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How Do I Efile My State Taxes

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How Do I Efile My State Taxes

How do i efile my state taxes 4. How do i efile my state taxes   Filing U. How do i efile my state taxes S. How do i efile my state taxes Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. How do i efile my state taxes S. How do i efile my state taxes Tax ReturnU. How do i efile my state taxes S. How do i efile my state taxes Armed Forces. How do i efile my state taxes Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. How do i efile my state taxes S. How do i efile my state taxes income tax return is required for your situation. How do i efile my state taxes If a U. How do i efile my state taxes S. How do i efile my state taxes return is required, your next step is to see if you meet the filing requirements. How do i efile my state taxes If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. How do i efile my state taxes This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. How do i efile my state taxes Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. How do i efile my state taxes If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. How do i efile my state taxes S. How do i efile my state taxes tax return, your filing requirement may be less than the amount in Table 4-1. How do i efile my state taxes For details, see the information under Filing Requirement if Possession Income Is Excluded , later. How do i efile my state taxes Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. How do i efile my state taxes For more information, see the Form 1040 instructions. How do i efile my state taxes Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. How do i efile my state taxes S. How do i efile my state taxes tax return, you must determine your adjusted filing requirement. How do i efile my state taxes Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. How do i efile my state taxes Personal exemption. How do i efile my state taxes   When figuring your filing requirement, your personal exemption is allowed in full. How do i efile my state taxes Do not reduce it for this purpose. How do i efile my state taxes Do not include exemptions for your dependents. How do i efile my state taxes Allowable standard deduction. How do i efile my state taxes   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. How do i efile my state taxes Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. How do i efile my state taxes Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax     Gross income from all sources (including excluded possession income)   Example. How do i efile my state taxes Barbara Spruce, a U. How do i efile my state taxes S. How do i efile my state taxes citizen, is single, under 65, and a bona fide resident of American Samoa. How do i efile my state taxes During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax). How do i efile my state taxes Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. How do i efile my state taxes   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. How do i efile my state taxes You must file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. How do i efile my state taxes    1. How do i efile my state taxes Enter the allowable standard deduction you figured earlier under Allowable standard deduction . How do i efile my state taxes If your filing status is married filing separately, enter -0-   2. How do i efile my state taxes Personal exemption. How do i efile my state taxes If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. How do i efile my state taxes Add lines 1 and 2. How do i efile my state taxes You must file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. How do i efile my state taxes 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. How do i efile my state taxes . How do i efile my state taxes . How do i efile my state taxes AND at the end of 2013 you were*. How do i efile my state taxes . How do i efile my state taxes . How do i efile my state taxes THEN file a return if your gross income** was at least. How do i efile my state taxes . How do i efile my state taxes . How do i efile my state taxes single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. How do i efile my state taxes ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). How do i efile my state taxes Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). How do i efile my state taxes If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. How do i efile my state taxes *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. How do i efile my state taxes Example 1. How do i efile my state taxes James and Joan Thompson, one over 65, are U. How do i efile my state taxes S. How do i efile my state taxes citizens and bona fide residents of Puerto Rico during the entire tax year. How do i efile my state taxes They file a joint income tax return. How do i efile my state taxes During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax). How do i efile my state taxes Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return because their gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). How do i efile my state taxes Example 2. How do i efile my state taxes Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return because her gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). How do i efile my state taxes If you must file a U. How do i efile my state taxes S. How do i efile my state taxes income tax return, you may be able to file a paperless return using IRS e-file. How do i efile my state taxes See your form instructions or visit our website at IRS. How do i efile my state taxes gov. How do i efile my state taxes When To File If you file on a calendar year basis, the due date for filing your U. How do i efile my state taxes S. How do i efile my state taxes income tax return is April 15 following the end of your tax year. How do i efile my state taxes If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. How do i efile my state taxes If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. How do i efile my state taxes For your 2013 tax return, the due date is April 15, 2014. How do i efile my state taxes If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. How do i efile my state taxes If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. How do i efile my state taxes See your form instructions for a list of designated private delivery services. How do i efile my state taxes Extension of Time To File You can get an extension of time to file your U. How do i efile my state taxes S. How do i efile my state taxes income tax return. How do i efile my state taxes Special rules apply for those living outside the United States. How do i efile my state taxes Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. How do i efile my state taxes Example. How do i efile my state taxes If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. How do i efile my state taxes Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. How do i efile my state taxes If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. How do i efile my state taxes You may also be charged penalties (see the Instructions for Form 4868). How do i efile my state taxes How to get the automatic extension. How do i efile my state taxes   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. How do i efile my state taxes E-file Form 4868 using your personal computer or a tax professional. How do i efile my state taxes E-file and pay by credit or debit card. How do i efile my state taxes Your payment must be at least $1. How do i efile my state taxes You may pay by phone or over the Internet. How do i efile my state taxes Do not file Form 4868. How do i efile my state taxes File a paper Form 4868. How do i efile my state taxes If you are a fiscal year taxpayer, you must file a paper Form 4868. How do i efile my state taxes See Form 4868 for information on getting an extension using these options. How do i efile my state taxes When to file. How do i efile my state taxes   You must request the automatic extension by the due date for your return. How do i efile my state taxes You can file your return any time before the 6-month extension period ends. How do i efile my state taxes When you file your return. How do i efile my state taxes   Enter any payment you made related to the extension of time to file on Form 1040, line 68. How do i efile my state taxes If you file Form 1040A, U. How do i efile my state taxes S. How do i efile my state taxes Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. How do i efile my state taxes Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. How do i efile my state taxes You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. How do i efile my state taxes Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. How do i efile my state taxes S. How do i efile my state taxes citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. How do i efile my state taxes However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. How do i efile my state taxes If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. How do i efile my state taxes For more information, see Publication 3, Armed Forces' Tax Guide. How do i efile my state taxes Married taxpayers. How do i efile my state taxes   If you file a joint return, only one spouse has to qualify for this automatic extension. How do i efile my state taxes However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. How do i efile my state taxes How to get the extension. How do i efile my state taxes   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. How do i efile my state taxes (See the situations listed under (2), earlier. How do i efile my state taxes ) Extension beyond 2 months. How do i efile my state taxes   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. How do i efile my state taxes File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). How do i efile my state taxes Be sure to check the box on Form 4868, line 8, if appropriate. How do i efile my state taxes   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). How do i efile my state taxes   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. How do i efile my state taxes Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. How do i efile my state taxes Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. How do i efile my state taxes If you are not including a check or a money order, send your U. How do i efile my state taxes S. How do i efile my state taxes tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. How do i efile my state taxes S. How do i efile my state taxes tax return and all attachments to:  Internal Revenue Service P. How do i efile my state taxes O. How do i efile my state taxes Box 1303 Charlotte, NC 28201-1303 USA Also send your U. How do i efile my state taxes S. How do i efile my state taxes return to these addresses if you are attaching Form 5074 or Form 8689. How do i efile my state taxes If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. How do i efile my state taxes Special Rules for Completing Your U. How do i efile my state taxes S. How do i efile my state taxes Tax Return If you are not excluding possession income from your U. How do i efile my state taxes S. How do i efile my state taxes tax return, follow the instructions for the specific forms you file. How do i efile my state taxes However, you may not qualify to claim the earned income credit (EIC). How do i efile my state taxes Earned income credit. How do i efile my state taxes   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. How do i efile my state taxes S. How do i efile my state taxes tax return. How do i efile my state taxes This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. How do i efile my state taxes S. How do i efile my state taxes Armed Forces. How do i efile my state taxes U. How do i efile my state taxes S. How do i efile my state taxes Armed Forces. How do i efile my state taxes   U. How do i efile my state taxes S. How do i efile my state taxes military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. How do i efile my state taxes Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. How do i efile my state taxes Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. How do i efile my state taxes Income from American Samoa or Puerto Rico excluded. How do i efile my state taxes   You will not be allowed to take deductions and credits that apply to the excluded income. How do i efile my state taxes The additional information you need follows. How do i efile my state taxes Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. How do i efile my state taxes S. How do i efile my state taxes income tax return. How do i efile my state taxes Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. How do i efile my state taxes S. How do i efile my state taxes tax return. How do i efile my state taxes Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). How do i efile my state taxes Figuring the deduction. How do i efile my state taxes   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. How do i efile my state taxes   Gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). How do i efile my state taxes Moving expense deduction. How do i efile my state taxes   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. How do i efile my state taxes Likewise, the expenses of a move back to the United States are generally attributable to U. How do i efile my state taxes S. How do i efile my state taxes earned income. How do i efile my state taxes   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. How do i efile my state taxes S. How do i efile my state taxes tax return. How do i efile my state taxes For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. How do i efile my state taxes   If you are claiming expenses for a move from a U. How do i efile my state taxes S. How do i efile my state taxes possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. How do i efile my state taxes For purposes of deducting moving expenses, the possessions are considered part of the United States. How do i efile my state taxes See Publication 521, Moving Expenses, for information about what expenses are deductible. How do i efile my state taxes Self-employment tax deduction. How do i efile my state taxes   Generally, if you are reporting self-employment income on your U. How do i efile my state taxes S. How do i efile my state taxes return, you can include the deductible part of your self-employment tax on Form 1040, line 27. How do i efile my state taxes This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). How do i efile my state taxes   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. How do i efile my state taxes   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. How do i efile my state taxes This would happen if, for instance, you have two businesses and only the income from one of them is excludable. How do i efile my state taxes   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. How do i efile my state taxes   Self-employment income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. How do i efile my state taxes Include the deductible part of this amount on Form 1040, line 27. How do i efile my state taxes Individual retirement arrangement (IRA) deduction. How do i efile my state taxes   Do not take excluded income into account when figuring your deductible IRA contribution. How do i efile my state taxes Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. How do i efile my state taxes To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. How do i efile my state taxes Then multiply your full standard deduction by the following fraction. How do i efile my state taxes   Gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). How do i efile my state taxes ” This calculation may not be the same as the one you used to determine if you need to file a U. How do i efile my state taxes S. How do i efile my state taxes tax return. How do i efile my state taxes Itemized Deductions Most itemized deductions do not apply to a particular type of income. How do i efile my state taxes However, itemized deductions can be divided into three categories. How do i efile my state taxes Those that apply specifically to excluded income, such as employee business expenses, are not deductible. How do i efile my state taxes Those that apply specifically to income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. How do i efile my state taxes Those that do not apply to specific income must be allocated between your gross income subject to U. How do i efile my state taxes S. How do i efile my state taxes income tax and your total gross income from all sources. How do i efile my state taxes The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. How do i efile my state taxes Example. How do i efile my state taxes In 2013, you and your spouse are both under 65 and U. How do i efile my state taxes S. How do i efile my state taxes citizens who are bona fide residents of Puerto Rico during the entire tax year. How do i efile my state taxes You file a joint income tax return. How do i efile my state taxes During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. How do i efile my state taxes S. How do i efile my state taxes gross income) and your spouse earned $60,000 from the U. How do i efile my state taxes S. How do i efile my state taxes Government. How do i efile my state taxes You have $16,000 of itemized deductions that do not apply to any specific type of income. How do i efile my state taxes These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). How do i efile my state taxes You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. How do i efile my state taxes   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. How do i efile my state taxes Overall limitation on itemized deductions. How do i efile my state taxes   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. How do i efile my state taxes Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. How do i efile my state taxes However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. How do i efile my state taxes See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. How do i efile my state taxes Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. How do i efile my state taxes S. How do i efile my state taxes tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. How do i efile my state taxes However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. How do i efile my state taxes S. How do i efile my state taxes tax return. How do i efile my state taxes The foreign tax credit is generally figured on Form 1116. How do i efile my state taxes If you have income, such as U. How do i efile my state taxes S. How do i efile my state taxes Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. How do i efile my state taxes You make this reduction for each separate income category. How do i efile my state taxes To find the amount of this reduction, use the following formula for each income category. How do i efile my state taxes Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. How do i efile my state taxes For more information on the foreign tax credit, see Publication 514. How do i efile my state taxes Example. How do i efile my state taxes Jason and Lynn Reddy are U. How do i efile my state taxes S. How do i efile my state taxes citizens who were bona fide residents of Puerto Rico during all of 2013. How do i efile my state taxes They file a joint tax return. How do i efile my state taxes The following table shows their excludable and taxable income for U. How do i efile my state taxes S. How do i efile my state taxes federal income tax purposes. How do i efile my state taxes   Taxable   Excludable Jason's wages from  U. How do i efile my state taxes S. How do i efile my state taxes Government $25,000     Lynn's wages from Puerto Rico  corp. How do i efile my state taxes     $15,000 Dividend from Puerto Rico corp. How do i efile my state taxes doing business in Puerto Rico     200 Dividend from U. How do i efile my state taxes S. How do i efile my state taxes  corp. How do i efile my state taxes doing business  in U. How do i efile my state taxes S. How do i efile my state taxes * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. How do i efile my state taxes   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. How do i efile my state taxes They have gross income of $26,000 for U. How do i efile my state taxes S. How do i efile my state taxes tax purposes. How do i efile my state taxes They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). How do i efile my state taxes They figure their foreign tax credit on two Forms 1116, which they must attach to their U. How do i efile my state taxes S. How do i efile my state taxes return. How do i efile my state taxes They fill out one Form 1116 for wages and one Form 1116 for the dividend. How do i efile my state taxes Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. How do i efile my state taxes   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. How do i efile my state taxes Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. How do i efile my state taxes A U. How do i efile my state taxes S. How do i efile my state taxes citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. How do i efile my state taxes This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. How do i efile my state taxes S. How do i efile my state taxes income tax return must otherwise be filed). How do i efile my state taxes Bona fide residents of the possessions discussed in this publication are considered U. How do i efile my state taxes S. How do i efile my state taxes residents for this purpose and are subject to the self-employment tax. How do i efile my state taxes Forms to file. How do i efile my state taxes   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. How do i efile my state taxes If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. How do i efile my state taxes If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. How do i efile my state taxes If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. How do i efile my state taxes Do not file forms 1040-SS or 1040-PR with Form 1040. How do i efile my state taxes If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. How do i efile my state taxes Chapter 11 Bankruptcy cases. How do i efile my state taxes   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. How do i efile my state taxes S. How do i efile my state taxes Income Tax Return for Estates and Trusts) of the bankruptcy estate. How do i efile my state taxes However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. How do i efile my state taxes   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. How do i efile my state taxes   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. How do i efile my state taxes Additional Medicare Tax Beginning in 2013, a 0. How do i efile my state taxes 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). How do i efile my state taxes Medicare wages and self-employment income are combined to determine if income exceeds the threshold. How do i efile my state taxes A self-employment loss should not be considered for purposes of this tax. How do i efile my state taxes RRTA compensation should be separately compared to the threshold. How do i efile my state taxes Your employer is responsible for withholding the 0. How do i efile my state taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. How do i efile my state taxes You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. How do i efile my state taxes There are no special rules for U. How do i efile my state taxes S. How do i efile my state taxes citizens and nonresident aliens living abroad for purposes of this provision. How do i efile my state taxes Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. How do i efile my state taxes For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. How do i efile my state taxes irs. How do i efile my state taxes gov and enter the following words in the search box: Additional Medicare Tax. How do i efile my state taxes You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. How do i efile my state taxes Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. How do i efile my state taxes 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. How do i efile my state taxes Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. How do i efile my state taxes The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. How do i efile my state taxes Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. How do i efile my state taxes Forms to file. How do i efile my state taxes   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. How do i efile my state taxes For more information, see Form 8960 and its instructions. How do i efile my state taxes Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. How do i efile my state taxes This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. How do i efile my state taxes In this situation, you may need to make estimated tax payments. How do i efile my state taxes Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. How do i efile my state taxes Include the Additional Medicare Tax and Net Investment Income Tax if applicable. How do i efile my state taxes If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. How do i efile my state taxes Or, you can make your payments electronically and not have to file any paper forms. How do i efile my state taxes See the Form 1040-ES instructions for information on making payments. How do i efile my state taxes Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. How do i efile my state taxes American Samoa. How do i efile my state taxes The Commonwealth of Puerto Rico. How do i efile my state taxes The Commonwealth of the Northern Mariana Islands. How do i efile my state taxes Guam. How do i efile my state taxes The U. How do i efile my state taxes S. How do i efile my state taxes Virgin Islands. How do i efile my state taxes These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. How do i efile my state taxes Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. How do i efile my state taxes How to make your request. How do i efile my state taxes   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. How do i efile my state taxes R. How do i efile my state taxes B. How do i efile my state taxes 900 available at www. How do i efile my state taxes irs. How do i efile my state taxes gov/pub/irs-irbs/irb06-49. How do i efile my state taxes pdf. How do i efile my state taxes    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. How do i efile my state taxes S. How do i efile my state taxes competent authority assistance under tax treaties. How do i efile my state taxes As noted, an update to Revenue Procedure 2006-23 will be published in the future. How do i efile my state taxes   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. How do i efile my state taxes It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. How do i efile my state taxes You (or a person having authority to sign your federal return) must sign and date the request. How do i efile my state taxes    Send your written request for U. How do i efile my state taxes S. How do i efile my state taxes assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. How do i efile my state taxes W. How do i efile my state taxes  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. How do i efile my state taxes Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. How do i efile my state taxes S. How do i efile my state taxes tax paid on the income in question, you should file a claim on Form 1040X, Amended U. How do i efile my state taxes S. How do i efile my state taxes Individual Income Tax Return. How do i efile my state taxes Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. How do i efile my state taxes Attach a copy of the request to the form. How do i efile my state taxes Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. How do i efile my state taxes See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. How do i efile my state taxes Prev  Up  Next   Home   More Online Publications
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The How Do I Efile My State Taxes

How do i efile my state taxes 4. How do i efile my state taxes   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. How do i efile my state taxes Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. How do i efile my state taxes Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. How do i efile my state taxes If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. How do i efile my state taxes You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. How do i efile my state taxes Special rules apply if you rent your condominium to others. How do i efile my state taxes You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. How do i efile my state taxes In addition, you can deduct any dues or assessments paid for maintenance of the common elements. How do i efile my state taxes You cannot deduct special assessments you pay to a condominium management corporation for improvements. How do i efile my state taxes However, you may be able to recover your share of the cost of any improvement by taking depreciation. How do i efile my state taxes Cooperatives If you live in a cooperative, you do not own your apartment. How do i efile my state taxes Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. How do i efile my state taxes If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. How do i efile my state taxes In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. How do i efile my state taxes Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. How do i efile my state taxes Figure your depreciation deduction as follows. How do i efile my state taxes Figure the depreciation for all the depreciable real property owned by the corporation. How do i efile my state taxes (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. How do i efile my state taxes ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. How do i efile my state taxes Multiply your cost per share by the total number of outstanding shares. How do i efile my state taxes Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. How do i efile my state taxes Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. How do i efile my state taxes Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. How do i efile my state taxes Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. How do i efile my state taxes Multiply the result of (2) by the percentage you figured in (3). How do i efile my state taxes This is your depreciation on the stock. How do i efile my state taxes Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. How do i efile my state taxes Payments added to capital account. How do i efile my state taxes   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. How do i efile my state taxes For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. How do i efile my state taxes   Treat as a capital cost the amount you were assessed for capital items. How do i efile my state taxes This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. How do i efile my state taxes   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. How do i efile my state taxes Otherwise, figure your share in the following manner. How do i efile my state taxes Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. How do i efile my state taxes Multiply the corporation's deductible interest by the number you figured in (1). How do i efile my state taxes This is your share of the interest. How do i efile my state taxes Multiply the corporation's deductible taxes by the number you figured in (1). How do i efile my state taxes This is your share of the taxes. How do i efile my state taxes Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. How do i efile my state taxes You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. How do i efile my state taxes You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. How do i efile my state taxes However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). How do i efile my state taxes Example. How do i efile my state taxes Your tax year is the calendar year. How do i efile my state taxes You moved from your home in May and started renting it out on June 1. How do i efile my state taxes You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. How do i efile my state taxes Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. How do i efile my state taxes When figuring depreciation, treat the property as placed in service on June 1. How do i efile my state taxes Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. How do i efile my state taxes Fair market value. How do i efile my state taxes   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. How do i efile my state taxes Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. How do i efile my state taxes Figuring the basis. How do i efile my state taxes   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. How do i efile my state taxes For other increases and decreases to basis, see Adjusted Basis in chapter 2. How do i efile my state taxes Example. How do i efile my state taxes Several years ago you built your home for $140,000 on a lot that cost you $14,000. How do i efile my state taxes Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. How do i efile my state taxes Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. How do i efile my state taxes Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. How do i efile my state taxes The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). How do i efile my state taxes On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. How do i efile my state taxes The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). How do i efile my state taxes Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. How do i efile my state taxes (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. How do i efile my state taxes ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. How do i efile my state taxes The fair market value of the property on the date you change your apartment to rental use. How do i efile my state taxes This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. How do i efile my state taxes The corporation's adjusted basis in the property on that date. How do i efile my state taxes Do not subtract depreciation when figuring the corporation's adjusted basis. How do i efile my state taxes If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). How do i efile my state taxes The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. How do i efile my state taxes Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. How do i efile my state taxes Generally, that will be MACRS for any conversion after 1986. How do i efile my state taxes Treat the property as placed in service on the conversion date. How do i efile my state taxes Example. How do i efile my state taxes Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. How do i efile my state taxes Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. How do i efile my state taxes 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . How do i efile my state taxes 01364). How do i efile my state taxes Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. How do i efile my state taxes You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). How do i efile my state taxes You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. How do i efile my state taxes There is no change in the types of expenses deductible for the personal-use part of your property. How do i efile my state taxes Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). How do i efile my state taxes You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. How do i efile my state taxes You do not have to divide the expenses that belong only to the rental part of your property. How do i efile my state taxes For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. How do i efile my state taxes If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. How do i efile my state taxes You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. How do i efile my state taxes How to divide expenses. How do i efile my state taxes   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. How do i efile my state taxes You can use any reasonable method for dividing the expense. How do i efile my state taxes It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. How do i efile my state taxes The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. How do i efile my state taxes Example. How do i efile my state taxes You rent a room in your house. How do i efile my state taxes The room is 12 × 15 feet, or 180 square feet. How do i efile my state taxes Your entire house has 1,800 square feet of floor space. How do i efile my state taxes You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. How do i efile my state taxes If your heating bill for the year for the entire house was $600, $60 ($600 × . How do i efile my state taxes 10) is a rental expense. How do i efile my state taxes The balance, $540, is a personal expense that you cannot deduct. How do i efile my state taxes Duplex. How do i efile my state taxes   A common situation is the duplex where you live in one unit and rent out the other. How do i efile my state taxes Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. How do i efile my state taxes Example. How do i efile my state taxes You own a duplex and live in one half, renting the other half. How do i efile my state taxes Both units are approximately the same size. How do i efile my state taxes Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. How do i efile my state taxes You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). How do i efile my state taxes Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. How do i efile my state taxes You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. How do i efile my state taxes Where to report. How do i efile my state taxes   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. How do i efile my state taxes For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. How do i efile my state taxes   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. How do i efile my state taxes You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. How do i efile my state taxes Presumption of profit. How do i efile my state taxes   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. How do i efile my state taxes Postponing decision. How do i efile my state taxes   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. How do i efile my state taxes You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. How do i efile my state taxes You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. How do i efile my state taxes More information. How do i efile my state taxes   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. How do i efile my state taxes Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. How do i efile my state taxes Instead of selling the house she had been living in, she decided to change it to rental property. How do i efile my state taxes Eileen selected a tenant and started renting the house on February 1. How do i efile my state taxes Eileen charges $750 a month for rent and collects it herself. How do i efile my state taxes Eileen also received a $750 security deposit from her tenant. How do i efile my state taxes Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. How do i efile my state taxes Her rental expenses for the year are as follows. How do i efile my state taxes   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. How do i efile my state taxes She can deduct eleven-twelfths of these expenses as rental expenses. How do i efile my state taxes She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. How do i efile my state taxes She cannot deduct the balance of the fire insurance because it is a personal expense. How do i efile my state taxes Eileen bought this house in 1984 for $35,000. How do i efile my state taxes Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. How do i efile my state taxes Before changing it to rental property, Eileen added several improvements to the house. How do i efile my state taxes She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. How do i efile my state taxes Of this amount, $35,000 was for the land and $117,000 was for the house. How do i efile my state taxes Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. How do i efile my state taxes As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. How do i efile my state taxes She chooses the GDS recovery period of 27. How do i efile my state taxes 5 years. How do i efile my state taxes She uses Table 2-2d to find her depreciation percentage. How do i efile my state taxes Since she placed the property in service in February, the percentage is 3. How do i efile my state taxes 182%. How do i efile my state taxes On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. How do i efile my state taxes The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. How do i efile my state taxes She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. How do i efile my state taxes On May 1, Eileen paid $4,000 to have a furnace installed in the house. How do i efile my state taxes The furnace is residential rental property. How do i efile my state taxes Because she placed the property in service in May, the percentage from Table 2-2d is 2. How do i efile my state taxes 273%. How do i efile my state taxes Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . How do i efile my state taxes 03182) $1,241   Dishwasher ($425 × . How do i efile my state taxes 20) 85   Furnace ($4,000 × . How do i efile my state taxes 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. How do i efile my state taxes She enters her income, expenses, and depreciation for the house in the column for Property A. How do i efile my state taxes Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. How do i efile my state taxes See the Instructions for Form 4562 for more information on preparing the form. How do i efile my state taxes Prev  Up  Next   Home   More Online Publications