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Filing Self Employment Taxes

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Filing Self Employment Taxes

Filing self employment taxes Publication 907 - Main Content Table of Contents IncomeDependent Care Benefits Social Security and Railroad Retirement Benefits Disability Pensions Military and Government Disability Pensions Other Payments Itemized DeductionsMedical Expenses Impairment-Related Work Expenses Tax CreditsChild and Dependent Care Credit Credit for the Elderly or the Disabled Earned Income Credit Household Employers Business Tax Incentives How To Get Tax Help Income All income is taxable unless it is specifically excluded by law. Filing self employment taxes The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities. Filing self employment taxes Dependent Care Benefits Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Filing self employment taxes Exclusion or deduction. Filing self employment taxes   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Filing self employment taxes Your employer can tell you whether your benefit plan qualifies. Filing self employment taxes To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Filing self employment taxes You cannot use Form 1040EZ. Filing self employment taxes   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Filing self employment taxes Therefore, you would not get an exclusion from wages. Filing self employment taxes Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Filing self employment taxes To claim the deduction, you must use Form 2441. Filing self employment taxes   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Filing self employment taxes Statement for employee. Filing self employment taxes   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Filing self employment taxes Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Filing self employment taxes Qualifying person(s). Filing self employment taxes   A qualifying person is: A qualifying child who is under age 13 whom you can claim as a dependent. Filing self employment taxes If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13. Filing self employment taxes Your disabled spouse who is not physically or mentally able to care for himself or herself. Filing self employment taxes Any disabled person who was not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,900 or more or filed a joint return). Filing self employment taxes Any disabled person who was not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's 2013 return. Filing self employment taxes For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions. Filing self employment taxes Social Security and Railroad Retirement Benefits If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable. Filing self employment taxes Are any of your benefits taxable?   If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable. Filing self employment taxes   If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Filing self employment taxes   For more information, see the instructions for Form 1040, lines 20a and 20b, or Form 1040A, lines 14a and 14b. Filing self employment taxes Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information. Filing self employment taxes Supplemental security income (SSI) payments. Filing self employment taxes   Social security benefits do not include SSI payments, which are not taxable. Filing self employment taxes Do not include these payments in your income. Filing self employment taxes Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. Filing self employment taxes You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Filing self employment taxes Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Filing self employment taxes You may be entitled to a tax credit if you were permanently and totally disabled when you retired. Filing self employment taxes For information on this credit, see Publication 524, Credit for the Elderly or the Disabled. Filing self employment taxes Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Filing self employment taxes Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Filing self employment taxes For more information on pensions and annuities, see Publication 575, Pension and Annuity Income. Filing self employment taxes Retirement and profit-sharing plans. Filing self employment taxes   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. Filing self employment taxes The payments must be reported as a pension or annuity. Filing self employment taxes Accrued leave payment. Filing self employment taxes   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. Filing self employment taxes The payment is not a disability payment. Filing self employment taxes Include it in your income in the tax year you receive it. Filing self employment taxes See Publication 525, Taxable and Nontaxable Income, for more information. Filing self employment taxes Military and Government Disability Pensions Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. Filing self employment taxes For information about military and government disability pensions, see Publication 525. Filing self employment taxes VA disability benefits. Filing self employment taxes   Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. Filing self employment taxes If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information. Filing self employment taxes   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. Filing self employment taxes These include: Education, training, and subsistence allowances, Disability compensation and pension payments for disabilities paid either to veterans or their families, Grants for homes designed for wheelchair living, Grants for motor vehicles for veterans who lost their sight or the use of their limbs, Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death, Interest on insurance dividends left on deposit with the VA, Benefits under a dependent-care assistance program, The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, or Payments made under the VA's compensated work therapy program. Filing self employment taxes Other Payments You may receive other payments that are related to your disability. Filing self employment taxes The following payments are not taxable. Filing self employment taxes Benefit payments from a public welfare fund, such as payments due to blindness. Filing self employment taxes Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law. Filing self employment taxes Compensatory (but not punitive) damages for physical injury or physical sickness. Filing self employment taxes Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries. Filing self employment taxes Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. Filing self employment taxes Long-Term Care Insurance Long-term care insurance contracts generally are treated as accident and health insurance contracts. Filing self employment taxes Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. Filing self employment taxes More detailed information can be found in Publication 525. Filing self employment taxes Accelerated Death Benefits You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. Filing self employment taxes Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. Filing self employment taxes These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Filing self employment taxes This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. Filing self employment taxes For more information, see Publication 525. Filing self employment taxes Itemized Deductions If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. Filing self employment taxes You must use Schedule A (Form 1040) to itemize your deductions. Filing self employment taxes See your form instructions for information on the standard deduction and the deductions you can itemize. Filing self employment taxes The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities. Filing self employment taxes Medical Expenses When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents. Filing self employment taxes Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. Filing self employment taxes They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance. Filing self employment taxes You can deduct only the amount of your medical and dental expenses that is more than 10% (7. Filing self employment taxes 5% if either you or your spouse was born before January 2, 1949) of your adjusted gross income shown on Form 1040, line 38. Filing self employment taxes The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. Filing self employment taxes For more detailed information, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). Filing self employment taxes Artificial limbs, contact lenses, eyeglasses, and hearing aids. Filing self employment taxes The part of the cost of Braille books and magazines that is more than the price of regular printed editions. Filing self employment taxes Cost and repair of special telephone equipment for hearing-impaired persons. Filing self employment taxes Cost and maintenance of a wheelchair or a three-wheel motor vehicle commercially known as an “autoette. Filing self employment taxes ” Cost and care of a guide dog or other animal aiding a person with a physical disability. Filing self employment taxes Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. Filing self employment taxes This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect. Filing self employment taxes Premiums for qualified long-term care insurance, up to certain amounts. Filing self employment taxes Improvements to a home that do not increase its value if the main purpose is medical care. Filing self employment taxes An example is constructing entrance or exit ramps. Filing self employment taxes Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. Filing self employment taxes See Publication 502 for more information. Filing self employment taxes Impairment-Related Work Expenses If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. Filing self employment taxes If you take a business deduction for these impairment-related work expenses, they are not subject to the 10% (7. Filing self employment taxes 5% if you or your spouse is age 65 or older) limit that applies to medical expenses. Filing self employment taxes You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (including, but not limited to, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Filing self employment taxes Impairment-related expenses defined. Filing self employment taxes   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Filing self employment taxes Publication 502 contains more detailed information. Filing self employment taxes Tax Credits This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities. Filing self employment taxes Child and Dependent Care Credit If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. Filing self employment taxes To qualify, you must pay these expenses so you can work or look for work. Filing self employment taxes The care must be provided for: Your qualifying child who is your dependent and who was under age 13 when the care was provided, Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Filing self employment taxes You can claim the credit on Form 1040 or 1040A. Filing self employment taxes You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Filing self employment taxes You figure the credit on Form 2441. Filing self employment taxes For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. Filing self employment taxes Publication 503, Child and Dependent Care Expenses, contains more detailed information. Filing self employment taxes Credit for the Elderly or the Disabled You may be able to claim this credit if you are a U. Filing self employment taxes S. Filing self employment taxes citizen or a resident alien and either of the following apply. Filing self employment taxes You were 65 or older at the end of 2013, You were under 65 at the end of 2013, and retired on permanent or total disability. Filing self employment taxes You can claim the credit on Form 1040 or 1040A. Filing self employment taxes You figure the credit on Schedule R. Filing self employment taxes For more information, see the instructions for Form 1040, line 53, or Form 1040A, line 30. Filing self employment taxes Publication 524, Credit for the Elderly or the Disabled, contains more detailed information. Filing self employment taxes Earned Income Credit This credit is based on the amount of your earned income. Filing self employment taxes You can get the credit if your adjusted gross income for 2013 is less than: $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, or $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children. Filing self employment taxes To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. Filing self employment taxes If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. Filing self employment taxes You cannot use Form 1040EZ if you have a qualifying child. Filing self employment taxes Qualifying child. Filing self employment taxes   To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2013, or permanently and totally disabled at any time during 2013, regardless of age. Filing self employment taxes Earned income. Filing self employment taxes   If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Filing self employment taxes However, payments you received from a disability insurance policy that you paid the premiums for are not earned income. Filing self employment taxes More information. Filing self employment taxes   For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 64a; Form 1040A, line 38a; or Form 1040EZ, line 8a. Filing self employment taxes Publication 596, Earned Income Credit (EIC), contains more detailed information. Filing self employment taxes Household Employers If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes. Filing self employment taxes A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. Filing self employment taxes This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. Filing self employment taxes In this case you do not have to pay employment taxes on the amount you pay. Filing self employment taxes But if you control what work is done and how it is done, the worker is your employee. Filing self employment taxes If you possess the right to discharge a worker, that worker is generally considered to be your employee. Filing self employment taxes If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency. Filing self employment taxes To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide For Wages Paid in 2013. Filing self employment taxes Business Tax Incentives If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities. Filing self employment taxes Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. Filing self employment taxes For more information, see chapter 7 of Publication 535, Business Expenses. Filing self employment taxes Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. Filing self employment taxes The expenses must be to enable the eligible small business to comply with the Americans With Disabilities Act of 1990. Filing self employment taxes See Form 8826, Disabled Access Credit, for more information. Filing self employment taxes Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. Filing self employment taxes One targeted group consists of vocational rehabilitation referrals. Filing self employment taxes These are individuals who have a physical or mental disability that results in a substantial handicap to employment. Filing self employment taxes See Form 5884, Work Opportunity Credit. Filing self employment taxes How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Filing self employment taxes 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. Filing self employment taxes Free help with your tax return. Filing self employment taxes   Free help in preparing your return is available nationwide from IRS-certified volunteers. Filing self employment taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Filing self employment taxes The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Filing self employment taxes 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. Filing self employment taxes Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Filing self employment taxes To find the nearest VITA or TCE site, visit IRS. Filing self employment taxes gov or call 1-800-906-9887. Filing self employment taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Filing self employment taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Filing self employment taxes aarp. Filing self employment taxes org/money/taxaide or call 1-888-227-7669. Filing self employment taxes   For more information on these programs, go to IRS. Filing self employment taxes gov and enter “VITA” in the search box. Filing self employment taxes Internet. Filing self employment taxes IRS. Filing self employment taxes gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Filing self employment taxes Apply for an Employer Identification Number (EIN). Filing self employment taxes Go to IRS. Filing self employment taxes gov and enter Apply for an EIN in the search box. Filing self employment taxes Request an Electronic Filing PIN by going to IRS. Filing self employment taxes gov and entering Electronic Filing PIN in the search box. Filing self employment taxes Check the status of your 2013 refund with Where's My Refund? Go to IRS. Filing self employment taxes 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. Filing self employment taxes 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. Filing self employment taxes Check the status of your amended return. Filing self employment taxes Go to IRS. Filing self employment taxes gov and enter Where's My Amended Return in the search box. Filing self employment taxes Download forms, instructions, and publications, including some accessible versions. Filing self employment taxes Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Filing self employment taxes gov or IRS2Go. Filing self employment taxes Tax return and tax account transcripts are generally available for the current year and past three years. Filing self employment taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Filing self employment taxes gov. Filing self employment taxes 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. Filing self employment taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Filing self employment taxes gov. Filing self employment taxes Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Filing self employment taxes gov or IRS2Go. Filing self employment taxes Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Filing self employment taxes An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Filing self employment taxes Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Filing self employment taxes If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Filing self employment taxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Filing self employment taxes Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Filing self employment taxes gov. Filing self employment taxes 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. Filing self employment taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Filing self employment taxes Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Filing self employment taxes AARP offers the Tax-Aide counseling program as part of the TCE program. Filing self employment taxes Visit AARP's website to find the nearest Tax-Aide location. Filing self employment taxes Research your tax questions. Filing self employment taxes Search publications and instructions by topic or keyword. Filing self employment taxes Read the Internal Revenue Code, regulations, or other official guidance. Filing self employment taxes Read Internal Revenue Bulletins. Filing self employment taxes Sign up to receive local and national tax news by email. Filing self employment taxes Phone. Filing self employment taxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Filing self employment taxes Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Filing self employment taxes 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. Filing self employment taxes Call to locate the nearest volunteer help site, 1-800-906-9887. Filing self employment taxes 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. Filing self employment taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Filing self employment taxes Most VITA and TCE sites offer free electronic filing. Filing self employment taxes Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Filing self employment taxes Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Filing self employment taxes Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Filing self employment taxes The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Filing self employment taxes 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. Filing self employment taxes 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. Filing self employment taxes Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Filing self employment taxes Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Filing self employment taxes Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Filing self employment taxes 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). Filing self employment taxes You should receive your order within 10 business days. Filing self employment taxes Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Filing self employment taxes Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Filing self employment taxes Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Filing self employment taxes Call to ask tax questions, 1-800-829-1040. Filing self employment taxes Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Filing self employment taxes The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Filing self employment taxes These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Filing self employment taxes gsa. Filing self employment taxes gov/fedrelay. Filing self employment taxes Walk-in. Filing self employment taxes You can find a selection of forms, publications and services — in-person, face-to-face. Filing self employment taxes Products. Filing self employment taxes You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Filing self employment taxes Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Filing self employment taxes Services. Filing self employment taxes You can walk in to your local TAC most business days for personal, face-to-face tax help. Filing self employment taxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Filing self employment taxes 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. Filing self employment taxes No appointment is necessary—just walk in. Filing self employment taxes Before visiting, check www. Filing self employment taxes irs. Filing self employment taxes gov/localcontacts for hours of operation and services provided. Filing self employment taxes Mail. Filing self employment taxes You can send your order for forms, instructions, and publications to the address below. Filing self employment taxes You should receive a response within 10 business days after your request is received. Filing self employment taxes  Internal Revenue Service 1201 N. Filing self employment taxes Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Filing self employment taxes   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Filing self employment taxes Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Filing self employment taxes What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Filing self employment taxes 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. Filing self employment taxes You face (or your business is facing) an immediate threat of adverse action. Filing self employment taxes You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Filing self employment taxes   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. Filing self employment taxes Here's why we can help: TAS is an independent organization within the IRS. Filing self employment taxes Our advocates know how to work with the IRS. Filing self employment taxes Our services are free and tailored to meet your needs. Filing self employment taxes We have offices in every state, the District of Columbia, and Puerto Rico. Filing self employment taxes 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. Filing self employment taxes irs. Filing self employment taxes gov/advocate, or call us toll-free at 1-877-777-4778. Filing self employment taxes How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Filing self employment taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Filing self employment taxes irs. Filing self employment taxes gov/sams. Filing self employment taxes Low Income Taxpayer Clinics. Filing self employment taxes   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. Filing self employment taxes Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Filing self employment taxes Visit www. 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The Filing Self Employment Taxes

Filing self employment taxes Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Filing self employment taxes Publication 946, How To Depreciate Property, contains information on depreciation. Filing self employment taxes However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Filing self employment taxes The new provisions are in the Supplement to Publication 946, which is reprinted below. Filing self employment taxes Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Filing self employment taxes The new law made several changes in the tax rules explained in the publication. Filing self employment taxes Some of the changes apply to property placed in service during 2001. Filing self employment taxes This supplemental publication describes those changes and explains what you should do if you are affected by them. Filing self employment taxes The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Filing self employment taxes The new law contains the following provisions. Filing self employment taxes 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Filing self employment taxes An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Filing self employment taxes A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Filing self employment taxes An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Filing self employment taxes If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Filing self employment taxes If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Filing self employment taxes See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Filing self employment taxes Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Filing self employment taxes The allowance is an additional deduction of 30% of the property's depreciable basis. Filing self employment taxes To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing self employment taxes See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing self employment taxes The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing self employment taxes There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing self employment taxes In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing self employment taxes Example 1. Filing self employment taxes On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Filing self employment taxes You did not elect to claim a section 179 deduction. Filing self employment taxes You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Filing self employment taxes You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing self employment taxes Example 2. Filing self employment taxes The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Filing self employment taxes You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Filing self employment taxes You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Filing self employment taxes Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Filing self employment taxes It is new property of one of the following types. Filing self employment taxes Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Filing self employment taxes See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing self employment taxes Water utility property. Filing self employment taxes See 25-year property on page 22 in Publication 946. Filing self employment taxes Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing self employment taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing self employment taxes ) Qualified leasehold improvement property (defined later). Filing self employment taxes It meets the following tests (explained later under Tests To Be Met). Filing self employment taxes Acquisition date test. Filing self employment taxes Placed in service date test. Filing self employment taxes Original use test. Filing self employment taxes It is not excepted property (explained later under Excepted Property). Filing self employment taxes Qualified leasehold improvement property. Filing self employment taxes    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Filing self employment taxes The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Filing self employment taxes That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Filing self employment taxes The improvement is placed in service more than 3 years after the date the building was first placed in service. Filing self employment taxes   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Filing self employment taxes The enlargement of the building. Filing self employment taxes Any elevator or escalator. Filing self employment taxes Any structural component benefiting a common area. Filing self employment taxes The internal structural framework of the building. Filing self employment taxes   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Filing self employment taxes However, a binding commitment between related persons is not treated as a lease. Filing self employment taxes Related persons. Filing self employment taxes   For this purpose, the following are related persons. Filing self employment taxes Members of an affiliated group. Filing self employment taxes The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Filing self employment taxes An executor and a beneficiary of the same estate. Filing self employment taxes Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Filing self employment taxes Acquisition date test. Filing self employment taxes    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Filing self employment taxes   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Filing self employment taxes Placed in service date test. Filing self employment taxes   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Filing self employment taxes   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing self employment taxes Original use test. Filing self employment taxes   The original use of the property must have begun with you after September 10, 2001. Filing self employment taxes “Original use” means the first use to which the property is put, whether or not by you. Filing self employment taxes Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Filing self employment taxes Excepted Property The following property does not qualify for the special depreciation allowance. Filing self employment taxes Property used by any person before September 11, 2001. Filing self employment taxes Property required to be depreciated using ADS. Filing self employment taxes This includes listed property used 50% or less in a qualified business use. Filing self employment taxes Qualified New York Liberty Zone leasehold improvement property (defined next). Filing self employment taxes Qualified New York Liberty Zone leasehold improvement property. Filing self employment taxes   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Filing self employment taxes The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Filing self employment taxes The improvement is placed in service after September 10, 2001, and before January 1, 2007. Filing self employment taxes No written binding contract for the improvement was in effect before September 11, 2001. Filing self employment taxes Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Filing self employment taxes If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing self employment taxes To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing self employment taxes When to make election. Filing self employment taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Filing self employment taxes   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Filing self employment taxes Attach the election statement to the amended return. Filing self employment taxes At the top of the election statement, write “Filed pursuant to section 301. Filing self employment taxes 9100–2. Filing self employment taxes ” Revoking an election. Filing self employment taxes   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing self employment taxes A request to revoke the election is subject to a user fee. Filing self employment taxes Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Filing self employment taxes The rules apply to returns for the following years. Filing self employment taxes 2000 fiscal years that end after September 10, 2001. Filing self employment taxes 2001 calendar and fiscal years. Filing self employment taxes Claiming the allowance. Filing self employment taxes   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Filing self employment taxes File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Filing self employment taxes Write “Filed Pursuant to Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33” at the top of the amended return. Filing self employment taxes File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Filing self employment taxes Your return must be filed by the due date (including extensions). Filing self employment taxes Write “Automatic Change Filed Under Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33” on the appropriate line of Form 3115. Filing self employment taxes You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Filing self employment taxes For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Filing self employment taxes Example 1. Filing self employment taxes You are an individual and you use the calendar year. Filing self employment taxes You placed qualified property in service for your business in December 2001. Filing self employment taxes You filed your 2001 income tax return before April 15, 2002. Filing self employment taxes You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Filing self employment taxes You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33” at the top of the amended return. Filing self employment taxes You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Filing self employment taxes Example 2. Filing self employment taxes The facts concerning your 2001 return are the same as in Example 1. Filing self employment taxes In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Filing self employment taxes You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Filing self employment taxes You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Filing self employment taxes Electing not to claim the allowance. Filing self employment taxes   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Filing self employment taxes The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Filing self employment taxes The statement can be either attached to or written on the return. Filing self employment taxes You can, for example, write “not deducting 30%” on Form 4562. Filing self employment taxes Deemed election. Filing self employment taxes   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Filing self employment taxes You will be treated as making the election if you meet both of the following conditions. Filing self employment taxes You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Filing self employment taxes You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Filing self employment taxes See Claiming the allowance, earlier. Filing self employment taxes Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Filing self employment taxes Generally, the limit is increased from $3,060 to $7,660. Filing self employment taxes However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Filing self employment taxes Table 1 shows the maximum deduction amounts for 2001. Filing self employment taxes Table 1. Filing self employment taxes Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Filing self employment taxes 11 Placed in Service After Sept. Filing self employment taxes 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Filing self employment taxes Election not to claim the allowance. Filing self employment taxes   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Filing self employment taxes New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Filing self employment taxes They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Filing self employment taxes Area defined. Filing self employment taxes   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Filing self employment taxes Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Filing self employment taxes The allowance is an additional deduction of 30% of the property's depreciable basis. Filing self employment taxes To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Filing self employment taxes See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Filing self employment taxes The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Filing self employment taxes There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Filing self employment taxes In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Filing self employment taxes You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing self employment taxes Qualified property is eligible for only one special depreciation allowance. Filing self employment taxes Example 1. Filing self employment taxes On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Filing self employment taxes You did not elect to claim a section 179 deduction. Filing self employment taxes You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Filing self employment taxes You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Filing self employment taxes Example 2. Filing self employment taxes The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Filing self employment taxes (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Filing self employment taxes You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Filing self employment taxes You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Filing self employment taxes Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Filing self employment taxes It is one of the following types of property. Filing self employment taxes Used property depreciated under MACRS with a recovery period of 20 years or less. Filing self employment taxes See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Filing self employment taxes Used water utility property. Filing self employment taxes See 25-year property on page 22 in Publication 946. Filing self employment taxes Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Filing self employment taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Filing self employment taxes ) Certain nonresidential real property and residential rental property (defined later). Filing self employment taxes It meets the following tests (explained later under Tests to be met). Filing self employment taxes Acquisition date test. Filing self employment taxes Placed in service date test. Filing self employment taxes Substantial use test. Filing self employment taxes Original use test. Filing self employment taxes It is not excepted property (explained later under Excepted property). Filing self employment taxes Nonresidential real property and residential rental property. Filing self employment taxes   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Filing self employment taxes Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Filing self employment taxes   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Filing self employment taxes Otherwise, the property is considered damaged real property. Filing self employment taxes For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Filing self employment taxes Tests to be met. Filing self employment taxes   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Filing self employment taxes Acquisition date test. Filing self employment taxes   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Filing self employment taxes   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Filing self employment taxes   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Filing self employment taxes Placed in service date test. Filing self employment taxes   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Filing self employment taxes   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Filing self employment taxes Substantial use test. Filing self employment taxes   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Filing self employment taxes Original use test. Filing self employment taxes   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Filing self employment taxes   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Filing self employment taxes Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Filing self employment taxes Excepted property. Filing self employment taxes   The following property does not qualify for the special Liberty Zone depreciation allowance. Filing self employment taxes Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Filing self employment taxes Property required to be depreciated using ADS. Filing self employment taxes This includes listed property used 50% or less in a qualified business use. Filing self employment taxes Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Filing self employment taxes Example. Filing self employment taxes In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Filing self employment taxes New office furniture with a MACRS recovery period of 7 years. Filing self employment taxes A used computer with a MACRS recovery period of 5 years. Filing self employment taxes The computer had not previously been used within the Liberty Zone. Filing self employment taxes Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Filing self employment taxes Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Filing self employment taxes Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Filing self employment taxes If you make this election for any property, it applies to all property in the same property class placed in service during the year. Filing self employment taxes To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Filing self employment taxes When to make the election. Filing self employment taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Filing self employment taxes   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Filing self employment taxes Attach the election statement to the amended return. Filing self employment taxes At the top of the election statement, write “Filed pursuant to section 301. Filing self employment taxes 9100–2. Filing self employment taxes ” Revoking an election. Filing self employment taxes   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Filing self employment taxes A request to revoke the election is subject to a user fee. Filing self employment taxes Returns filed before June 1, 2002. Filing self employment taxes   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Filing self employment taxes Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Filing self employment taxes For tax years beginning in 2000, that limit was $20,000. Filing self employment taxes For tax years beginning in 2001 and 2002, that limit is generally $24,000. Filing self employment taxes If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Filing self employment taxes Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Filing self employment taxes The increase is the smaller of the following amounts. Filing self employment taxes $35,000. Filing self employment taxes The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Filing self employment taxes If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Filing self employment taxes Qualified property. Filing self employment taxes   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Filing self employment taxes Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Filing self employment taxes Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Filing self employment taxes For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Filing self employment taxes Example 1. Filing self employment taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Filing self employment taxes Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Filing self employment taxes Example 2. Filing self employment taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Filing self employment taxes Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Filing self employment taxes Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Filing self employment taxes However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Filing self employment taxes Example. Filing self employment taxes In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Filing self employment taxes Your increased dollar limit is $59,000 ($35,000 + $24,000). Filing self employment taxes Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Filing self employment taxes Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Filing self employment taxes Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Filing self employment taxes This rule applies to returns for the following years. Filing self employment taxes 2000 fiscal years that end after September 10, 2001. Filing self employment taxes 2001 calendar and fiscal years. Filing self employment taxes On the amended return, write “Filed Pursuant to Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33. Filing self employment taxes ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Filing self employment taxes This means that it is depreciated over a recovery period of 5 years. Filing self employment taxes For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Filing self employment taxes The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Filing self employment taxes Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Filing self employment taxes Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Filing self employment taxes Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Filing self employment taxes Your 2001 calendar or fiscal year return. Filing self employment taxes On the amended return, write “Filed Pursuant to Rev. Filing self employment taxes Proc. Filing self employment taxes 2002–33. Filing self employment taxes ” Table 2. Filing self employment taxes Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Filing self employment taxes See the text for definitions and examples. Filing self employment taxes Do not rely on this chart alone. Filing self employment taxes IF you want to. Filing self employment taxes . Filing self employment taxes . Filing self employment taxes THEN you. Filing self employment taxes . Filing self employment taxes . Filing self employment taxes BY. Filing self employment taxes . Filing self employment taxes . Filing self employment taxes claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Filing self employment taxes elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Filing self employment taxes deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Filing self employment taxes use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Filing self employment taxes 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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