Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

H And R Block

H & R Block EfileFile An Amended Tax Return1040ez BookAmending Federal Tax ReturnsTaxslayer Com Main Aspx Destination2007 Taxes OnlineTaxes 2009File Late Taxes FreeFile Amended Tax ReturnFile Amended 2012 Tax ReturnHow To File Federal And State Taxes For FreeHow Do I File My 2010 Tax ReturnWww Irs Gov Amended Tax Return1040nr Ez FormMilitary Tax CreditFree State Tax Filing Online1040 Ez 20111040ex Form 20141040ez Tax Form Instructions2010 Amended Tax Return Instructions2010 1040xHandr Block ComFree Federal Tax Filing 2011H&r Block Printable CouponHow To Fill Out An Amended Tax Return FormFree 2012 Tax FilingWhere Can I File 2009 Taxes Online For FreeFree Federal & State E-fileForm 1040x 2012Free E File State Tax ReturnIrs Gov Free FileH&r Block Free FileFiling Taxes For 2011Turbotax 2011 OnlineWhere To File 1040x 20101040 Amended Tax FormWhere To File 1040x For 2012Amended Tax Return For 20102011 Amended ReturnHow Do I File An Amendment To My Taxes

H And R Block

H and r block Publication 596 - Introductory Material Table of Contents Future Developments What is the EIC? Can I Claim the EIC? Do I Need This Publication? Do I Have To Have A Child To Qualify For The EIC? How Do I Figure the Amount of EIC? How Can I Quickly Locate Specific information? Is There Help Online? What's New for 2013 Reminders Future Developments For the latest information about developments related to Publication 596, such as legislation enacted after it was published, go to www. H and r block irs. H and r block gov/pub596. H and r block What is the EIC? The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $51,567. H and r block A tax credit usually means more money in your pocket. H and r block It reduces the amount of tax you owe. H and r block The EIC may also give you a refund. H and r block Can I Claim the EIC? To claim the EIC, you must meet certain rules. H and r block These rules are summarized in Table 1. H and r block Table 1. H and r block Earned Income Credit in a Nutshell First, you must meet all the rules in this column. H and r block Second, you must meet all the rules in one of these columns, whichever applies. H and r block Third, you must meet the rule in this column. H and r block Chapter 1. H and r block  Rules for Everyone Chapter 2. H and r block  Rules If You Have a Qualifying Child Chapter 3. H and r block  Rules If You Do Not Have a Qualifying Child Chapter 4. H and r block  Figuring and Claiming the EIC 1. H and r block Your adjusted gross income (AGI) must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. H and r block 2. H and r block You must have a valid social security number. H and r block   3. H and r block Your filing status cannot be Married filing separately. H and r block   4. H and r block You must be a U. H and r block S. H and r block citizen or resident alien all year. H and r block   5. H and r block You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). H and r block   6. H and r block Your investment income must be $3,300 or less. H and r block    7. H and r block You must have earned income. H and r block 8. H and r block Your child must meet the relationship, age, residency, and joint return tests. H and r block   9. H and r block Your qualifying child cannot be used by more than one person to claim the EIC. H and r block   10. H and r block You cannot be a qualifying child of another person. H and r block 11. H and r block You must be at least age 25 but under age 65. H and r block    12. H and r block You cannot be the dependent of another person. H and r block   13. H and r block You cannot be a qualifying child of another person. H and r block   14. H and r block You must have lived in the United States more than half of the year. H and r block 15. H and r block Your earned income must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. H and r block Do I Need This Publication? Certain people who file Form 1040 must use Worksheet 1 in this publication, instead of Step 2 in their Form 1040 instructions, when they are checking whether they can take the EIC. H and r block You are one of those people if any of the following statements are true for 2013. H and r block You are filing Schedule E (Form 1040). H and r block You are reporting income from the rental of personal property not used in a trade or business. H and r block You are reporting income on Form 1040, line 21, from Form 8814 (relating to election to report child's interest and dividends). H and r block You are reporting an amount on Form 1040, line 13, that includes an amount from Form 4797. H and r block If none of the statements above apply to you, your tax form instructions have all the information you need to find out if you can claim the EIC and to figure the amount of your EIC. H and r block You do not need this publication. H and r block But you can read it to find out whether you can take the EIC and to learn more about the EIC. H and r block Do I Have To Have A Child To Qualify For The EIC? No, you can qualify for the EIC without a qualifying child if you are at least age 25 but under age 65 and your earned income is less than $14,340 ($19,680 if married filing jointly). H and r block See chapter 3. H and r block How Do I Figure the Amount of EIC? If you can claim the EIC, you can either have the IRS figure the amount of your credit, or you can figure it yourself. H and r block To figure it yourself, you can complete a worksheet in the instructions for the form you file. H and r block To find out how to have the IRS figure it for you, see chapter 4. H and r block How Can I Quickly Locate Specific information? You can use the index to look up specific information. H and r block In most cases, index entries will point you to headings, tables, or a worksheet. H and r block Is There Help Online? Yes. H and r block You can use the EITC Assistant at www. H and r block irs. H and r block gov/eitc to find out if you may be eligible for the credit. H and r block The EITC Assistant is available in English and Spanish. H and r block What's New for 2013 Earned income amount is more. H and r block The maximum amount of income you can earn and still get the credit has increased. H and r block You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). H and r block Your adjusted gross income also must be less than the amount in the above list that applies to you. H and r block For details, see Rules 1 and 15. H and r block Investment income amount is more. H and r block The maximum amount of investment income you can have and still get the credit has increased to $3,300. H and r block See Rule 6—Your Investment Income Must Be $3,300 or Less . H and r block Reminders Increased EIC on certain joint returns. H and r block . H and r block  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. H and r block As a result, the EIC table has different columns for married persons filing jointly than for everyone else. H and r block When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. H and r block Earned income credit has no effect on certain welfare benefits. H and r block  Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. H and r block These programs include the following. H and r block Temporary Assistance for Needy Families (TANF). H and r block Medicaid. H and r block Supplemental security income (SSI). H and r block Supplemental Nutrition Assistance Program (food stamps). H and r block Low-income housing. H and r block In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. H and r block Check with your local benefit coordinator to find out if your refund will affect your benefits. H and r block Do not overlook your state credit. H and r block  If you can claim the EIC on your federal income tax return, you may be able to take a similar credit on your state or local income tax return. H and r block For a list of states that offer a state EIC, go to www. H and r block irs. H and r block gov/eitc. H and r block EIC questioned by IRS. H and r block  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. H and r block We will tell you what documents to send us. H and r block These may include: birth certificates, school records, etc. H and r block The process of establishing your eligibility will delay your refund. H and r block Spanish version of Publication 596. H and r block  You can order Publicación 596SP, Crédito por Ingreso del Trabajo, from the IRS. H and r block It is a Spanish translation of Publication 596. H and r block See How To Get Tax Help to find out how to order this and other IRS forms and publications. H and r block Photographs of missing children. H and r block  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H and r block Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H and r block 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. H and r block Comments and suggestions. H and r block  We welcome your comments about this publication and your suggestions for future editions. H and r block You can write to us at the following address:  Internal Revenue Service Individual Forms and Publications Branch 1111 Constitution Ave. H and r block NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. H and r block Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block You can send your comments from www. H and r block irs. H and r block gov/formspubs/. H and r block Click on “More Information” and then on “Comment on Tax Forms and Publications. H and r block ” 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. H and r block Ordering forms and publications. H and r block  Visit www. H and r block irs. H and r block 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. H and r block  Internal Revenue Service 1201 N. H and r block Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H and r block  If you have a tax question, check the information available on IRS. H and r block gov or call 1-800-829-1040. H and r block We cannot answer tax questions sent to either of the above addresses. H and r block Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Tax Relief for Victims of Aug. 30 Wildfires in Texas

IRS e-File to Remain Open through Oct. 31 for Victims of Texas Wildfires

Updated 10/11/11 to include Navarro county.
Updated 9/29/11 to include Anderson, Caldwell, Fayette, Henderson, Hill and Rusk counties.
Updated 9/27/11 to include Harrison, Smith and Upshur counties.
Updated 9/20/11 to include Cass and Marion counties.
Updated 9/19/11 to include Gregg, Grimes, Montgomery, Walker and Waller counties.
Updated 9/15/11 to include Colorado, Houston, Leon, Travis and Williamson counties.

TX-2011-64, Sept. 12, 2011

HOUSTON — Victims of wildfires that began on Aug. 30, 2011 in parts of Texas may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Anderson, Bastrop, Caldwell, Cass, Colorado, Fayette, Gregg, Grimes, Harrison, Henderson, Hill, Houston, Leon, Marion, Montgomery, Navarro, Rusk, Smith, Travis, Upshur, Walker, Waller and Williamson. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 30 and on or before Oct. 31 have been postponed to Oct. 31. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 30 and on or before Sept. 14, 2011, as long as the deposits were made by Sept. 14, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 30 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 30 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 30 and on or before Sept. 14 provided the taxpayer made these deposits by Sept. 14.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Texas/Wildfires” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 24-Mar-2014

The H And R Block

H and r block 7. H and r block   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. H and r block Costs not included. H and r block Intangible Drilling Costs Exploration CostsPartnerships and S corporations. H and r block Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. H and r block Film and Television Production Costs What's New Film and television productions costs. H and r block  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. H and r block See Film and Television Production Costs , later. H and r block Introduction This chapter discusses costs you can elect to deduct or capitalize. H and r block You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. H and r block If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. H and r block When you capitalize a cost, you add it to the basis of property to which it relates. H and r block A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. H and r block Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. H and r block You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. H and r block For more information on the alternative minimum tax, see the instructions for the following forms. H and r block Form 6251, Alternative Minimum Tax—Individuals. H and r block Form 4626, Alternative Minimum Tax—Corporations. H and r block Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. H and r block Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. H and r block Certain carrying charges must be capitalized under the uniform capitalization rules. H and r block (For information on capitalization of interest, see chapter 4 . H and r block ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. H and r block You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. H and r block For unimproved and unproductive real property, your election is good for only 1 year. H and r block You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. H and r block For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. H and r block For personal property, your election is effective until the date you install or first use it, whichever is later. H and r block How to make the election. H and r block   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. H and r block 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 return (excluding extensions). H and r block Attach the statement to the amended return and write “Filed pursuant to section 301. H and r block 9100-2” on the statement. H and r block File the amended return at the same address you filed the original return. H and r block Research and Experimental Costs The costs of research and experimentation are generally capital expenses. H and r block However, you can elect to deduct these costs as a current business expense. H and r block Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. H and r block If you meet certain requirements, you may elect to defer and amortize research and experimental costs. H and r block For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. H and r block Research and experimental costs defined. H and r block   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. H and r block Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. H and r block Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. H and r block      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. H and r block However, costs paid or incurred to obtain another's patent are not research and experimental costs. H and r block Product. H and r block   The term “product” includes any of the following items. H and r block Formula. H and r block Invention. H and r block Patent. H and r block Pilot model. H and r block Process. H and r block Technique. H and r block Property similar to the items listed above. H and r block It also includes products used by you in your trade or business or held for sale, lease, or license. H and r block Costs not included. H and r block   Research and experimental costs do not include expenses for any of the following activities. H and r block Advertising or promotions. H and r block Consumer surveys. H and r block Efficiency surveys. H and r block Management studies. H and r block Quality control testing. H and r block Research in connection with literary, historical, or similar projects. H and r block The acquisition of another's patent, model, production, or process. H and r block When and how to elect. H and r block   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. H and r block If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. H and r block Deducting or Amortizing Research and Experimentation Costs IF you . H and r block . H and r block . H and r block THEN . H and r block . H and r block . H and r block Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. H and r block Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. H and r block See Research and Experimental Costs in chapter 8. H and r block Research credit. H and r block   If you pay or incur qualified research expenses, you may be able to take the research credit. H and r block For more information see Form 6765, Credit for Increasing Research Activities and its instructions. H and r block Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. H and r block You can usually recover them through depreciation or depletion. H and r block However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. H and r block These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. H and r block You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. H and r block You can elect to deduct only the costs of items with no salvage value. H and r block These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. H and r block Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. H and r block However, see Amounts paid to contractor that must be capitalized , later. H and r block You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. H and r block It does not matter whether there is any intent to produce hydrocarbons. H and r block If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. H and r block Amounts paid to contractor that must be capitalized. H and r block   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. H and r block How to make the election. H and r block   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. H and r block No formal statement is required. H and r block If you file Schedule C (Form 1040), enter these costs under “Other expenses. H and r block ”   For oil and gas wells, your election is binding for the year it is made and for all later years. H and r block For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. H and r block You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. H and r block Energy credit for costs of geothermal wells. H and r block   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. H and r block See the Instructions for Form 3468 for more information. H and r block Nonproductive well. H and r block   If you capitalize your IDCs, you have another option if the well is nonproductive. H and r block You can deduct the IDCs of the nonproductive well as an ordinary loss. H and r block You must indicate and clearly state your election on your tax return for the year the well is completed. H and r block Once made, the election for oil and gas wells is binding for all later years. H and r block You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. H and r block Costs incurred outside the United States. H and r block   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. H and r block However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. H and r block If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. H and r block These rules do not apply to a nonproductive well. H and r block Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. H and r block You recover these costs through depletion as the mineral is removed from the ground. H and r block However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). H and r block How to make the election. H and r block   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. H and r block Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. H and r block The election applies to the tax year you make this election and all later tax years. H and r block Partnerships and S corporations. H and r block   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. H and r block Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. H and r block Reduced corporate deductions for exploration costs. H and r block   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. H and r block It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. H and r block A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. H and r block For more information on this method of amortization, see Internal Revenue Code section 59(e). H and r block   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. H and r block However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. H and r block See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. H and r block   These rules also apply to the deduction of development costs by corporations. H and r block See Development Costs , later. H and r block Recapture of exploration expenses. H and r block   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. H and r block Use either of the following methods. H and r block Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. H and r block Your election must be clearly indicated on the return. H and r block Increase your adjusted basis in the mine by the amount included in income. H and r block Generally, you must elect this recapture method by the due date (including extensions) of your return. H and r block 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 return (excluding extensions). H and r block Make the election on your amended return and write “Filed pursuant to section 301. H and r block 9100-2” on the form where you are including the income. H and r block File the amended return at the same address you filed the original return. H and r block Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. H and r block   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. H and r block Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. H and r block   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. H and r block Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. H and r block If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. H and r block Foreign exploration costs. H and r block   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. H and r block You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. H and r block (Cost depletion is discussed in chapter 9 . H and r block ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. H and r block These rules also apply to foreign development costs. H and r block Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. H and r block These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. H and r block Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. H and r block Development costs do not include the costs for the acquisition or improvement of depreciable property. H and r block Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. H and r block This election applies each tax year to expenses paid or incurred in that year. H and r block Once made, the election is binding for the year and cannot be revoked for any reason. H and r block How to make the election. H and r block   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. H and r block Generally, you must make the election by the due date of the return (including extensions). H and r block 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 return (excluding extensions). H and r block Clearly indicate the election on your amended return and write “Filed pursuant to section 301. H and r block 9100-2. H and r block ” File the amended return at the same address you filed the original return. H and r block Foreign development costs. H and r block   The rules discussed earlier for foreign exploration costs apply to foreign development costs. H and r block Reduced corporate deductions for development costs. H and r block   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. H and r block Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. H and r block For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. H and r block Circulation costs are deductible even if they normally would be capitalized. H and r block This rule does not apply to the following costs that must be capitalized. H and r block The purchase of land or depreciable property. H and r block The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. H and r block Other treatment of circulation costs. H and r block   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. H and r block Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). H and r block Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. H and r block How to make the election. H and r block   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. H and r block Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. H and r block Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. H and r block However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. H and r block The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. H and r block Any remaining costs must be amortized. H and r block For information about amortizing start-up and organizational costs, see chapter 8 . H and r block Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. H and r block Organizational costs include the costs of creating a corporation. H and r block For more information on start-up and organizational costs, see chapter 8 . H and r block How to make the election. H and r block   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. H and r block 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 return (excluding extensions). H and r block Clearly indicate the election on your amended return and write “Filed pursuant to section 301. H and r block 9100-2. H and r block ” File the amended return at the same address you filed the original return. H and r block The election applies when computing taxable income for the current tax year and all subsequent years. H and r block Reforestation Costs Reforestation costs are generally capital expenditures. H and r block However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. H and r block The remaining costs can be amortized over an 84-month period. H and r block For information about amortizing reforestation costs, see chapter 8 . H and r block Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. H and r block Qualified timber property is property that contains trees in significant commercial quantities. H and r block See chapter 8 for more information on qualifying reforestation costs and qualified timber property. H and r block If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. H and r block Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. H and r block How to make the election. H and r block   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. H and r block If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. H and r block If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. H and r block The unique stand identification numbers. H and r block The total number of acres reforested during the tax year. H and r block The nature of the reforestation treatments. H and r block The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. H and r block   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 return (excluding extensions). H and r block Clearly indicate the election on your amended return and write “Filed pursuant to section 301. H and r block 9100-2. H and r block ” File the amended return at the same address you filed the original return. H and r block The election applies when computing taxable income for the current tax year and all subsequent years. H and r block   For additional information on reforestation costs, see chapter 8 . H and r block Recapture. H and r block   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. H and r block For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. H and r block Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. H and r block However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. H and r block Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. H and r block However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. H and r block You must own or lease the facility or vehicle for use in connection with your trade or business. H and r block A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. H and r block A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). H and r block You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. H and r block Deduction limit. H and r block   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. H and r block However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. H and r block Partners and partnerships. H and r block   The $15,000 limit applies to a partnership and also to each partner in the partnership. H and r block A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. H and r block If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. H and r block   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). H and r block If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. H and r block Example. H and r block Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. H and r block Emilio had $12,000 of similar expenses in his sole proprietorship. H and r block He elected to deduct $7,000 of them. H and r block Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. H and r block Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. H and r block Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. H and r block Qualification standards. H and r block   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. H and r block You can view the Americans with Disabilities Act at www. H and r block ada. H and r block gov/pubs/ada. H and r block htm. H and r block   The following is a list of some architectural barrier removal costs that can be deducted. H and r block Ground and floor surfaces. H and r block Walks. H and r block Parking lots. H and r block Ramps. H and r block Entrances. H and r block Doors and doorways. H and r block Stairs. H and r block Floors. H and r block Toilet rooms. H and r block Water fountains. H and r block Public telephones. H and r block Elevators. H and r block Controls. H and r block Signage. H and r block Alarms. H and r block Protruding objects. H and r block Symbols of accessibility. H and r block You can find the ADA guidelines and requirements for architectural barrier removal at www. H and r block usdoj. H and r block gov/crt/ada/reg3a. H and r block html. H and r block   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. H and r block You can find the guidelines and requirements for transportation barrier removal at www. H and r block fta. H and r block dot. H and r block gov. H and r block   Also, you can access the ADA website at www. H and r block ada. H and r block gov for additional information. H and r block Other barrier removals. H and r block   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. H and r block The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. H and r block The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). H and r block The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. H and r block How to make the election. H and r block   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. H and r block Identify the deduction as a separate item. H and r block The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. H and r block If you make this election, you must maintain adequate records to support your deduction. H and r block   For your election to be valid, you generally must file your return by its due date, including extensions. H and r block 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 return (excluding extensions). H and r block Clearly indicate the election on your amended return and write “Filed pursuant to section 301. H and r block 9100-2. H and r block ” File the amended return at the same address you filed the original return. H and r block Your election is irrevocable after the due date, including extensions, of your return. H and r block Disabled access credit. H and r block   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. H and r block If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. H and r block   For more information, see Form 8826, Disabled Access Credit. H and r block Film and Television Production Costs Film and television production costs are generally capital expenses. H and r block However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. H and r block For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. H and r block Prev  Up  Next   Home   More Online Publications