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File 2012 Taxes Turbotax

File 2012 taxes turbotax 1. File 2012 taxes turbotax   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. File 2012 taxes turbotax Employee. File 2012 taxes turbotax Other payee. File 2012 taxes turbotax Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. File 2012 taxes turbotax Earning credits in 2013 and 2014. File 2012 taxes turbotax Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. File 2012 taxes turbotax Penalties. File 2012 taxes turbotax Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. File 2012 taxes turbotax It also discusses taxpayer identification numbers. File 2012 taxes turbotax Table 1-1 lists the benefits of filing electronically. File 2012 taxes turbotax Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. File 2012 taxes turbotax Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. File 2012 taxes turbotax You may want to get Publication 509, Tax Calendars. File 2012 taxes turbotax It has tax calendars that tell you when to file returns and make tax payments. File 2012 taxes turbotax Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. File 2012 taxes turbotax S. File 2012 taxes turbotax Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. File 2012 taxes turbotax Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. File 2012 taxes turbotax Social security number (SSN). File 2012 taxes turbotax   Generally, use your SSN as your taxpayer identification number. File 2012 taxes turbotax You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. File 2012 taxes turbotax   To apply for an SSN, use Form SS-5, Application for a Social Security Card. File 2012 taxes turbotax This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. File 2012 taxes turbotax It is also available from the SSA website at www. File 2012 taxes turbotax socialsecurity. File 2012 taxes turbotax gov. File 2012 taxes turbotax Individual taxpayer identification number (ITIN). File 2012 taxes turbotax   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. File 2012 taxes turbotax In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. File 2012 taxes turbotax  Internal Revenue Service ITIN Operation P. File 2012 taxes turbotax O. File 2012 taxes turbotax Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. File 2012 taxes turbotax If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. File 2012 taxes turbotax The application is also available in Spanish. File 2012 taxes turbotax The form is available at IRS. File 2012 taxes turbotax gov or you can call 1-800-829-3676 to order the form. File 2012 taxes turbotax    An ITIN is for tax use only. File 2012 taxes turbotax It does not entitle the holder to social security benefits or change the holder's employment or immigration status. File 2012 taxes turbotax Employer identification number (EIN). File 2012 taxes turbotax   You must also have an EIN to use as a taxpayer identification number if you do either of the following. File 2012 taxes turbotax Pay wages to one or more employees. File 2012 taxes turbotax File pension or excise tax returns. File 2012 taxes turbotax   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. File 2012 taxes turbotax   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. File 2012 taxes turbotax irs. File 2012 taxes turbotax gov/businesses/small. File 2012 taxes turbotax The EIN is issued immediately once the application information is validated. File 2012 taxes turbotax By telephone at 1-800-829-4933. File 2012 taxes turbotax By mailing or faxing Form SS-4, Application for Employer Identification Number. File 2012 taxes turbotax New EIN. File 2012 taxes turbotax   You may need to get a new EIN if either the form or the ownership of your business changes. File 2012 taxes turbotax For more information, see Publication 1635, Understanding Your EIN. File 2012 taxes turbotax When you need identification numbers of other persons. File 2012 taxes turbotax   In operating your business, you will probably make certain payments you must report on information returns. File 2012 taxes turbotax These payments are discussed under Information Returns, later in this chapter. File 2012 taxes turbotax You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. File 2012 taxes turbotax You must include the payee's identification number and your identification number on the returns and statements. File 2012 taxes turbotax Employee. File 2012 taxes turbotax   If you have employees, you must get an SSN from each of them. File 2012 taxes turbotax Record the name and SSN of each employee exactly as they are shown on the employee's social security card. File 2012 taxes turbotax If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. File 2012 taxes turbotax This may occur if the employee's name was changed due to marriage or divorce. File 2012 taxes turbotax   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. File 2012 taxes turbotax   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. File 2012 taxes turbotax Other payee. File 2012 taxes turbotax   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. File 2012 taxes turbotax If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. File 2012 taxes turbotax   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. File 2012 taxes turbotax   A payee who does not provide you with an identification number may be subject to backup withholding. File 2012 taxes turbotax For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. File 2012 taxes turbotax Income Tax This part explains whether you have to file an income tax return and when you file it. File 2012 taxes turbotax It also explains how you pay the tax. File 2012 taxes turbotax Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. File 2012 taxes turbotax If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. File 2012 taxes turbotax How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. File 2012 taxes turbotax Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. File 2012 taxes turbotax Use Schedule C to figure your net profit or loss from your business. File 2012 taxes turbotax If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. File 2012 taxes turbotax You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. File 2012 taxes turbotax IRS e-file (Electronic Filing) Please click here for the text description of the image. File 2012 taxes turbotax E-file logo You may be able to file your tax returns electronically using an IRS e-file option. File 2012 taxes turbotax Table 1-1 lists the benefits of IRS e-file. File 2012 taxes turbotax IRS e-file uses automation to replace most of the manual steps needed to process paper returns. File 2012 taxes turbotax As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. File 2012 taxes turbotax As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. File 2012 taxes turbotax Using e-file does not affect your chances of an IRS examination of your return. File 2012 taxes turbotax You can file most commonly used business forms using IRS e-file. File 2012 taxes turbotax For more information, visit IRS. File 2012 taxes turbotax gov. File 2012 taxes turbotax Electronic signatures. File 2012 taxes turbotax   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. File 2012 taxes turbotax If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. File 2012 taxes turbotax If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. File 2012 taxes turbotax    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). File 2012 taxes turbotax You will also need to provide your date of birth (DOB). File 2012 taxes turbotax Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. File 2012 taxes turbotax To do this, check your annual Social Security Statement. File 2012 taxes turbotax   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. File 2012 taxes turbotax For more details on the Self-Select PIN program, visit IRS. File 2012 taxes turbotax gov. File 2012 taxes turbotax State returns. File 2012 taxes turbotax   In most states, you can file an electronic state return simultaneously with your federal return. File 2012 taxes turbotax For more information, check with your local IRS office, state tax agency, tax professional, or IRS. File 2012 taxes turbotax gov. File 2012 taxes turbotax Refunds. File 2012 taxes turbotax   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. File 2012 taxes turbotax   With e-file, your refund will be issued in half the time as when filing on paper. File 2012 taxes turbotax Most refunds are issued within 3 weeks. File 2012 taxes turbotax If you choose Direct Deposit, you can receive your refund in as few as 10 days. File 2012 taxes turbotax Offset against debts. File 2012 taxes turbotax   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. File 2012 taxes turbotax You will be notified if the refund you claimed has been offset against your debts. File 2012 taxes turbotax Refund inquiries. File 2012 taxes turbotax   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. File 2012 taxes turbotax Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. File 2012 taxes turbotax To check on your refund, do one of the following. File 2012 taxes turbotax Go to IRS. File 2012 taxes turbotax gov and click on Where's My Refund. File 2012 taxes turbotax Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. File 2012 taxes turbotax Call 1-800-829-1954 during the hours shown in your form instructions. File 2012 taxes turbotax Balance due. File 2012 taxes turbotax   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. File 2012 taxes turbotax You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. File 2012 taxes turbotax Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. File 2012 taxes turbotax You have two options. File 2012 taxes turbotax You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. File 2012 taxes turbotax You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. File 2012 taxes turbotax You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. File 2012 taxes turbotax Depending on the provider and the specific services requested, a fee may be charged. File 2012 taxes turbotax To find an authorized IRS e-file provider near you, go to IRS. File 2012 taxes turbotax gov or look for an “Authorized IRS e-file Provider” sign. File 2012 taxes turbotax Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. File 2012 taxes turbotax When you use your personal computer, you can e-file your return from your home any time of the day or night. File 2012 taxes turbotax Sign your return electronically using a self-selected PIN to complete the process. File 2012 taxes turbotax There is no signature form to submit or Forms W-2 to send in. File 2012 taxes turbotax Free Internet filing options. File 2012 taxes turbotax   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. File 2012 taxes turbotax gov or www. File 2012 taxes turbotax usa. File 2012 taxes turbotax gov. File 2012 taxes turbotax The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. File 2012 taxes turbotax Security and privacy certificate programs will assure tax data is safe and secure. File 2012 taxes turbotax To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. File 2012 taxes turbotax gov. File 2012 taxes turbotax   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. File 2012 taxes turbotax You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. File 2012 taxes turbotax Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. File 2012 taxes turbotax Others offer it for a fee. File 2012 taxes turbotax Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. File 2012 taxes turbotax Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. File 2012 taxes turbotax The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. File 2012 taxes turbotax Some locations offer free electronic filing. File 2012 taxes turbotax Table 1-1. File 2012 taxes turbotax Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. File 2012 taxes turbotax Security • Your privacy and security are assured. File 2012 taxes turbotax Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. File 2012 taxes turbotax There is nothing to mail. File 2012 taxes turbotax Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. File 2012 taxes turbotax Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. File 2012 taxes turbotax Free Internet filing options • Use IRS. File 2012 taxes turbotax gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. File 2012 taxes turbotax Electronic payment options • Convenient, safe, and secure electronic payment options are available. File 2012 taxes turbotax E-file and pay your taxes in a single step. File 2012 taxes turbotax Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. File 2012 taxes turbotax Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. File 2012 taxes turbotax When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. File 2012 taxes turbotax If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. File 2012 taxes turbotax If you file late, you may have to pay penalties and interest. File 2012 taxes turbotax If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. File 2012 taxes turbotax S. File 2012 taxes turbotax Individual Income Tax Return, to request an automatic 6-month extension. File 2012 taxes turbotax For calendar year taxpayers, this will extend the tax filing due date until October 15. File 2012 taxes turbotax Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. File 2012 taxes turbotax How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. File 2012 taxes turbotax You must pay it as you earn or receive income during the year. File 2012 taxes turbotax An employee usually has income tax withheld from his or her pay. File 2012 taxes turbotax If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. File 2012 taxes turbotax You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. File 2012 taxes turbotax Use Form 1040-ES to figure and pay the tax. File 2012 taxes turbotax If you do not have to make estimated tax payments, you can pay any tax due when you file your return. File 2012 taxes turbotax For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. File 2012 taxes turbotax What are my payment options?   You can pay your estimated tax electronically using various options. File 2012 taxes turbotax If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. File 2012 taxes turbotax These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). File 2012 taxes turbotax Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. File 2012 taxes turbotax Paying by credit or debit card over the phone or by Internet. File 2012 taxes turbotax Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. File 2012 taxes turbotax EFTPS    To enroll in EFTPS, go to www. File 2012 taxes turbotax eftps. File 2012 taxes turbotax gov or call 1-800-555-4477. File 2012 taxes turbotax When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. File 2012 taxes turbotax Benefits of EFTPS: The chance of an error in making your payments is reduced. File 2012 taxes turbotax You receive immediate confirmation of every transaction. File 2012 taxes turbotax Penalty for underpayment of tax. File 2012 taxes turbotax   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. File 2012 taxes turbotax The IRS will figure the penalty for you and send you a bill. File 2012 taxes turbotax Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. File 2012 taxes turbotax For more information, see Publication 505. File 2012 taxes turbotax Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. File 2012 taxes turbotax It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. File 2012 taxes turbotax If you earned income as a statutory employee, you do not pay SE tax on that income. File 2012 taxes turbotax Social security coverage. File 2012 taxes turbotax   Social security benefits are available to self-employed persons just as they are to wage earners. File 2012 taxes turbotax Your payments of SE tax contribute to your coverage under the social security system. File 2012 taxes turbotax Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. File 2012 taxes turbotax By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. File 2012 taxes turbotax How to become insured under social security. File 2012 taxes turbotax   You must be insured under the social security system before you begin receiving social security benefits. File 2012 taxes turbotax You are insured if you have the required number of credits (also called quarters of coverage), discussed next. File 2012 taxes turbotax Earning credits in 2013 and 2014. File 2012 taxes turbotax   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. File 2012 taxes turbotax Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). File 2012 taxes turbotax   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. File 2012 taxes turbotax    Making false statements to get or to increase social security benefits may subject you to penalties. File 2012 taxes turbotax The Social Security Administration (SSA) time limit for posting self-employment income. File 2012 taxes turbotax   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. File 2012 taxes turbotax If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. File 2012 taxes turbotax The SSA will not change its records to increase your self-employment income. File 2012 taxes turbotax Who must pay self-employment tax. File 2012 taxes turbotax   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. File 2012 taxes turbotax Your net earnings from self-employment (excluding church employee income) were $400 or more. File 2012 taxes turbotax You had church employee income of $108. File 2012 taxes turbotax 28 or more. File 2012 taxes turbotax The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. File 2012 taxes turbotax SE tax rate. File 2012 taxes turbotax   For 2013, the SE tax rate on net earnings is 15. File 2012 taxes turbotax 3% (12. File 2012 taxes turbotax 4% social security tax plus 2. File 2012 taxes turbotax 9% Medicare tax). File 2012 taxes turbotax Maximum earnings subject to SE tax. File 2012 taxes turbotax   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. File 2012 taxes turbotax 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. File 2012 taxes turbotax   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. File 2012 taxes turbotax 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. File 2012 taxes turbotax   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. File 2012 taxes turbotax 4% social security part of the SE tax on any of your net earnings. File 2012 taxes turbotax However, you must pay the 2. File 2012 taxes turbotax 9% Medicare part of the SE tax on all your net earnings. File 2012 taxes turbotax Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. File 2012 taxes turbotax   More information. File 2012 taxes turbotax   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. File 2012 taxes turbotax Table 1-2. File 2012 taxes turbotax Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. File 2012 taxes turbotax Self-employment tax Schedule SE File with Form 1040. File 2012 taxes turbotax Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. File 2012 taxes turbotax Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. File 2012 taxes turbotax     See Publication 15. File 2012 taxes turbotax Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. File 2012 taxes turbotax   Last day of February (March 31 if filing electronically)3. File 2012 taxes turbotax Federal unemployment (FUTA) tax 940 January 313. File 2012 taxes turbotax     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. File 2012 taxes turbotax Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). File 2012 taxes turbotax     Other forms – see the General Instructions for Certain Information Returns. File 2012 taxes turbotax Excise tax See Excise Taxes See the instructions to the forms. File 2012 taxes turbotax 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. File 2012 taxes turbotax For more information, see Publication 509, Tax Calendars. File 2012 taxes turbotax 2 File a separate schedule for each business. File 2012 taxes turbotax 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. File 2012 taxes turbotax     Employment Taxes If you have employees, you will need to file forms to report employment taxes. File 2012 taxes turbotax Employment taxes include the following items. File 2012 taxes turbotax Social security and Medicare taxes. File 2012 taxes turbotax Federal income tax withholding. File 2012 taxes turbotax Federal unemployment (FUTA) tax. File 2012 taxes turbotax For more information, see Publication 15 (Circular E), Employer's Tax Guide. File 2012 taxes turbotax That publication explains your tax responsibilities as an employer. File 2012 taxes turbotax To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. File 2012 taxes turbotax That publication has information to help you determine whether an individual is an independent contractor or an employee. File 2012 taxes turbotax If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. File 2012 taxes turbotax An independent contractor is someone who is self-employed. File 2012 taxes turbotax You do not generally have to withhold or pay any taxes on payments made to an independent contractor. File 2012 taxes turbotax Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. File 2012 taxes turbotax Manufacture or sell certain products. File 2012 taxes turbotax Operate certain kinds of businesses. File 2012 taxes turbotax Use various kinds of equipment, facilities, or products. File 2012 taxes turbotax Receive payment for certain services. File 2012 taxes turbotax For more information on excise taxes, see Publication 510, Excise Taxes. File 2012 taxes turbotax Form 720. File 2012 taxes turbotax   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. File 2012 taxes turbotax Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. File 2012 taxes turbotax Communications and air transportation taxes. File 2012 taxes turbotax Fuel taxes. File 2012 taxes turbotax Tax on the first retail sale of heavy trucks, trailers, and tractors. File 2012 taxes turbotax Manufacturers taxes on the sale or use of a variety of different articles. File 2012 taxes turbotax Tax on indoor tanning services. File 2012 taxes turbotax Form 2290. File 2012 taxes turbotax   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. File 2012 taxes turbotax The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. File 2012 taxes turbotax Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. File 2012 taxes turbotax For more information, see the Instructions for Form 2290. File 2012 taxes turbotax Depositing excise taxes. File 2012 taxes turbotax   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. File 2012 taxes turbotax For details on depositing excise taxes, see the Instructions for Form 720. File 2012 taxes turbotax Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. File 2012 taxes turbotax The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. File 2012 taxes turbotax You must give a copy of each information return you are required to file to the recipient or payer. File 2012 taxes turbotax In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. File 2012 taxes turbotax For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. File 2012 taxes turbotax Form 1099-MISC. File 2012 taxes turbotax   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. File 2012 taxes turbotax These payments include the following items. File 2012 taxes turbotax Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. File 2012 taxes turbotax Rent payments of $600 or more, other than rents paid to real estate agents. File 2012 taxes turbotax Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. File 2012 taxes turbotax Royalty payments of $10 or more. File 2012 taxes turbotax Payments to certain crew members by operators of fishing boats. File 2012 taxes turbotax You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. File 2012 taxes turbotax Form W-2. File 2012 taxes turbotax   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. File 2012 taxes turbotax You can file Form W-2 online. File 2012 taxes turbotax For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. File 2012 taxes turbotax Penalties. File 2012 taxes turbotax   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. File 2012 taxes turbotax For more information, see the General Instructions for Certain Information Returns. File 2012 taxes turbotax Failure to file information returns. File 2012 taxes turbotax This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. File 2012 taxes turbotax Failure to furnish correct payee statements. File 2012 taxes turbotax This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. File 2012 taxes turbotax Waiver of penalties. File 2012 taxes turbotax   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. File 2012 taxes turbotax   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. File 2012 taxes turbotax (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. File 2012 taxes turbotax ) Form 8300. File 2012 taxes turbotax   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. File 2012 taxes turbotax Cash includes U. File 2012 taxes turbotax S. File 2012 taxes turbotax and foreign coin and currency. File 2012 taxes turbotax It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. File 2012 taxes turbotax Cash does not include a check drawn on an individual's personal account (personal check). File 2012 taxes turbotax For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). File 2012 taxes turbotax Penalties. File 2012 taxes turbotax   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. File 2012 taxes turbotax Table 1-3. File 2012 taxes turbotax Going Out of Business Checklists (Note. File 2012 taxes turbotax The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. File 2012 taxes turbotax For more information, see the instructions for the listed forms. File 2012 taxes turbotax ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. File 2012 taxes turbotax   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. File 2012 taxes turbotax   □ File Form 8594 with your Form 1040 if you sold your business. File 2012 taxes turbotax Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. File 2012 taxes turbotax Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. File 2012 taxes turbotax Note. File 2012 taxes turbotax Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. File 2012 taxes turbotax   □ File Form 940 for the calendar year in which final wages were paid. File 2012 taxes turbotax Note. File 2012 taxes turbotax Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. File 2012 taxes turbotax Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. File 2012 taxes turbotax Note. File 2012 taxes turbotax These forms are generally due by the due date of your final Form 941 or Form 944. File 2012 taxes turbotax   □ File Form W-3 to file Forms W-2. File 2012 taxes turbotax Note. File 2012 taxes turbotax These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. File 2012 taxes turbotax   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. File 2012 taxes turbotax   □ File Form 1096 to file Forms 1099-MISC. File 2012 taxes turbotax Prev  Up  Next   Home   More Online Publications
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Understanding Your CP152A Notice

We received your Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds and provides an explanation for the reduced credit payment amount.


What you need to do

  • You don’t need to do anything.

You may want to...

  • Keep a copy of this notice for your records.

Will I receive a notice for each Form 8038-CP I filed?

  • Yes. We'll send a separate acknowledgement for each form.

Answers to Common Questions

Why was my credit payment reduced?
In accordance with the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic reductions take place as of March 1, 2013.


As determined by the Office of Management and Budget, these required reductions include a reduction to refundable credits under section 6431 of the Internal Revenue Code applicable to certain qualified bonds. The sequester reduction is applied to section 6431 amounts claimed by an issuer on any Form 8038-CP filed with the Service which results in an obligation to such issuer on or after March 1, 2013.


As a result, the refundable portion of your claim will be reduced by 8.7% percent. The sequestration rate will be applied until the end of the fiscal year (September 30, 2013), or intervening Congressional action, at which time the sequestration rate is subject to change.

Can I appeal the decision to reduce my refund?
Reduction in the amount of your refund is required of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended and can't be appealed.

Page Last Reviewed or Updated: 26-Mar-2014

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How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The File 2012 Taxes Turbotax

File 2012 taxes turbotax Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. File 2012 taxes turbotax Dispositions — mass asset accounts. File 2012 taxes turbotax Early dispositions — 15-year real property. File 2012 taxes turbotax Early dispositions — 18- and 19-year real property. File 2012 taxes turbotax Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. File 2012 taxes turbotax It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. File 2012 taxes turbotax These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. File 2012 taxes turbotax If you placed property in service during this period, you must continue to figure your depreciation under ACRS. File 2012 taxes turbotax If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. File 2012 taxes turbotax Listed property includes cars, other means of transportation, and certain computers. File 2012 taxes turbotax Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. File 2012 taxes turbotax ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. File 2012 taxes turbotax It does not matter that the underlying property is depreciated under ACRS or one of the other methods. File 2012 taxes turbotax ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. File 2012 taxes turbotax The alternate ACRS method used a recovery percentage based on a modified straight line method. File 2012 taxes turbotax The law prescribes fixed percentages to be uses for each class of property. File 2012 taxes turbotax Property depreciable under ACRS is called recovery property. File 2012 taxes turbotax The recovery class of property determines the recovery period. File 2012 taxes turbotax Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. File 2012 taxes turbotax Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. File 2012 taxes turbotax To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. File 2012 taxes turbotax You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. File 2012 taxes turbotax For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. File 2012 taxes turbotax What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. File 2012 taxes turbotax It includes new or used and real or personal property. File 2012 taxes turbotax The property must be for use in a trade or business or for the production of income. File 2012 taxes turbotax Property you acquired before 1981 or after 1986 is not ACRS recovery property. File 2012 taxes turbotax For information on depreciating property acquired before 1981, see chapter 2. File 2012 taxes turbotax For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. File 2012 taxes turbotax Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. File 2012 taxes turbotax It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. File 2012 taxes turbotax Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. File 2012 taxes turbotax Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. File 2012 taxes turbotax Intangible property. File 2012 taxes turbotax   Intangible property is not depreciated under ACRS. File 2012 taxes turbotax Property depreciated under methods not expressed in a term of years. File 2012 taxes turbotax   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. File 2012 taxes turbotax This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). File 2012 taxes turbotax Public utility property. File 2012 taxes turbotax   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. File 2012 taxes turbotax Additions or improvements to ACRS property after 1986. File 2012 taxes turbotax   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. File 2012 taxes turbotax ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. File 2012 taxes turbotax It does not matter that the underlying property is depreciated under ACRS or one of the other methods. File 2012 taxes turbotax How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. File 2012 taxes turbotax Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. File 2012 taxes turbotax Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. File 2012 taxes turbotax Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. File 2012 taxes turbotax However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. File 2012 taxes turbotax If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. File 2012 taxes turbotax If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. File 2012 taxes turbotax See Publication 551. File 2012 taxes turbotax Classes of Recovery Property All recovery property under ACRS is in one of the following classes. File 2012 taxes turbotax The class for your property was determined when you began to depreciate it. File 2012 taxes turbotax 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. File 2012 taxes turbotax Race horses over 2 years old when placed in service are 3-year property. File 2012 taxes turbotax Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. File 2012 taxes turbotax The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. File 2012 taxes turbotax You cannot claim depreciation for this property after 1988. File 2012 taxes turbotax 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. File 2012 taxes turbotax It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). File 2012 taxes turbotax The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. File 2012 taxes turbotax You cannot claim depreciation for this property after 1990. File 2012 taxes turbotax 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. File 2012 taxes turbotax Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. File 2012 taxes turbotax You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. File 2012 taxes turbotax For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. File 2012 taxes turbotax The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. File 2012 taxes turbotax Example. File 2012 taxes turbotax On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. File 2012 taxes turbotax You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. File 2012 taxes turbotax On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. File 2012 taxes turbotax The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). File 2012 taxes turbotax Your ACRS deduction was $3,000 (8% × $37,500). File 2012 taxes turbotax In 1987, your ACRS deduction was $5,250 (14% × $37,500). File 2012 taxes turbotax In 1988, your ACRS deduction was $4,500 (12% × $37,500). File 2012 taxes turbotax In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). File 2012 taxes turbotax In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). File 2012 taxes turbotax 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. File 2012 taxes turbotax It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. File 2012 taxes turbotax Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. File 2012 taxes turbotax You could group 15-year real property by month and year placed in service. File 2012 taxes turbotax In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. File 2012 taxes turbotax You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. File 2012 taxes turbotax Example. File 2012 taxes turbotax On March 5, 1984, you placed an apartment building in service in your business. File 2012 taxes turbotax It is 15-year real property. File 2012 taxes turbotax After subtracting the value of the land, your unadjusted basis in the building is $250,000. File 2012 taxes turbotax You use the calendar year as your tax year. File 2012 taxes turbotax March is the third month of your tax year. File 2012 taxes turbotax Your ACRS deduction for 1984 was $25,000 (10% × $250,000). File 2012 taxes turbotax For 1985, the percentage for the third month of the second year of the recovery period is 11%. File 2012 taxes turbotax Your deduction was $27,500 (11% × $250,000). File 2012 taxes turbotax For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. File 2012 taxes turbotax For 1989 through 1992, the percentage for the third month is 6%. File 2012 taxes turbotax Your deduction each year is $15,000 (6% × $250,000). File 2012 taxes turbotax For 1993, 1994, and 1995, the percentage for the third month is 5%. File 2012 taxes turbotax Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. File 2012 taxes turbotax Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. File 2012 taxes turbotax Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. File 2012 taxes turbotax Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. File 2012 taxes turbotax Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. File 2012 taxes turbotax The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. File 2012 taxes turbotax Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. File 2012 taxes turbotax Use the percentages listed under that month for each year of the recovery period. File 2012 taxes turbotax Table 2 shows percentages for low-income housing placed in service before May 9, 1985. File 2012 taxes turbotax Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. File 2012 taxes turbotax Example. File 2012 taxes turbotax In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. File 2012 taxes turbotax You use the calendar year as your tax year. File 2012 taxes turbotax You use Table C–3 because the property was placed in service after May 8, 1985. File 2012 taxes turbotax Your unadjusted basis for the property, not including the land, was $59,000. File 2012 taxes turbotax Your deduction for 1986 through 2001 is shown in the following table. File 2012 taxes turbotax Year Rate Deduction 1986 8. File 2012 taxes turbotax 9% $5,251 1987 12. File 2012 taxes turbotax 1% 7,139 1988 10. File 2012 taxes turbotax 5% 6,195 1989 9. File 2012 taxes turbotax 1% 5,369 1990 7. File 2012 taxes turbotax 9% 4,661 1991 6. File 2012 taxes turbotax 9% 4,071 1992 5. File 2012 taxes turbotax 9% 3,481 1993 5. File 2012 taxes turbotax 2% 3,068 1994 4. File 2012 taxes turbotax 6% 2,714 1995 4. File 2012 taxes turbotax 6% 2,714 1996 4. File 2012 taxes turbotax 6% 2,714 1997 4. File 2012 taxes turbotax 6% 2,714 1998 4. File 2012 taxes turbotax 6% 2,714 1999 4. File 2012 taxes turbotax 5% 2,655 2000 4. File 2012 taxes turbotax 5% 2,655 2001 1. File 2012 taxes turbotax 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. File 2012 taxes turbotax It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. File 2012 taxes turbotax The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. File 2012 taxes turbotax There are also tables for 18-year real property in the Appendix. File 2012 taxes turbotax Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. File 2012 taxes turbotax Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. File 2012 taxes turbotax Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. File 2012 taxes turbotax Use the percentages listed under that month for each year of the recovery period. File 2012 taxes turbotax Example. File 2012 taxes turbotax On April 28, 1985, you bought and placed in service a rental house. File 2012 taxes turbotax The house, not including the land, cost $95,000. File 2012 taxes turbotax This is your unadjusted basis for the house. File 2012 taxes turbotax You use the calendar year as your tax year. File 2012 taxes turbotax Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. File 2012 taxes turbotax You use Table 4 to figure your deduction for the house. File 2012 taxes turbotax April is the fourth month of your tax year. File 2012 taxes turbotax Your deduction for 1985 through 2003 is shown in the following table. File 2012 taxes turbotax Year Rate Deduction 1985 7. File 2012 taxes turbotax 0% $6,650 1986 9. File 2012 taxes turbotax 0% 8,550 1987 8. File 2012 taxes turbotax 0% 7,600 1988 7. File 2012 taxes turbotax 0% 6,650 1989 7. File 2012 taxes turbotax 0% 6,650 1990 6. File 2012 taxes turbotax 0% 5,700 1991 5. File 2012 taxes turbotax 0% 4,750 1992 5. File 2012 taxes turbotax 0% 4,750 1993 5. File 2012 taxes turbotax 0% 4,750 1994 5. File 2012 taxes turbotax 0% 4,750 1995 5. File 2012 taxes turbotax 0% 4,750 1996 5. File 2012 taxes turbotax 0% 4,750 1997 5. File 2012 taxes turbotax 0% 4,750 1998 4. File 2012 taxes turbotax 0% 3,800 1999 4. File 2012 taxes turbotax 0% 3,800 2000 4. File 2012 taxes turbotax 0% 3,800 2001 4. File 2012 taxes turbotax 0% 3,800 2002 4. File 2012 taxes turbotax 0% 3,800 2003 1. File 2012 taxes turbotax 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. File 2012 taxes turbotax It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. File 2012 taxes turbotax The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. File 2012 taxes turbotax Table 6 shows the percentages for 19-year real property. File 2012 taxes turbotax You find the month in your tax year that you placed the property in service. File 2012 taxes turbotax You use the percentages listed under that month for each year of the recovery period. File 2012 taxes turbotax Recovery Periods Each item of recovery property is assigned to a class of property. File 2012 taxes turbotax The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. File 2012 taxes turbotax The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. File 2012 taxes turbotax This alternate ACRS method uses a recovery percentage based on a modified straight line method. File 2012 taxes turbotax This alternate ACRS method generally uses percentages other than those from the tables. File 2012 taxes turbotax If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. File 2012 taxes turbotax This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. File 2012 taxes turbotax   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. File 2012 taxes turbotax 00% 10 years 10. File 2012 taxes turbotax 00% 12 years 8. File 2012 taxes turbotax 333% 15 years 6. File 2012 taxes turbotax 667% 25 years 4. File 2012 taxes turbotax 00% 35 years 2. File 2012 taxes turbotax 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. File 2012 taxes turbotax There are tables for 18- and 19-year real property later in this publication in the Appendix. File 2012 taxes turbotax For 15-year real property, see 15-year real property, later. File 2012 taxes turbotax 3-, 5-, and 10-year property. File 2012 taxes turbotax   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. File 2012 taxes turbotax This applies throughout the recovery period you selected. File 2012 taxes turbotax Half-year convention. File 2012 taxes turbotax   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. File 2012 taxes turbotax This applied regardless of when in the tax year you placed the property in service. File 2012 taxes turbotax For each of the remaining years in the recovery period, you take a full year's deduction. File 2012 taxes turbotax If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. File 2012 taxes turbotax Example. File 2012 taxes turbotax You operate a small upholstery business. File 2012 taxes turbotax On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. File 2012 taxes turbotax You elected to use the alternate ACRS method. File 2012 taxes turbotax You did not elect to take a section 179 deduction. File 2012 taxes turbotax You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. File 2012 taxes turbotax The saw is 5-year property, but you decided to recover its cost over 12 years. File 2012 taxes turbotax For 1986, your ACRS deduction reflected the half-year convention. File 2012 taxes turbotax In the first year, you deducted half of the amount determined for a full year. File 2012 taxes turbotax Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. File 2012 taxes turbotax 00     Electric saw   12 years straight line = 8. File 2012 taxes turbotax 333% 8. File 2012 taxes turbotax 333% ÷ $500 = $41. File 2012 taxes turbotax 67 Half-year convention -½ of $41. File 2012 taxes turbotax 67= 20. File 2012 taxes turbotax 84 Total ACRS deduction for 1986 $1,320. File 2012 taxes turbotax 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. File 2012 taxes turbotax Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. File 2012 taxes turbotax 333% 8. File 2012 taxes turbotax 333% ÷ $500 = $41. File 2012 taxes turbotax 67 Total annual ACRS deduction for 1987 through 1990 $2,641. File 2012 taxes turbotax 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. File 2012 taxes turbotax Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. File 2012 taxes turbotax 00     Electric saw   12 years straight line = 8. File 2012 taxes turbotax 333% 8. File 2012 taxes turbotax 333% ÷ $500 = $41. File 2012 taxes turbotax 67 Total ACRS deduction for 1991 $1,341. File 2012 taxes turbotax 67       The truck is fully depreciated after 1991. File 2012 taxes turbotax You take a full year of depreciation for the saw for the years 1992 through 1997. File 2012 taxes turbotax Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. File 2012 taxes turbotax 333% 8. File 2012 taxes turbotax 333% ÷ $500 = $41. File 2012 taxes turbotax 67 Total annual ACRS deduction for 1992 through 1997 $41. File 2012 taxes turbotax 67       You take a half-year of depreciation for the saw for 1998. File 2012 taxes turbotax Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. File 2012 taxes turbotax 333% 8. File 2012 taxes turbotax 333% ÷ $500 = $41. File 2012 taxes turbotax 67 Half-year convention -½ of $41. File 2012 taxes turbotax 67= 20. File 2012 taxes turbotax 84 Total ACRS deduction for 1998 $20. File 2012 taxes turbotax 84       The saw is fully depreciated after 1998. File 2012 taxes turbotax 15-year real property. File 2012 taxes turbotax   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. File 2012 taxes turbotax The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. File 2012 taxes turbotax If you selected a 15-year recovery period, you use the percentage (6. File 2012 taxes turbotax 667%) from the schedule above. File 2012 taxes turbotax You prorate this percentage for the number of months the property was in service in the first year. File 2012 taxes turbotax If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. File 2012 taxes turbotax Alternate periods for 18-year real property. File 2012 taxes turbotax   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. File 2012 taxes turbotax The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. File 2012 taxes turbotax There are two tables for each alternate recovery period. File 2012 taxes turbotax One table shows the percentage for property placed in service after June 22, 1984. File 2012 taxes turbotax The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. File 2012 taxes turbotax Alternate periods for 19-year real property. File 2012 taxes turbotax   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. File 2012 taxes turbotax If you selected a 19-year recovery period, use Table 9 to determine your deduction. File 2012 taxes turbotax If you select a 35- or 45-year recovery period, use either Table 13 or 14. File 2012 taxes turbotax Example. File 2012 taxes turbotax You placed in service an apartment building on August 3, 1986. File 2012 taxes turbotax The building is 19-year real property. File 2012 taxes turbotax The sales contract allocated $300,000 to the building and $100,000 to the land. File 2012 taxes turbotax You use the calendar year as your tax year. File 2012 taxes turbotax You chose the alternate ACRS method over a recovery period of 35 years. File 2012 taxes turbotax For 1986, you figure your ACRS deduction usingTable 13. File 2012 taxes turbotax August is the eighth month of your tax year. File 2012 taxes turbotax The percentage from Table 13 for the eighth month is 1. File 2012 taxes turbotax 1%. File 2012 taxes turbotax Your deduction was $3,300 ($300,000 ÷ 1. File 2012 taxes turbotax 1%). File 2012 taxes turbotax The deduction rate from ACRS Table 13 for years 2 through 20 is 2. File 2012 taxes turbotax 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. File 2012 taxes turbotax 9%). File 2012 taxes turbotax Alternate periods for low-income housing. File 2012 taxes turbotax   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. File 2012 taxes turbotax If you selected a 15-year period for this property, use 6. File 2012 taxes turbotax 667% as the percentage. File 2012 taxes turbotax If you selected a 35- or 45-year period, use either Table 11, 12, or 15. File 2012 taxes turbotax Election. File 2012 taxes turbotax   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. File 2012 taxes turbotax Revocation of election. File 2012 taxes turbotax   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. File 2012 taxes turbotax The Commissioner grants consent only in extraordinary circumstances. File 2012 taxes turbotax Any request for a revocation will be considered a request for a ruling. File 2012 taxes turbotax ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. File 2012 taxes turbotax Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. File 2012 taxes turbotax You figure this by multiplying the unadjusted basis by the recovery percentage. File 2012 taxes turbotax You then multiply the ACRS deduction determined for a full tax year by a fraction. File 2012 taxes turbotax The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. File 2012 taxes turbotax For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. File 2012 taxes turbotax The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. File 2012 taxes turbotax The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. File 2012 taxes turbotax The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). File 2012 taxes turbotax You use the full ACRS percentages during the remaining years of the recovery period. File 2012 taxes turbotax For the first tax year after the recovery period, the unrecovered basis will be deductible. File 2012 taxes turbotax Exception. File 2012 taxes turbotax   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. File 2012 taxes turbotax You compute the number of months using either a full month or mid-month convention. File 2012 taxes turbotax This is true regardless of the number of months in the tax year and the recovery period and method used. File 2012 taxes turbotax Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. File 2012 taxes turbotax You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. File 2012 taxes turbotax You generally recognize gain or loss on the disposition of an asset by sale. File 2012 taxes turbotax However, nonrecognition rules can allow you to postpone some gain. File 2012 taxes turbotax See Publication 544. File 2012 taxes turbotax If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. File 2012 taxes turbotax Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. File 2012 taxes turbotax Early dispositions. File 2012 taxes turbotax   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. File 2012 taxes turbotax When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. File 2012 taxes turbotax Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. File 2012 taxes turbotax   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. File 2012 taxes turbotax This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. File 2012 taxes turbotax Dispositions — mass asset accounts. File 2012 taxes turbotax   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. File 2012 taxes turbotax A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. File 2012 taxes turbotax Examples of mass assets include minor items of office, plant, and store furniture and fixtures. File 2012 taxes turbotax   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. File 2012 taxes turbotax You leave the unadjusted basis of the property in the account until recovered in future years. File 2012 taxes turbotax If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. File 2012 taxes turbotax Early dispositions — 15-year real property. File 2012 taxes turbotax   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. File 2012 taxes turbotax You use a full-month convention. File 2012 taxes turbotax For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. File 2012 taxes turbotax This applies whether you use the regular ACRS method or elected the alternate ACRS method. File 2012 taxes turbotax Example. File 2012 taxes turbotax You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). File 2012 taxes turbotax You file your return based on a calendar year. File 2012 taxes turbotax Your rate from Table 1 for the third month is 10%. File 2012 taxes turbotax Your ACRS deduction for 1984 was $9,800 ($98. File 2012 taxes turbotax 000 ÷ 10%). File 2012 taxes turbotax For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. File 2012 taxes turbotax For 1989 through 1992, you figured your ACRS deductions using 6% for each year. File 2012 taxes turbotax The deduction each year was $98,000 ÷ 6%. File 2012 taxes turbotax For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. File 2012 taxes turbotax You sell the house on June 1, 1995. File 2012 taxes turbotax You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. File 2012 taxes turbotax The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). File 2012 taxes turbotax You then prorate this amount to the 5 months in 1995 during which it was rented. File 2012 taxes turbotax Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). File 2012 taxes turbotax Early dispositions — 18- and 19-year real property. File 2012 taxes turbotax   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. File 2012 taxes turbotax For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. File 2012 taxes turbotax For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. File 2012 taxes turbotax Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. File 2012 taxes turbotax Count the month of disposition as half a month of use. File 2012 taxes turbotax Example. File 2012 taxes turbotax You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). File 2012 taxes turbotax You file your return based on a calendar year. File 2012 taxes turbotax Your rate from Table 4 for the seventh month is 4%. File 2012 taxes turbotax You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). File 2012 taxes turbotax In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. File 2012 taxes turbotax You sell the house on September 24, 1995. File 2012 taxes turbotax Figure your ACRS deduction for 1995 for the months of use. File 2012 taxes turbotax The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). File 2012 taxes turbotax Prorate this amount for the 8. File 2012 taxes turbotax 5 months in 1995 that you held the property. File 2012 taxes turbotax Under the mid-month convention, you count September as half a month. File 2012 taxes turbotax Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. File 2012 taxes turbotax 5/12). File 2012 taxes turbotax Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. File 2012 taxes turbotax Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. File 2012 taxes turbotax This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. File 2012 taxes turbotax You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. File 2012 taxes turbotax Section 1245 property generally includes all personal property. File 2012 taxes turbotax See Section 1245 property in chapter 4 of Publication 544 for more information. File 2012 taxes turbotax You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. File 2012 taxes turbotax You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. File 2012 taxes turbotax Section 1250 property includes most real property. File 2012 taxes turbotax See Section 1250 property in chapter 4 of Publication 544 for more information. File 2012 taxes turbotax This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. File 2012 taxes turbotax Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. File 2012 taxes turbotax Any 15-, 18-, or 19-year real property that is subsidized low-income housing. File 2012 taxes turbotax For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. File 2012 taxes turbotax See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. File 2012 taxes turbotax Prev  Up  Next   Home   More Online Publications