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Free State Tax Return Turbotax

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Free State Tax Return Turbotax

Free state tax return turbotax Publication 523 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Free state tax return turbotax Tax questions. Free state tax return turbotax Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 523, such as legislation enacted after it was published, go to www. Free state tax return turbotax irs. Free state tax return turbotax gov/pub523. Free state tax return turbotax Reminders Change of address. Free state tax return turbotax  If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Free state tax return turbotax Mail it to the Internal Revenue Service Center for your old address. Free state tax return turbotax (Addresses for the Service Centers are on the back of the form. Free state tax return turbotax ) Home sold with undeducted points. Free state tax return turbotax  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of sale. Free state tax return turbotax See Points in Publication 936, Home Mortgage Interest Deduction. Free state tax return turbotax Photographs of missing children. Free state tax return turbotax  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free state tax return turbotax Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free state tax return turbotax You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free state tax return turbotax Introduction This publication explains the tax rules that apply when you sell your main home. Free state tax return turbotax In most cases, your main home is the one in which you live most of the time. Free state tax return turbotax If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). Free state tax return turbotax See Excluding the Gain , later. Free state tax return turbotax Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Free state tax return turbotax If you have gain that cannot be excluded, you generally must report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses. Free state tax return turbotax You may also have to complete Form 4797, Sales of Business Property. Free state tax return turbotax See Reporting the Sale , later. Free state tax return turbotax If you have a loss on the sale, you generally cannot deduct it on your return. Free state tax return turbotax However, you may need to report it. Free state tax return turbotax See Reporting the Sale , later. Free state tax return turbotax The main topics in this publication are: Figuring gain or loss, Basis, Excluding the gain, Ownership and use tests, and Reporting the sale. Free state tax return turbotax Other topics include: Business use or rental of home, Deducting taxes in the year of sale, and Recapturing a federal mortgage subsidy. Free state tax return turbotax Net Investment Income Tax (NIIT). Free state tax return turbotax   If any part of the gain on the sale of a home is not excluded under the rules discussed in this publication, it may be subject to the NIIT. Free state tax return turbotax For more details, see Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions. Free state tax return turbotax Worksheets. Free state tax return turbotax   Near the end of this publication you will find worksheets you can use to figure your gain (or loss) and your exclusion. Free state tax return turbotax Use Worksheet 1 to figure the adjusted basis of the home you sold. Free state tax return turbotax Use Worksheet 2 to figure the gain (or loss), the exclusion, and the taxable gain (if any) on the sale. Free state tax return turbotax If you do not qualify for the maximum exclusion, use Worksheet 3 to figure your reduced maximum exclusion. Free state tax return turbotax Date of sale. Free state tax return turbotax    If you received a Form 1099-S, Proceeds From Real Estate Transactions, the date of sale should be shown in box 1. Free state tax return turbotax If you did not receive this form, the date of sale is the earlier of (a) the date title transferred or (b) the date the economic burdens and benefits of ownership shifted to the buyer. Free state tax return turbotax In most cases, these dates are the same. Free state tax return turbotax What is not covered in this publication. Free state tax return turbotax   This publication does not cover the sale of rental property, second homes, or vacation homes. Free state tax return turbotax For information on how to report any gain or loss from those sales, see Publication 544, Sales and Other Dispositions of Assets. Free state tax return turbotax Comments and suggestions. Free state tax return turbotax   We welcome your comments about this publication and your suggestions for future editions. Free state tax return turbotax   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free state tax return turbotax NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free state tax return turbotax Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free state tax return turbotax   You can send your comments from www. Free state tax return turbotax irs. Free state tax return turbotax gov/formspubs/. Free state tax return turbotax Click on “More Information” and then on “Comment on Tax Forms and Publications”. Free state tax return turbotax   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free state tax return turbotax Ordering forms and publications. Free state tax return turbotax   Visit www. Free state tax return turbotax irs. Free state tax return turbotax gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free state tax return turbotax Internal Revenue Service 1201 N. Free state tax return turbotax Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free state tax return turbotax   If you have a tax question, check the information available on IRS. Free state tax return turbotax gov or call 1-800-829-1040. Free state tax return turbotax We cannot answer tax questions sent to either of the above addresses. Free state tax return turbotax Useful Items - You may want to see: Publication 527 Residential Rental Property 530 Tax Information for Homeowners 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 551 Basis of Assets 587 Business Use of Your Home 936 Home Mortgage Interest Deduction 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 1040 U. Free state tax return turbotax S. Free state tax return turbotax Individual Income Tax Return 1040NR U. Free state tax return turbotax S. Free state tax return turbotax Nonresident Alien Income Tax Return 1040X Amended U. Free state tax return turbotax S. Free state tax return turbotax Individual Income Tax Return 1099-S Proceeds From Real Estate Transactions 4797 Sales of Business Property 5405 Repayment of the First-Time Homebuyer Credit 8822 Change of Address 8828 Recapture of Federal Mortgage Subsidy 8939 Allocation of Increase in Basis for Property Acquired From a Decedent 8949 Sales and Other Dispositions of Capital Assets W-2 Wage and Tax Statement See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Free state tax return turbotax Prev  Up  Next   Home   More Online Publications
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American Holidays

Americans celebrate a variety of federal holidays and other national observances.


Federal Holidays

Find the dates for this year's federal holidays.

Federal law establishes the following public holidays for federal employees. If the holiday falls during the weekend, it may be observed on a different day.

Many government offices are closed on federal holidays and some private businesses may close as well. If you plan to visit a government office on or around a federal holiday, you should contact them to determine when they will be open. Find contact information for government departments and agencies.

New Year's Day

New Year's Day is January 1. The celebration of this holiday begins the night before, when Americans gather to wish each other a happy and prosperous coming year. Many Americans make New Year's resolutions. See the New Year's resolutions that are popular every year.

Birthday of Martin Luther King, Jr.

Martin Luther King, Jr. Day is celebrated on the third Monday in January. The Reverend Martin Luther King, Jr. was an African-American clergyman who is recognized for his tireless efforts to win civil rights for all people through nonviolent means.

Washington's Birthday

Washington's Birthday is observed the third Monday of February in honor George Washington, the first President of the United States. This date is commonly called Presidents' Day and many groups honor the legacy of past presidents on this date.

Memorial Day

Memorial Day is a observed the last Monday of May. It originally honored the people killed in the American Civil War, but has become a day on which the American dead of all wars are remembered.

Independence Day

Independence Day is July 4. This holiday honors the nation's birthday - the adoption of the Declaration of Independence on July 4, 1776. It is a day of picnics and patriotic parades, a night of concerts, and fireworks.

Labor Day

Labor Day is the first Monday of September. This holiday honors the nation's working people, typically with parades. For most Americans it marks the end of the summer vacation season and the start of the school year.

Columbus Day

Columbus Day is a celebrated on the second Monday in October. The day commemorates October 12, 1492, when Italian navigator Christopher Columbus landed in the New World. The holiday was first proclaimed in 1937 by President Franklin D. Roosevelt.

Veterans Day

Veterans Day is celebrated on November 11. This holiday was originally called Armistice Day and established to honor Americans who had served in World War I. It now honors veterans of all wars in which the U.S. has fought. Veterans' organizations hold parades, and the president places a wreath on the Tomb of the Unknowns at Arlington National Cemetery in Virginia.

Thanksgiving Day

Thanksgiving Day is celebrated on the fourth Thursday in November. In the fall of 1621, the Pilgrims held a three-day feast to celebrate a bountiful harvest. Many regard this event as the nation's first Thanksgiving. The Thanksgiving feast became a national tradition and almost always includes some of the foods served at the first feast: roast turkey, cranberry sauce, potatoes, and pumpkin pie.

Christmas Day

Christmas Day is a celebrated on December 25. Christmas is a Christian holiday marking the birth of the Christ Child. Decorating houses and yards with lights, putting up Christmas trees, giving gifts, and sending greeting cards have become holiday traditions even for many non-Christian Americans. Find tips to help celebrate.

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Other Celebrations and Observances

There are many commonly observed celebrations in the United States that are not federal holidays. Some of these observances honor groups of people, such as National African American History Month and Women's History Month, or causes, such as National Oceans Month and National Substance Abuse Prevention Month. Many of these holidays and observances are proclaimed by the President ever year. View recent Presidential proclamations.

These are some of the most popular American celebrations and observances that occur every year.

Groundhog Day

Groundhog Day is February 2 and has been celebrated since 1887. On Groundhog Day, crowds gather in Punxsutawney, Pennsylvania, to see if groundhog Punxsutawney Phil sees his shadow after emerging from his burrow, thus predicting six more weeks of winter weather.

Valentine's Day

Valentine's Day is celebrated on February 14. The day was named after an early Christian martyr, and on Valentine's Day, Americans give presents like candy or flowers to the ones they love. The first mass-produced valentine cards were sold in the 1840s.

Earth Day

Earth Day is observed on April 22. First celebrated in 1970 in the United States, it inspired national legislation such as the Clean Air and Clean Water Acts. Earth Day is designed to promote ecology, encourage respect for life on earth, and highlight concern over pollution of the soil, air, and water.

Arbor Day

National Arbor Day was proclaimed as the last Friday in April by President Richard Nixon in 1970. A number of state Arbor Days are observed at other times of the year to coincide with the best tree planting weather. The observance began in 1872, when Nebraska settlers and homesteaders were urged to plant trees on the largely treeless plains.

Mother's Day

Mother's Day is the second Sunday of May. President Woodrow Wilson issued a proclamation in 1914 that started the holiday. He asked Americans to give a public expression of reverence to mothers on this day. Carnations have come to represent Mother's Day, following President William McKinley's habit of always wearing a white carnation, his mother's favorite flower.

Flag Day

Flag Day, celebrated June 14, has been a presidentially proclaimed observance since 1916. Although Flag Day is not a federal holiday, Americans are encouraged to display the flag outside their homes and businesses on this day to honor the history and heritage the American flag represents.

Father's Day

Father's Day celebrates fathers every third Sunday of June. Father's Day began in 1909 in Spokane, Washington, when a daughter requested a special day to honor her father, a Civil War veteran who raised his children after his wife died. The first presidential proclamation honoring fathers was issued in 1966 by President Lyndon Johnson.

Patriot Day

September 11, 2001, was a defining moment in American history. On that day, terrorists hijacked four commercial airliners to strike targets in the United States. Nearly 3,000 people died as a consequence of the attacks. Patriot Day and National Day of Service and Remembrance is observed on September 11 in honor of the victims of these attacks.

Halloween

Halloween is celebrated on October 31. On Halloween, American children dress up in funny or scary costumes and go "trick or treating" by knocking on doors in their neighborhood. The neighbors are expected to respond by giving them small gifts of candy or money.

Pearl Harbor Day

Pearl Harbor Remembrance Day is December 7. In 1994, Congress designated this national observance to honor the more than 2,400 military service personnel who died on this date in 1941, during the surprise attack on Pearl Harbor, Hawaii, by Japanese forces. The attack on Pearl Harbor caused the United States to enter World War II.

Ethnic and Religious Holidays

Various ethnic and religious groups in America celebrate days with special meaning to them even though these are not national holidays. For example, Christians celebrate the resurrection of Jesus Christ on Easter, Jews observe their high holy days in September, Muslims celebrate Ramadan, and African Americans celebrate Kwanzaa. There are many other religious and ethnic celebrations in the United States.

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The Free State Tax Return Turbotax

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