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Past Year Tax

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Past Year Tax

Past year tax 9. Past year tax   Worksheets Table of Contents When Should I Figure MAC?Checking the Previous Year's Contributions Available Worksheets Chapter 2 introduced you to the term maximum amount contributable (MAC). Past year tax Generally, your MAC is the lesser of your: Limit on annual additions (chapter 3), or Limit on elective deferrals (chapter 4). Past year tax The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your MAC. Past year tax After completing the worksheets, you should maintain them with your 403(b) records for that year. Past year tax Do not attach them to your tax return. Past year tax At the end of the year or the beginning of the next year, you should compare your estimated compensation figures with your actual figures. Past year tax If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year. Past year tax If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC. Past year tax When Should I Figure MAC? At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. Past year tax Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. Past year tax By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year. Past year tax Checking the Previous Year's Contributions At the beginning of the following year, you should refigure your MAC based on your actual earned income. Past year tax At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. Past year tax This means refiguring your limit based on your actual compensation figures for the year. Past year tax This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes. Past year tax Available Worksheets The following worksheets have been provided to help you figure your MAC. Past year tax Worksheet A. Past year tax Cost of Incidental Life Insurance. Past year tax Worksheet B. Past year tax Includible Compensation for Your Most Recent Year of Service Worksheet C. Past year tax Limit on Catch-Up Contributions. Past year tax ??? Worksheet 1. Past year tax Maximum Amount Contributable (MAC). Past year tax Worksheet A. Past year tax Cost of Incidental Life Insurance Note. Past year tax Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Past year tax This amount will be used to figure includible compensation for your most recent year of service. Past year tax 1. Past year tax Enter the value of the contract (amount payable upon your death) 1. Past year tax   2. Past year tax Enter the cash value in the contract at the end of the year 2. Past year tax   3. Past year tax Subtract line 2 from line 1. Past year tax This is the value of your current life insurance protection 3. Past year tax   4. Past year tax Enter your age on your birthday nearest the beginning of the policy year 4. Past year tax   5. Past year tax Enter the 1-year term premium for $1,000 of life insurance based on your age. Past year tax (From Figure 3-1) 5. Past year tax   6. Past year tax Divide line 3 by $1,000 6. Past year tax   7. Past year tax Multiply line 6 by line 5. Past year tax This is the cost of your incidental life insurance 7. Past year tax   Worksheet B. Past year tax Includible Compensation for Your Most Recent Year of Service1 Note. Past year tax Use this worksheet to figure includible compensation for your most recent year of service. Past year tax 1. Past year tax Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Past year tax   2. Past year tax Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Past year tax   3. Past year tax Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Past year tax   4. Past year tax Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government or of a tax-exempt organization) for your most recent year of service 4. Past year tax   5. Past year tax Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Past year tax   6. Past year tax Enter your foreign earned income exclusion for your most recent year of service 6. Past year tax   7. Past year tax Add lines 1, 2, 3, 4, 5, and 6 7. Past year tax   8. Past year tax Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Past year tax   9. Past year tax Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Past year tax   10. Past year tax Add lines 8 and 9 10. Past year tax   11. Past year tax Subtract line 10 from line 7. Past year tax This is your includible compensation for your most recent year of service 11. Past year tax   1Use estimated amounts if figuring includible compensation before the end of the year. Past year tax  2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Past year tax Worksheet C. Past year tax Limit on Catch-Up Contributions Note. Past year tax If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions. Past year tax 1. Past year tax Maximum catch-up contributions 1. Past year tax $5,500 2. Past year tax Enter your includible compensation for your most recent year of service 2. Past year tax   3. Past year tax Enter your elective deferrals 3. Past year tax   4. Past year tax Subtract line 3 from line 2 4. Past year tax   5. Past year tax Enter the lesser of line 1 or line 4. Past year tax This is your limit on catch-up contributions 5. Past year tax   Worksheet 1. Past year tax Maximum Amount Contributable (MAC) Note. Past year tax Use this worksheet to figure your MAC. Past year tax Part I. Past year tax Limit on Annual Additions     1. Past year tax Enter your includible compensation for your most recent year of service 1. Past year tax   2. Past year tax Maximum1: For 2013, enter $51,000 For 2014, enter $52,000 2. Past year tax   3. Past year tax Enter the lesser of line 1 or line 2. Past year tax This is your limit on annual additions 3. Past year tax     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Past year tax     Part II. Past year tax Limit on Elective Deferrals     4. Past year tax Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Past year tax     Note. Past year tax If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Past year tax If not, enter zero (-0-) on line 16 and go to line 17. Past year tax     5. Past year tax Amount per year of service 5. Past year tax $ 5,000 6. Past year tax Enter your years of service 6. Past year tax   7. Past year tax Multiply line 5 by line 6 7. Past year tax   8. Past year tax Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Past year tax   9. Past year tax Subtract line 8 from line 7. Past year tax If zero or less, enter zero (-0-) 9. Past year tax   10. Past year tax Maximum increase in limit for long service 10. Past year tax $15,000 11. Past year tax Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Past year tax   12. Past year tax Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Past year tax   13. Past year tax Add line 11 and line 12 13. Past year tax   14. Past year tax Subtract line 13 from line 10 14. Past year tax   15. Past year tax Maximum additional contributions 15. Past year tax $ 3,000 16. Past year tax Enter the least of lines 9, 14, or 15. Past year tax This is your increase in the limit for long service 16. Past year tax   17. Past year tax Add lines 4 and 16. Past year tax This is your limit on elective deferrals 17. Past year tax     Part III. Past year tax Maximum Amount Contributable     18. Past year tax If you had only nonelective contributions, enter the amount from line 3. Past year tax This is your MAC. Past year tax    If you had only elective deferrals, enter the lesser of lines 3 or 17. Past year tax This is your MAC. Past year tax    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Past year tax This is your MAC. Past year tax (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Past year tax ) 18. Past year tax   1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Past year tax You must also combine the contributions made to all 403(b) accounts on your behalf by your employer. Past year tax Prev  Up  Next   Home   More Online Publications
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Understanding your CP09 Notice

We've sent you this notice because our records indicate you may be eligible for the Earned Income Credit (EIC), but didn't claim it on your tax return.


What you need to do

  • Read your notice carefully — it will explain the steps needed to determine your qualifications.
  • Complete the Earned Income Credit Eligibility Worksheet.

    If you are eligible for the credit,
    • Sign and date the worksheet.
    • Mail the signed worksheet in the envelope provided.
    If you are not eligible for the credit,
    • Do not return the worksheet to us.

What we will do

We will review your worksheet and make a determination.

  • If you're eligible for the credit, we'll send you a refund check in 6 ― 8 weeks, as long as you don't owe tax or any other debts we’re required to collect.
  • If we deny the credit, we will send you a letter of explanation.
  • If you don't hear from us after 8 weeks, call our toll free line at 1-800-829-0922 to check the status.

You may want to...


Answers to Common Questions

Why did the IRS send me this notice?
You may be eligible for the Earned Income Credit (EIC). The EIC is a credit for certain people who work and have earned income. The credit may give you a refund even if you do not owe any tax.


Tips for next year

Claim the credit if you are still eligible.

Ask the IRS to figure the earned income credit for you by writing "EIC" on the EIC line, complete Schedule EIC, and attach it to your return. If you qualify for the credit, the IRS will calculate it for you.

Write "NO" on the EIC line if you do not want or you do not qualify for the credit.

Page Last Reviewed or Updated: 19-Feb-2014

How to get help

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

The Past Year Tax

Past year tax 4. Past year tax   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. Past year tax Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. Past year tax 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. Past year tax If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. Past year tax 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. Past year tax Special rules apply if you rent your condominium to others. Past year tax You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. Past year tax In addition, you can deduct any dues or assessments paid for maintenance of the common elements. Past year tax You cannot deduct special assessments you pay to a condominium management corporation for improvements. Past year tax However, you may be able to recover your share of the cost of any improvement by taking depreciation. Past year tax Cooperatives If you live in a cooperative, you do not own your apartment. Past year tax Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. Past year tax 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. Past year tax 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. Past year tax Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. Past year tax Figure your depreciation deduction as follows. Past year tax Figure the depreciation for all the depreciable real property owned by the corporation. Past year tax (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. Past year tax ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. Past year tax Multiply your cost per share by the total number of outstanding shares. Past year tax Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. Past year tax 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. Past year tax 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. Past year tax Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Past year tax Multiply the result of (2) by the percentage you figured in (3). Past year tax This is your depreciation on the stock. Past year tax 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. Past year tax Payments added to capital account. Past year tax   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. Past year tax 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. Past year tax   Treat as a capital cost the amount you were assessed for capital items. Past year tax 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. Past year tax   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. Past year tax Otherwise, figure your share in the following manner. Past year tax Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Past year tax Multiply the corporation's deductible interest by the number you figured in (1). Past year tax This is your share of the interest. Past year tax Multiply the corporation's deductible taxes by the number you figured in (1). Past year tax This is your share of the taxes. Past year tax 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. Past year tax 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. Past year tax You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Past year tax 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). Past year tax Example. Past year tax Your tax year is the calendar year. Past year tax You moved from your home in May and started renting it out on June 1. Past year tax You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Past year tax Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Past year tax When figuring depreciation, treat the property as placed in service on June 1. Past year tax 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. Past year tax Fair market value. Past year tax   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. Past year tax Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. Past year tax Figuring the basis. Past year tax   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. Past year tax For other increases and decreases to basis, see Adjusted Basis in chapter 2. Past year tax Example. Past year tax Several years ago you built your home for $140,000 on a lot that cost you $14,000. Past year tax 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. Past year tax Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. Past year tax Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. Past year tax 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). Past year tax 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. Past year tax 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). Past year tax Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. Past year tax (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. Past year tax ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. Past year tax The fair market value of the property on the date you change your apartment to rental use. Past year tax This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. Past year tax The corporation's adjusted basis in the property on that date. Past year tax Do not subtract depreciation when figuring the corporation's adjusted basis. Past year tax 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). Past year tax 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. Past year tax Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. Past year tax Generally, that will be MACRS for any conversion after 1986. Past year tax Treat the property as placed in service on the conversion date. Past year tax Example. Past year tax Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. Past year tax Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. Past year tax 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . Past year tax 01364). Past year tax 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. Past year tax 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). Past year tax 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. Past year tax There is no change in the types of expenses deductible for the personal-use part of your property. Past year tax Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Past year tax You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Past year tax You do not have to divide the expenses that belong only to the rental part of your property. Past year tax 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. Past year tax 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. Past year tax 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. Past year tax How to divide expenses. Past year tax   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. Past year tax You can use any reasonable method for dividing the expense. Past year tax It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Past year tax 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. Past year tax Example. Past year tax You rent a room in your house. Past year tax The room is 12 × 15 feet, or 180 square feet. Past year tax Your entire house has 1,800 square feet of floor space. Past year tax You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. Past year tax If your heating bill for the year for the entire house was $600, $60 ($600 × . Past year tax 10) is a rental expense. Past year tax The balance, $540, is a personal expense that you cannot deduct. Past year tax Duplex. Past year tax   A common situation is the duplex where you live in one unit and rent out the other. Past year tax 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. Past year tax Example. Past year tax You own a duplex and live in one half, renting the other half. Past year tax Both units are approximately the same size. Past year tax Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. Past year tax 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). Past year tax 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. Past year tax 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. Past year tax Where to report. Past year tax   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. Past year tax 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. Past year tax   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. Past year tax You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Past year tax Presumption of profit. Past year tax   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. Past year tax Postponing decision. Past year tax   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. Past year tax You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. Past year tax 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. Past year tax More information. Past year tax   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. Past year tax Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. Past year tax Instead of selling the house she had been living in, she decided to change it to rental property. Past year tax Eileen selected a tenant and started renting the house on February 1. Past year tax Eileen charges $750 a month for rent and collects it herself. Past year tax Eileen also received a $750 security deposit from her tenant. Past year tax Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. Past year tax Her rental expenses for the year are as follows. Past year tax   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. Past year tax She can deduct eleven-twelfths of these expenses as rental expenses. Past year tax She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. Past year tax She cannot deduct the balance of the fire insurance because it is a personal expense. Past year tax Eileen bought this house in 1984 for $35,000. Past year tax Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. Past year tax Before changing it to rental property, Eileen added several improvements to the house. Past year tax 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. Past year tax Of this amount, $35,000 was for the land and $117,000 was for the house. Past year tax 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. Past year tax As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. Past year tax She chooses the GDS recovery period of 27. Past year tax 5 years. Past year tax She uses Table 2-2d to find her depreciation percentage. Past year tax Since she placed the property in service in February, the percentage is 3. Past year tax 182%. Past year tax On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. Past year tax The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. Past year tax She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. Past year tax On May 1, Eileen paid $4,000 to have a furnace installed in the house. Past year tax The furnace is residential rental property. Past year tax Because she placed the property in service in May, the percentage from Table 2-2d is 2. Past year tax 273%. Past year tax 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 × . Past year tax 03182) $1,241   Dishwasher ($425 × . Past year tax 20) 85   Furnace ($4,000 × . Past year tax 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. Past year tax She enters her income, expenses, and depreciation for the house in the column for Property A. Past year tax Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. Past year tax See the Instructions for Form 4562 for more information on preparing the form. Past year tax Prev  Up  Next   Home   More Online Publications