File 1040x online 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. File 1040x online 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. File 1040x online The date of the expenditure or use. File 1040x online The business or investment purpose for the expenditure or use. File 1040x online   Written documents of your expenditure or use are generally better evidence than oral statements alone. File 1040x online You do not have to keep a daily log. File 1040x online 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 of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. File 1040x online Timeliness. File 1040x online   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. File 1040x online 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 generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. File 1040x online   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. File 1040x online Business purpose supported. File 1040x online   Generally, an adequate record of business purpose must be in the form of a written statement. File 1040x online However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. File 1040x online A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. File 1040x online 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. File 1040x online Business use supported. File 1040x online   An adequate record contains enough information on each element of every business or investment use. File 1040x online The amount of detail required to support the use depends on the facts and circumstances. File 1040x online For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the 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. File 1040x online   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. File 1040x online Separate or combined expenditures or uses. File 1040x online   Each use by you normally is considered a separate use. File 1040x online However, you can combine repeated uses as a single item. File 1040x online   Record each expenditure as a separate item. File 1040x online Do not combine it with other expenditures. File 1040x online If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. File 1040x online If you combine these expenses, you do not need to support the business purpose of each expense. File 1040x online Instead, you can divide the expenses based on the total business use of the listed property. File 1040x online   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. File 1040x online For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. File 1040x online You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. File 1040x online Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. File 1040x online Confidential information. File 1040x online   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. File 1040x online You must keep it elsewhere and make it available as support to the IRS director for your area on request. File 1040x online Substantial compliance. File 1040x online   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 satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. File 1040x online   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. File 1040x online By your own oral or written statement containing detailed information as to the element. File 1040x online By other evidence sufficient to establish the element. File 1040x online   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. File 1040x online If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. File 1040x online Sampling. File 1040x online   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. File 1040x online Example 1. File 1040x online Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. File 1040x online She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. File 1040x online There is no other business use of the automobile, but she and family members also use it for personal purposes. File 1040x online She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. File 1040x online Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. File 1040x online If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File 1040x online Example 2. File 1040x online Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. File 1040x online Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. File 1040x online The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File 1040x online Example 3. File 1040x online Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. File 1040x online For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. File 1040x online During these weeks, his business use of the automobile does not follow a consistent pattern. File 1040x online During the fourth week of each month, he delivers all business orders taken during the previous month. File 1040x online The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. File 1040x online The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. File 1040x online Loss of records. File 1040x online   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. File 1040x online How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. File 1040x online Any deduction for a vehicle. File 1040x online A depreciation deduction for any other listed property. File 1040x online If you claim any deduction for a vehicle, you also must provide the information requested in Section B. File 1040x online If you provide the vehicle for your employee's use, the employee must give you this information. File 1040x online If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. File 1040x online Vehicles used by your employees. File 1040x online   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. File 1040x online You maintain a written policy statement that prohibits one of the following uses of the vehicles. File 1040x online All personal use including commuting. File 1040x online Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. File 1040x online You treat all use of the vehicles by your employees as personal use. File 1040x online You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. File 1040x online For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. File 1040x online Exceptions. File 1040x online   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. File 1040x online Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. File 1040x online Prev  Up  Next   Home   More Online Publications
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Report Phishing

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

What is phishing?
Phishing is a scam typically carried out by unsolicited email and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.

All unsolicited email claiming to be from either the IRS or any other IRS-related components such as the Office of Professional Responsibility or EFTPS, should be reported to phishing@irs.gov.

However, if you have experienced monetary losses due to an IRS-related incident please file a complaint with the Federal Trade Commission through their Complaint Assistant to make that information available to investigators.

ALERT: IRS Warns of Phone Scam

What to do if you receive a suspicious IRS-related communication

If

Then

You receive an email claiming to be from the IRS that contains a request for personal information …
  1. Do not reply.
  2. Do not open any attachments. Attachments may contain malicious code that will infect your computer.
  3. Do not click on any links.
    If you clicked on links in a suspicious email or phishing website and entered confidential information, visit our identity protection page.
  4. Forward the email as-is, to us at phishing@irs.gov.
  5. After you forward the email and/or header information to us, delete the original email message you received.

Note:
Please forward the full original email to us at phishing@irs.gov. Do not forward scanned images of printed emails as that strips the email of valuable information only available in the electronic copy.

You discover a website on the Internet that claims to be the IRS but you suspect it is bogus … ... send the URL of the suspicious site to phishing@irs.gov. Please add in the subject line of the email, 'Suspicious website'.
You receive a phone call or paper letter via mail from an individual claiming to be the IRS but you suspect they are not an IRS employee …

Phone call:

  1. Ask for a call back number and employee badge number.
  2. Contact the IRS to determine if the caller is an IRS employee with a legitimate need to contact you.
  3. If you determine the person calling you is an IRS employee with a legitimate need to contact you, call them back.

Letter or notice via paper mail:

  1. Contact the IRS to determine if the mail is a legitimate IRS letter.
  2. If it is a legitimate IRS letter, reply if needed.

Report the incident to the Treasury Inspector General for Tax Administration if the caller or party that sent the paper letter is not legitimate.

You receive an unsolicited e-mail or fax, involving a stock or share purchase 

... and you are a U.S. citizen located in the United States or its territories or a U.S. citizen living abroad.

  1. Complete the appropriate complaint form with the U.S. Securities and Exchange Commission.
  2. Forward email to phishing@irs.gov.
    Please add in the subject line of the email, 'Stock'.
  3. If you are a victim of monetary or identity theft, you may submit a complaint through the FTC Complaint Assistant.  

... and you are not a U.S. citizen and reside outside the United States.

  1. Complete the appropriate complaint form with the U.S. Securities and Exchange Commission.
  2. Contact your securities regulator and file a complaint.
  3. Forward email to phishing@irs.gov.
    Please add in the subject line of the e-mail, 'Stock'.
  4. If you are a victim of monetary or identity theft, you may report your complaint to econsumer.gov.
You receive an unsolicited fax (such as Form W8-BEN) claiming to be from the IRS, requesting personal information … Contact the IRS to determine if the fax is from the IRS.
  • If you learn the fax is not from the IRS, please send us the information via email at phishing@irs.gov. In the subject line of the email, please type the word ‘FAX’.
You receive a text message or Short Message Service (SMS) message claiming to be from the IRS …
  1. Do not reply.
  2. Do not open any attachments. Attachments may contain malicious code that will infect your computer or mobile phone.
  3. Do not click on any links. If you clicked on links in a suspicious SMS and entered confidential information, visit our identity protection page.
  4. Forward the text as-is, to us at 202-552-1226. Note: Standard text messaging rates apply.
  5. If possible, in a separate text, forward the originating number to us at 202-552-1226
  6. After you forward the text, please delete the original text.

You have a tax-related question ...

Note: Do not submit tax-related questions to phishing@irs.gov.

If you have a tax-related question, unrelated to phishing or identity theft, please contact the IRS.

How to identify phishing email scams claiming to be from the IRS and bogus IRS websites


The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

The IRS does not:

  • request detailed personal information through e-mail.
  • send any communication requesting your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

What to do if you receive a suspicious email message that does not claim to be from the IRS

 If

 Then

You receive a suspicious phishing email not claiming to be from the IRS ... Forward the email as-is to reportphishing@antiphishing.org.
You receive an email you suspect contains malicious code or a malicious attachment and you HAVE clicked on the link or downloaded the attachment … Visit OnGuardOnline.gov to learn what to do if you suspect you have malware on your computer.
You receive an email you suspect contains malicious code or a malicious attachment and you HAVE NOT clicked on the link or downloaded the attachment … Forward the email to your Internet Service Provider’s abuse department and/or to spam@uce.gov.

 

 

Page Last Reviewed or Updated: 26-Mar-2014

Phishing-Malware

See YouTube for more ID theft videos.

 

The File 1040x Online

File 1040x online 5. File 1040x online   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. File 1040x online Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. File 1040x online Free help with your tax return. File 1040x online    Free help in preparing your return is available nationwide from IRS-certified volunteers. File 1040x online The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. File 1040x online The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. File 1040x online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. File 1040x online Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. File 1040x online To find the nearest VITA or TCE site, visit IRS. File 1040x online gov or call 1-800-906-9887. File 1040x online   As part of the TCE program, AARP offers the Tax-Aide counseling program. File 1040x online To find the nearest AARP Tax-Aide site, visit AARP's website at www. File 1040x online aarp. File 1040x online org/money/taxaide or call 1-888-227-7669. File 1040x online   For more information on these programs, go to IRS. File 1040x online gov and enter “VITA” in the search box. File 1040x online Internet. File 1040x online IRS. File 1040x online gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. File 1040x online Apply for an Employer Identification Number (EIN). File 1040x online Go to IRS. File 1040x online gov and enter Apply for an EIN in the search box. File 1040x online Request an Electronic Filing PIN by going to IRS. File 1040x online gov and entering Electronic Filing PIN in the search box. File 1040x online Check the status of your 2013 refund with Where's My Refund? Go to IRS. File 1040x online gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 1040x online If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File 1040x online Check the status of your amended return. File 1040x online Go to IRS. File 1040x online gov and enter Where's My Amended Return in the search box. File 1040x online Download forms, instructions, and publications, including some accessible versions. File 1040x online Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. File 1040x online gov or IRS2Go. File 1040x online Tax return and tax account transcripts are generally available for the current year and past three years. File 1040x online Figure your income tax withholding with the IRS Withholding Calculator on IRS. File 1040x online gov. File 1040x online Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. File 1040x online Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File 1040x online gov. File 1040x online Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. File 1040x online gov or IRS2Go. File 1040x online Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. File 1040x online An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. File 1040x online Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. File 1040x online If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. File 1040x online Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File 1040x online Locate the nearest volunteer help site with the VITA Locator Tool on IRS. File 1040x online gov. File 1040x online Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File 1040x online The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File 1040x online Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. File 1040x online AARP offers the Tax-Aide counseling program as part of the TCE program. File 1040x online Visit AARP's website to find the nearest Tax-Aide location. File 1040x online Research your tax questions. File 1040x online Search publications and instructions by topic or keyword. File 1040x online Read the Internal Revenue Code, regulations, or other official guidance. File 1040x online Read Internal Revenue Bulletins. File 1040x online Sign up to receive local and national tax news by email. File 1040x online Phone. File 1040x online You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File 1040x online Download the free IRS2Go mobile app from the iTunes app store or from Google Play. File 1040x online Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. File 1040x online Call to locate the nearest volunteer help site, 1-800-906-9887. File 1040x online Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File 1040x online The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File 1040x online Most VITA and TCE sites offer free electronic filing. File 1040x online Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File 1040x online Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File 1040x online Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. File 1040x online The automated Where's My Refund? information is available 24 hours a day, 7 days a week. File 1040x online If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File 1040x online Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. File 1040x online Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 1040x online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. File 1040x online Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File 1040x online Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). File 1040x online You should receive your order within 10 business days. File 1040x online Call to order transcripts of your tax returns or tax account, 1-800-908-9946. File 1040x online Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. File 1040x online Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. File 1040x online Call to ask tax questions, 1-800-829-1040. File 1040x online Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File 1040x online The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File 1040x online These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. File 1040x online gsa. File 1040x online gov/fedrelay. File 1040x online Walk-in. File 1040x online You can find a selection of forms, publications and services — in-person, face-to-face. File 1040x online Products. File 1040x online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File 1040x online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File 1040x online Services. File 1040x online You can walk in to your local TAC most business days for personal, face-to-face tax help. File 1040x online An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. File 1040x online If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. File 1040x online No appointment is necessary—just walk in. File 1040x online Before visiting, check www. File 1040x online irs. File 1040x online gov/localcontacts for hours of operation and services provided. File 1040x online Mail. File 1040x online You can send your order for forms, instructions, and publications to the address below. File 1040x online You should receive a response within 10 business days after your request is received. File 1040x online  Internal Revenue Service 1201 N. File 1040x online Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. File 1040x online    The Taxpayer Advocate Service (TAS) is your voice at the IRS. File 1040x online Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File 1040x online What can TAS do for you?    We can offer you free help with IRS problems that you can't resolve on your own. File 1040x online We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File 1040x online You face (or your business is facing) an immediate threat of adverse action. File 1040x online You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File 1040x online   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File 1040x online Here's why we can help: TAS is an independent organization within the IRS. File 1040x online Our advocates know how to work with the IRS. File 1040x online Our services are free and tailored to meet your needs. File 1040x online We have offices in every state, the District of Columbia, and Puerto Rico. File 1040x online How can you reach us?    If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. File 1040x online irs. File 1040x online gov/advocate, or call us toll-free at 1-877-777-4778. File 1040x online How else does TAS help taxpayers?    TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File 1040x online If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. File 1040x online irs. File 1040x online gov/sams. File 1040x online Low Income Taxpayer Clinics. File 1040x online    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. File 1040x online Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File 1040x online Visit www. File 1040x online TaxpayerAdvocate. File 1040x online irs. File 1040x online gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. File 1040x online Prev  Up  Next   Home   More Online Publications