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Print 1040ez Forms

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Print 1040ez forms 5. Print 1040ez forms   Manufacturers Taxes Table of Contents Importer. Print 1040ez forms Use considered sale. Print 1040ez forms Lease considered sale. Print 1040ez forms Bonus goods. Print 1040ez forms Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Print 1040ez forms Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Print 1040ez forms CoalExported. Print 1040ez forms Taxable TiresQualifying intercity or local bus. Print 1040ez forms Qualifying school bus. Print 1040ez forms Gas Guzzler TaxVehicles not subject to tax. Print 1040ez forms Imported automobiles. Print 1040ez forms VaccinesConditions to allowance. Print 1040ez forms Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. Print 1040ez forms Manufacturer. Print 1040ez forms   The term “manufacturer” includes a producer or importer. Print 1040ez forms A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. Print 1040ez forms If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. Print 1040ez forms   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. Print 1040ez forms The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. Print 1040ez forms Importer. Print 1040ez forms   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. Print 1040ez forms Sale. Print 1040ez forms   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. Print 1040ez forms Use considered sale. Print 1040ez forms   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. Print 1040ez forms Lease considered sale. Print 1040ez forms   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. Print 1040ez forms However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. Print 1040ez forms Manufacturers taxes based on sale price. Print 1040ez forms   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. Print 1040ez forms The taxes imposed on coal are based either on the sale price or the weight. Print 1040ez forms   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. Print 1040ez forms However, you include certain charges made when a taxable article is sold and you exclude others. Print 1040ez forms To figure the price on which you base the tax, use the following rules. Print 1040ez forms Include both the following charges in the price. Print 1040ez forms Any charge for coverings or containers (regardless of their nature). Print 1040ez forms Any charge incident to placing the article in a condition packed ready for shipment. Print 1040ez forms Exclude all the following amounts from the price. Print 1040ez forms The manufacturers excise tax, whether or not it is stated as a separate charge. Print 1040ez forms The transportation charges pursuant to the sale. Print 1040ez forms The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. Print 1040ez forms Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. Print 1040ez forms Discounts, rebates, and similar allowances actually granted to the purchaser. Print 1040ez forms Local advertising charges. Print 1040ez forms A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. Print 1040ez forms Charges for warranty paid at the purchaser's option. Print 1040ez forms However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. Print 1040ez forms Bonus goods. Print 1040ez forms   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. Print 1040ez forms Figure the tax only on the sale price attributable to the taxable articles. Print 1040ez forms Example. Print 1040ez forms A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. Print 1040ez forms The sale price of the shipment is $1,500. Print 1040ez forms The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Print 1040ez forms Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). Print 1040ez forms The remaining $375 is allocated to the nontaxable articles. Print 1040ez forms Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. Print 1040ez forms When the title passes depends on the intention of the parties as gathered from the contract of sale. Print 1040ez forms In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. Print 1040ez forms If the taxable article is used by the manufacturer, the tax attaches at the time use begins. Print 1040ez forms The manufacturer is liable for the tax. Print 1040ez forms Partial payments. Print 1040ez forms   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. Print 1040ez forms To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. Print 1040ez forms Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. Print 1040ez forms Sale of an article to a state or local government for the exclusive use of the state or local government. Print 1040ez forms This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Print 1040ez forms State is defined in Definitions in chapter 1. Print 1040ez forms Sale of an article to a nonprofit educational organization for its exclusive use. Print 1040ez forms This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Print 1040ez forms Nonprofit educational organization is defined under Communications Tax in chapter 4. Print 1040ez forms Sale of an article to a qualified blood collector organization. Print 1040ez forms This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Print 1040ez forms Qualified blood collector organizations are defined under Communications Tax in chapter 4. Print 1040ez forms Sale of an article for use by the purchaser as supplies for vessels. Print 1040ez forms This exemption does not apply to the taxes on coal and vaccines. Print 1040ez forms Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. Print 1040ez forms Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. Print 1040ez forms This exemption does not apply to the tax on coal and tires. Print 1040ez forms Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. Print 1040ez forms If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. Print 1040ez forms Sale of an article for export or for resale by the purchaser to a second purchaser for export. Print 1040ez forms The article may be exported to a foreign country or to a possession of the United States. Print 1040ez forms A vaccine shipped to a possession of the United States is not considered to be exported. Print 1040ez forms If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. Print 1040ez forms Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. Print 1040ez forms S. Print 1040ez forms jurisdiction in Alaska. Print 1040ez forms For tire exemptions, see section 4221(e)(2). Print 1040ez forms Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. Print 1040ez forms Registration requirements. Print 1040ez forms   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. Print 1040ez forms See the Form 637 instructions for more information. Print 1040ez forms Exceptions to registration requirements. Print 1040ez forms   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. Print 1040ez forms Certification requirement. Print 1040ez forms   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. Print 1040ez forms The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. Print 1040ez forms   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. Print 1040ez forms See Regulations section 48. Print 1040ez forms 4221-5(c) for the certificate requirements. Print 1040ez forms   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. Print 1040ez forms See Regulations section 48. Print 1040ez forms 4221-4(d) for the certificate requirements. Print 1040ez forms Proof of export requirement. Print 1040ez forms   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. Print 1040ez forms See Regulations section 48. Print 1040ez forms 4221-3(d) for evidence that qualifies as proof of exportation. Print 1040ez forms Proof of resale for further manufacture requirement. Print 1040ez forms   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. Print 1040ez forms See Regulations section 48. Print 1040ez forms 4221-2(c) for evidence that qualifies as proof of resale. Print 1040ez forms Information to be furnished to purchaser. Print 1040ez forms   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. Print 1040ez forms Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. Print 1040ez forms The claim must set forth in detail the facts upon which the claim is based. Print 1040ez forms Uses, sales, and exports. Print 1040ez forms   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). Print 1040ez forms Export. Print 1040ez forms   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. Print 1040ez forms In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. Print 1040ez forms Price readjustments. Print 1040ez forms   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. Print 1040ez forms Conditions to allowance. Print 1040ez forms   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. Print 1040ez forms The claimant sold the article at a tax-excluded price. Print 1040ez forms The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. Print 1040ez forms The person has obtained the written consent of the ultimate vendor to make the claim. Print 1040ez forms The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. Print 1040ez forms Claim for further manufacture. Print 1040ez forms   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. Print 1040ez forms The name and address of the manufacturer and the date of payment. Print 1040ez forms An identification of the article for which the credit or refund is claimed. Print 1040ez forms The amount of tax paid on the article and the date on which it was paid. Print 1040ez forms Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. Print 1040ez forms An identification of the second article. Print 1040ez forms   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. Print 1040ez forms The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. Print 1040ez forms Claim for price readjustment. Print 1040ez forms   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. Print 1040ez forms A description of the circumstances that gave rise to the price readjustment. Print 1040ez forms An identification of the article whose price was readjusted. Print 1040ez forms The price at which the article was sold. Print 1040ez forms The amount of tax paid on the article and the date on which it was paid. Print 1040ez forms The name and address of the purchaser. Print 1040ez forms The amount repaid to the purchaser or credited to the purchaser's account. Print 1040ez forms Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. Print 1040ez forms This includes any parts or accessories sold on or in connection with the sale of those articles. Print 1040ez forms Pay this tax with Form 720. Print 1040ez forms No tax deposits are required. Print 1040ez forms Sport fishing equipment includes all the following items. Print 1040ez forms Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. Print 1040ez forms Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). Print 1040ez forms The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. Print 1040ez forms Fishing tip-ups and tilts. Print 1040ez forms Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. Print 1040ez forms See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. Print 1040ez forms Fishing rods and fishing poles. Print 1040ez forms   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. Print 1040ez forms The tax is paid by the manufacturer, producer, or importer. Print 1040ez forms Fishing tackle boxes. Print 1040ez forms   The tax on fishing tackle boxes is 3% of the sales price. Print 1040ez forms The tax is paid by the manufacturer, producer, or importer. Print 1040ez forms Electric outboard boat motors. Print 1040ez forms   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. Print 1040ez forms This includes any parts or accessories sold on or in connection with the sale of those articles. Print 1040ez forms Certain equipment resale. Print 1040ez forms   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. Print 1040ez forms If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. Print 1040ez forms If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. Print 1040ez forms The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. Print 1040ez forms   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. Print 1040ez forms The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. Print 1040ez forms Related person. Print 1040ez forms   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). Print 1040ez forms Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. Print 1040ez forms 11) of the sales price. Print 1040ez forms The tax is paid by the manufacturer, producer, or importer. Print 1040ez forms It applies to bows having a peak draw weight of 30 pounds or more. Print 1040ez forms The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. Print 1040ez forms Pay this tax with Form 720. Print 1040ez forms No tax deposits are required. Print 1040ez forms Arrow Shafts The tax on arrow shafts is listed on Form 720. Print 1040ez forms The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. Print 1040ez forms It measures 18 inches or more in overall length. Print 1040ez forms It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. Print 1040ez forms Exemption for certain wooden arrows. Print 1040ez forms   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. Print 1040ez forms It measures 5/16 of an inch or less in diameter. Print 1040ez forms It is not suitable for use with a taxable bow, described earlier. Print 1040ez forms Pay this tax with Form 720. Print 1040ez forms No tax deposits are required. Print 1040ez forms Coal A tax is imposed on the first sale of coal mined in the United States. Print 1040ez forms The producer of the coal is liable for the tax. Print 1040ez forms The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Print 1040ez forms Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. Print 1040ez forms A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). Print 1040ez forms The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. Print 1040ez forms Tax rates. Print 1040ez forms   The tax on underground-mined coal is the lower of: $1. Print 1040ez forms 10 a ton, or 4. Print 1040ez forms 4% of the sale price. Print 1040ez forms   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. Print 1040ez forms 4% of the sale price. Print 1040ez forms   Coal will be taxed at the 4. Print 1040ez forms 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. Print 1040ez forms 50 a ton for surface-mined coal. Print 1040ez forms Apply the tax proportionately if a sale or use includes a portion of a ton. Print 1040ez forms Example. Print 1040ez forms If you sell 21,000 pounds (10. Print 1040ez forms 5 tons) of coal from an underground mine for $525, the price per ton is $50. Print 1040ez forms The tax is $1. Print 1040ez forms 10 × 10. Print 1040ez forms 5 tons ($11. Print 1040ez forms 55). Print 1040ez forms Coal production. Print 1040ez forms   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. Print 1040ez forms Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. Print 1040ez forms   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. Print 1040ez forms In some cases, a single mine may yield coal from both surface mining and underground mining. Print 1040ez forms Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. Print 1040ez forms Determining tonnage or selling price. Print 1040ez forms   The producer pays the tax on coal at the time of sale or use. Print 1040ez forms In figuring the selling price for applying the tax, the point of sale is f. Print 1040ez forms o. Print 1040ez forms b. Print 1040ez forms (free on board) mine or f. Print 1040ez forms o. Print 1040ez forms b. Print 1040ez forms cleaning plant if you clean the coal before selling it. Print 1040ez forms This applies even if you sell the coal for a delivered price. Print 1040ez forms The f. Print 1040ez forms o. Print 1040ez forms b. Print 1040ez forms mine or f. Print 1040ez forms o. Print 1040ez forms b. Print 1040ez forms cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. Print 1040ez forms 4% rate. Print 1040ez forms   The tax applies to the full amount of coal sold. Print 1040ez forms However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. Print 1040ez forms Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. Print 1040ez forms   Do not include in the sales price the excise tax imposed on coal. Print 1040ez forms Coal used by the producer. Print 1040ez forms   The tax on coal applies if the coal is used by the producer in other than a mining process. Print 1040ez forms A mining process means the same for this purpose as for percentage depletion. Print 1040ez forms For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. Print 1040ez forms In this case, the tax applies only when you sell the coal. Print 1040ez forms The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. Print 1040ez forms However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. Print 1040ez forms   You must use a constructive sale price to figure the tax under the 4. Print 1040ez forms 4% rate if you use the coal in other than a mining process. Print 1040ez forms Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. Print 1040ez forms o. Print 1040ez forms b. Print 1040ez forms mine or cleaning plant. Print 1040ez forms Normally, you use the same constructive price used to figure your percentage depletion deduction. Print 1040ez forms Blending. Print 1040ez forms   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. Print 1040ez forms Figure the tax separately for each type of coal in the blend. Print 1040ez forms Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. Print 1040ez forms Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. Print 1040ez forms However, the tax is limited to 4. Print 1040ez forms 4% of the sale price per ton of the blended coal. Print 1040ez forms Exemption from tax. Print 1040ez forms   The tax does not apply to sales of lignite and imported coal. Print 1040ez forms The only other exemption from the tax on the sale of coal is for coal exported as discussed next. Print 1040ez forms Exported. Print 1040ez forms   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. Print 1040ez forms   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. Print 1040ez forms For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. Print 1040ez forms   Proof of export includes any of the following items. Print 1040ez forms A copy of the export bill of lading issued by the delivering carrier. Print 1040ez forms A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. Print 1040ez forms A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. Print 1040ez forms If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. Print 1040ez forms Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. Print 1040ez forms A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. Print 1040ez forms 0945 ($. Print 1040ez forms 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. Print 1040ez forms The three categories for reporting the tax and the tax rate are listed below. Print 1040ez forms Taxable tires other than biasply or super single tires at $. Print 1040ez forms 0945. Print 1040ez forms Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. Print 1040ez forms 04725. Print 1040ez forms Taxable tires, super single tires designed for steering at $. Print 1040ez forms 0945. Print 1040ez forms A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. Print 1040ez forms A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. Print 1040ez forms A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Print 1040ez forms Special rule, manufacturer's retail stores. Print 1040ez forms   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. Print 1040ez forms Tires on imported articles. Print 1040ez forms   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). Print 1040ez forms Tires exempt from tax. Print 1040ez forms   The tax on taxable tires does not apply to the following items. Print 1040ez forms Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. Print 1040ez forms Tire carcasses not suitable for commercial use. Print 1040ez forms Tires for use on qualifying intercity, local, and school buses. Print 1040ez forms For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. Print 1040ez forms Tires sold for the exclusive use of the Department of Defense or the Coast Guard. Print 1040ez forms Tires of a type used exclusively on mobile machinery. Print 1040ez forms A taxable tire used on mobile machinery is not exempt from tax. Print 1040ez forms Qualifying intercity or local bus. Print 1040ez forms   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). Print 1040ez forms Qualifying school bus. Print 1040ez forms   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. Print 1040ez forms Credit or refund. Print 1040ez forms   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. Print 1040ez forms   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. Print 1040ez forms   The person who paid the tax is eligible to make the claim. Print 1040ez forms Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. Print 1040ez forms 5 miles per gallon. Print 1040ez forms If you import an automobile for personal use, you may be liable for this tax. Print 1040ez forms Figure the tax on Form 6197, as discussed later. Print 1040ez forms The tax rate is based on fuel economy rating. Print 1040ez forms The tax rates for the gas guzzler tax are shown on Form 6197. Print 1040ez forms A person that lengthens an existing automobile is the manufacturer of an automobile. Print 1040ez forms Automobiles. Print 1040ez forms   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. Print 1040ez forms Vehicles not subject to tax. Print 1040ez forms   For the gas guzzler tax, the following vehicles are not considered automobiles. Print 1040ez forms Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. Print 1040ez forms Vehicles operated exclusively on a rail or rails. Print 1040ez forms Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. Print 1040ez forms Vehicles treated under 49 U. Print 1040ez forms S. Print 1040ez forms C. Print 1040ez forms 32901 (1978) as non-passenger automobiles. Print 1040ez forms This includes limousines manufactured primarily to transport more than 10 persons. Print 1040ez forms   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. Print 1040ez forms   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. Print 1040ez forms Model type. Print 1040ez forms   Model type is a particular class of automobile as determined by EPA regulations. Print 1040ez forms Fuel economy. Print 1040ez forms   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. Print 1040ez forms 1 mile as figured by the EPA. Print 1040ez forms Imported automobiles. Print 1040ez forms   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. Print 1040ez forms An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. Print 1040ez forms   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. Print 1040ez forms   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. Print 1040ez forms A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). Print 1040ez forms   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. Print 1040ez forms Exemptions. Print 1040ez forms   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. Print 1040ez forms However, see Vehicles not subject to tax, earlier. Print 1040ez forms Form 6197. Print 1040ez forms   Use Form 6197 to figure your tax liability for each quarter. Print 1040ez forms Attach Form 6197 to your Form 720 for the quarter. Print 1040ez forms See the Form 6197 instructions for more information and the one-time filing rules. Print 1040ez forms Credit or refund. Print 1040ez forms   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. Print 1040ez forms For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Print 1040ez forms Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. Print 1040ez forms A taxable vaccine means any of the following vaccines. Print 1040ez forms Any vaccine containing diphtheria toxoid. Print 1040ez forms Any vaccine containing tetanus toxoid. Print 1040ez forms Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. Print 1040ez forms Any vaccine containing polio virus. Print 1040ez forms Any vaccine against measles. Print 1040ez forms Any vaccine against mumps. Print 1040ez forms Any vaccine against rubella. Print 1040ez forms Any vaccine against hepatitis A. Print 1040ez forms Any vaccine against hepatitis B. Print 1040ez forms Any vaccine against chicken pox. Print 1040ez forms Any vaccine against rotavirus gastroenteritis. Print 1040ez forms Any HIB vaccine. Print 1040ez forms Any conjugate vaccine against streptococcus pneumoniae. Print 1040ez forms Any trivalent vaccine against influenza or any other vaccine against influenza. Print 1040ez forms Any meningococcal vaccine. Print 1040ez forms Any vaccine against the human papillomavirus. Print 1040ez forms The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. Print 1040ez forms The tax is $. Print 1040ez forms 75 per dose of each taxable vaccine. Print 1040ez forms The tax per dose on a vaccine that contains more than one taxable vaccine is $. Print 1040ez forms 75 times the number of taxable vaccines. Print 1040ez forms Taxable use. Print 1040ez forms   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. Print 1040ez forms Credit or refund. Print 1040ez forms   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. Print 1040ez forms The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. Print 1040ez forms Conditions to allowance. Print 1040ez forms   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. Print 1040ez forms Taxable Medical Devices Taxable medical devices. Print 1040ez forms   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. Print 1040ez forms 3% (. Print 1040ez forms 023) of the sales price. Print 1040ez forms A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. Print 1040ez forms There are specific exemptions for eyeglasses, contact lenses, and hearing aids. Print 1040ez forms There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). Print 1040ez forms See T. Print 1040ez forms D. Print 1040ez forms 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. Print 1040ez forms More information. Print 1040ez forms   For more information on the medical device tax, see section 4191, T. Print 1040ez forms D. Print 1040ez forms 9604, and Notice 2012-77. Print 1040ez forms You can find T. Print 1040ez forms D. Print 1040ez forms 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. Print 1040ez forms R. Print 1040ez forms B. Print 1040ez forms 2012-52 at www. Print 1040ez forms irs. Print 1040ez forms gov/pub/irs-irbs/irb12-52. Print 1040ez forms pdf. Print 1040ez forms Prev  Up  Next   Home   More Online Publications
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The Print 1040ez Forms

Print 1040ez forms 1. Print 1040ez forms   Rental Income and Expenses (If No Personal Use of Dwelling) Table of Contents Rental IncomeWhen To Report Types of Income Rental ExpensesWhen To Deduct Types of Expenses This chapter discusses the various types of rental income and expenses for a residential rental activity with no personal use of the dwelling. Print 1040ez forms Generally, each year you will report all income and deduct all out-of-pocket expenses in full. Print 1040ez forms The deduction to recover the cost of your rental property—depreciation—is taken over a prescribed number of years, and is discussed in chapter 2, Depreciation of Rental Property. Print 1040ez forms If your rental income is from property you also use personally or rent to someone at less than a fair rental price, first read the information in chapter 5 , Personal Use of Dwelling Unit (Including Vacation Home). Print 1040ez forms Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Print 1040ez forms Rental income is any payment you receive for the use or occupation of property. Print 1040ez forms In addition to amounts you receive as normal rental payments, there are other amounts that may be rental income. Print 1040ez forms When To Report When you report rental income on your tax return generally depends on whether you are a cash basis taxpayer or use an accrual method. Print 1040ez forms Most individual taxpayers use the cash method. Print 1040ez forms Cash method. Print 1040ez forms   You are a cash basis taxpayer if you report income on your return in the year you actually or constructively receive it, regardless of when it was earned. Print 1040ez forms You constructively receive income when it is made available to you, for example, by being credited to your bank account. Print 1040ez forms Accrual method. Print 1040ez forms    If you are an accrual basis taxpayer, you generally report income when you earn it, rather than when you receive it. Print 1040ez forms You generally deduct your expenses when you incur them, rather than when you pay them. Print 1040ez forms More information. Print 1040ez forms   See Publication 538, Accounting Periods and Methods, for more information about when you constructively receive income and accrual methods of accounting. Print 1040ez forms Types of Income The following are common types of rental income. Print 1040ez forms Advance rent. Print 1040ez forms   Advance rent is any amount you receive before the period that it covers. Print 1040ez forms Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Print 1040ez forms Example. Print 1040ez forms On March 18, 2013, you signed a 10-year lease to rent your property. Print 1040ez forms During 2013, you received $9,600 for the first year's rent and $9,600 as rent for the last year of the lease. Print 1040ez forms You must include $19,200 in your rental income in the first year. Print 1040ez forms Canceling a lease. Print 1040ez forms   If your tenant pays you to cancel a lease, the amount you receive is rent. Print 1040ez forms Include the payment in your income in the year you receive it regardless of your method of accounting. Print 1040ez forms Expenses paid by tenant. Print 1040ez forms   If your tenant pays any of your expenses, those payments are rental income. Print 1040ez forms Because you must include this amount in income, you can also deduct the expenses if they are deductible rental expenses. Print 1040ez forms For more information, see Rental Expenses , later. Print 1040ez forms Example 1. Print 1040ez forms Your tenant pays the water and sewage bill for your rental property and deducts the amount from the normal rent payment. Print 1040ez forms Under the terms of the lease, your tenant does not have to pay this bill. Print 1040ez forms Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income. Print 1040ez forms You can deduct the utility payment made by your tenant as a rental expense. Print 1040ez forms Example 2. Print 1040ez forms While you are out of town, the furnace in your rental property stops working. Print 1040ez forms Your tenant pays for the necessary repairs and deducts the repair bill from the rent payment. Print 1040ez forms Include the repair bill paid by the tenant and any amount received as a rent payment in your rental income. Print 1040ez forms You can deduct the repair payment made by your tenant as a rental expense. Print 1040ez forms Property or services. Print 1040ez forms   If you receive property or services as rent, instead of money, include the fair market value of the property or services in your rental income. Print 1040ez forms   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Print 1040ez forms Example. Print 1040ez forms Your tenant is a house painter. Print 1040ez forms He offers to paint your rental property instead of paying 2 months rent. Print 1040ez forms You accept his offer. Print 1040ez forms Include in your rental income the amount the tenant would have paid for 2 months rent. Print 1040ez forms You can deduct that same amount as a rental expense for painting your property. Print 1040ez forms Security deposits. Print 1040ez forms   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Print 1040ez forms But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Print 1040ez forms    If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Print 1040ez forms Include it in your income when you receive it. Print 1040ez forms Other Sources of Rental Income Lease with option to buy. Print 1040ez forms   If the rental agreement gives your tenant the right to buy your rental property, the payments you receive under the agreement are generally rental income. Print 1040ez forms If your tenant exercises the right to buy the property, the payments you receive for the period after the date of sale are considered part of the selling price. Print 1040ez forms Part interest. Print 1040ez forms   If you own a part interest in rental property, you must report your part of the rental income from the property. Print 1040ez forms Rental of property also used as your home. Print 1040ez forms   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Print 1040ez forms However, you can deduct on Schedule A (Form 1040), Itemized Deductions, the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Print 1040ez forms See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Print 1040ez forms Rental Expenses In most cases, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income. Print 1040ez forms Personal use of rental property. Print 1040ez forms   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Print 1040ez forms Also, your rental expense deductions may be limited. Print 1040ez forms See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Print 1040ez forms Part interest. Print 1040ez forms   If you own a part interest in rental property, you can deduct expenses you paid according to your percentage of ownership. Print 1040ez forms Example. Print 1040ez forms Roger owns a one-half undivided interest in a rental house. Print 1040ez forms Last year he paid $968 for necessary repairs on the property. Print 1040ez forms Roger can deduct $484 (50% × $968) as a rental expense. Print 1040ez forms He is entitled to reimbursement for the remaining half from the co-owner. Print 1040ez forms When To Deduct You generally deduct your rental expenses in the year you pay them. Print 1040ez forms If you use the accrual method, see Publication 538 for more information. Print 1040ez forms Types of Expenses Listed below are the most common rental expenses. Print 1040ez forms Advertising. Print 1040ez forms Auto and travel expenses. Print 1040ez forms Cleaning and maintenance. Print 1040ez forms Commissions. Print 1040ez forms Depreciation. Print 1040ez forms Insurance. Print 1040ez forms Interest (other). Print 1040ez forms Legal and other professional fees. Print 1040ez forms Local transportation expenses. Print 1040ez forms Management fees. Print 1040ez forms Mortgage interest paid to banks, etc. Print 1040ez forms Points. Print 1040ez forms Rental payments. Print 1040ez forms Repairs. Print 1040ez forms Taxes. Print 1040ez forms Utilities. Print 1040ez forms Some of these expenses, as well as other less common ones, are discussed below. Print 1040ez forms Depreciation. Print 1040ez forms   Depreciation is a capital expense. Print 1040ez forms It is the mechanism for recovering your cost in an income producing property and must be taken over the expected life of the property. Print 1040ez forms   You can begin to depreciate rental property when it is ready and available for rent. Print 1040ez forms See Placed in Service under When Does Depreciation Begin and End in chapter 2. Print 1040ez forms Insurance premiums paid in advance. Print 1040ez forms   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Print 1040ez forms You cannot deduct the total premium in the year you pay it. Print 1040ez forms See chapter 6 of Publication 535 for information on deductible premiums. Print 1040ez forms Interest expense. Print 1040ez forms   You can deduct mortgage interest you pay on your rental property. Print 1040ez forms When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Print 1040ez forms Chapter 4 of Publication 535 explains mortgage interest in detail. Print 1040ez forms Expenses paid to obtain a mortgage. Print 1040ez forms   Certain expenses you pay to obtain a mortgage on your rental property cannot be deducted as interest. Print 1040ez forms These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses that are part of your basis in the property. Print 1040ez forms Form 1098, Mortgage Interest Statement. Print 1040ez forms   If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098 or similar statement showing the interest you paid for the year. Print 1040ez forms If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on, the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Print 1040ez forms Attach a statement to your return showing the name and address of the other person. Print 1040ez forms On the dotted line next to line 13, enter “See attached. Print 1040ez forms ” Legal and other professional fees. Print 1040ez forms   You can deduct, as a rental expense, legal and other professional expenses such as tax return preparation fees you paid to prepare Schedule E, Part I. Print 1040ez forms For example, on your 2013 Schedule E you can deduct fees paid in 2013 to prepare Part I of your 2012 Schedule E. Print 1040ez forms You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Print 1040ez forms Local benefit taxes. Print 1040ez forms   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Print 1040ez forms These charges are nondepreciable capital expenditures and must be added to the basis of your property. Print 1040ez forms However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Print 1040ez forms Local transportation expenses. Print 1040ez forms   You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Print 1040ez forms However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Print 1040ez forms See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Print 1040ez forms   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Print 1040ez forms For 2013, the standard mileage rate for business use is 56. Print 1040ez forms 5 cents per mile. Print 1040ez forms For more information, see chapter 4 of Publication 463. Print 1040ez forms    To deduct car expenses under either method, you must keep records that follow the rules in chapter 5 of Publication 463. Print 1040ez forms In addition, you must complete Form 4562, Part V, and attach it to your tax return. Print 1040ez forms Pre-rental expenses. Print 1040ez forms   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Print 1040ez forms Rental of equipment. Print 1040ez forms   You can deduct the rent you pay for equipment that you use for rental purposes. Print 1040ez forms However, in some cases, lease contracts are actually purchase contracts. Print 1040ez forms If so, you cannot deduct these payments. Print 1040ez forms You can recover the cost of purchased equipment through depreciation. Print 1040ez forms Rental of property. Print 1040ez forms   You can deduct the rent you pay for property that you use for rental purposes. Print 1040ez forms If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Print 1040ez forms Travel expenses. Print 1040ez forms   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Print 1040ez forms You must properly allocate your expenses between rental and nonrental activities. Print 1040ez forms You cannot deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. Print 1040ez forms The cost of improvements is recovered by taking depreciation. Print 1040ez forms For information on travel expenses, see chapter 1 of Publication 463. Print 1040ez forms    To deduct travel expenses, you must keep records that follow the rules in chapter 5 of Publication 463. Print 1040ez forms Uncollected rent. Print 1040ez forms   If you are a cash basis taxpayer, do not deduct uncollected rent. Print 1040ez forms Because you have not included it in your income, it is not deductible. Print 1040ez forms   If you use an accrual method, report income when you earn it. Print 1040ez forms If you are unable to collect the rent, you may be able to deduct it as a business bad debt. Print 1040ez forms See chapter 10 of Publication 535 for more information about business bad debts. Print 1040ez forms Vacant rental property. Print 1040ez forms   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Print 1040ez forms However, you cannot deduct any loss of rental income for the period the property is vacant. Print 1040ez forms Vacant while listed for sale. Print 1040ez forms   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Print 1040ez forms If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Print 1040ez forms Points The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. Print 1040ez forms These charges are also called loan origination fees, maximum loan charges, or premium charges. Print 1040ez forms Any of these charges (points) that are solely for the use of money are interest. Print 1040ez forms Because points are prepaid interest, you generally cannot deduct the full amount in the year paid, but must deduct the interest over the term of the loan. Print 1040ez forms The method used to figure the amount of points you can deduct each year follows the original issue discount (OID) rules. Print 1040ez forms In this case, points are equivalent to OID, which is the difference between: The amount borrowed (redemption price at maturity, or principal) and The proceeds (issue price). Print 1040ez forms The first step is to determine whether your total OID (which you may have on bonds or other investments in addition to the mortgage loan), including the OID resulting from the points, is insignificant or de minimis. Print 1040ez forms If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct. Print 1040ez forms De minimis OID. Print 1040ez forms   The OID is de minimis if it is less than one-fourth of 1% (. Print 1040ez forms 0025) of the stated redemption price at maturity (principal amount of the loan) multiplied by the number of full years from the date of original issue to maturity (term of the loan). Print 1040ez forms   If the OID is de minimis, you can choose one of the following ways to figure the amount of points you can deduct each year. Print 1040ez forms On a constant-yield basis over the term of the loan. Print 1040ez forms On a straight line basis over the term of the loan. Print 1040ez forms In proportion to stated interest payments. Print 1040ez forms In its entirety at maturity of the loan. Print 1040ez forms You make this choice by deducting the OID (points) in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Print 1040ez forms Example. Print 1040ez forms Carol Madison took out a $100,000 mortgage loan on January 1, 2013, to buy a house she will use as a rental during 2013. Print 1040ez forms The loan is to be repaid over 30 years. Print 1040ez forms During 2013, Carol paid $10,000 of mortgage interest (stated interest) to the lender. Print 1040ez forms When the loan was made, she paid $1,500 in points to the lender. Print 1040ez forms The points reduced the principal amount of the loan from $100,000 to $98,500, resulting in $1,500 of OID. Print 1040ez forms Carol determines that the points (OID) she paid are de minimis based on the following computation. Print 1040ez forms Redemption price at maturity (principal amount of the loan) $100,000 Multiplied by: The term of the  loan in complete years ×30 Multiplied by ×. Print 1040ez forms 0025 De minimis amount $7,500 The points (OID) she paid ($1,500) are less than the de minimis amount ($7,500). Print 1040ez forms Therefore, Carol has de minimis OID and she can choose one of the four ways discussed earlier to figure the amount she can deduct each year. Print 1040ez forms Under the straight line method, she can deduct $50 each year for 30 years. Print 1040ez forms Constant-yield method. Print 1040ez forms   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Print 1040ez forms   You figure your deduction for the first year in the following manner. Print 1040ez forms Determine the issue price of the loan. Print 1040ez forms If you paid points on the loan, the issue price generally is the difference between the principal and the points. Print 1040ez forms Multiply the result in (1) by the yield to maturity (defined later). Print 1040ez forms Subtract any qualified stated interest payments (defined later) from the result in (2). Print 1040ez forms This is the OID you can deduct in the first year. Print 1040ez forms Yield to maturity (YTM). Print 1040ez forms   This rate is generally shown in the literature you receive from your lender. Print 1040ez forms If you do not have this information, consult your lender or tax advisor. Print 1040ez forms In general, the YTM is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Print 1040ez forms Qualified stated interest (QSI). Print 1040ez forms   In general, this is the stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a fixed rate. Print 1040ez forms Example—Year 1. Print 1040ez forms The facts are the same as in the previous example. Print 1040ez forms The yield to maturity on Carol's loan is 10. Print 1040ez forms 2467%, compounded annually. Print 1040ez forms She figured the amount of points (OID) she could deduct in 2013 as follows. Print 1040ez forms Principal amount of the loan $100,000 Minus: Points (OID) –1,500 Issue price of the loan $98,500 Multiplied by: YTM × . Print 1040ez forms 102467 Total 10,093 Minus: QSI –10,000 Points (OID) deductible in 2013 $93 To figure your deduction in any subsequent year, you start with the adjusted issue price. Print 1040ez forms To get the adjusted issue price, add to the issue price figured in Year 1 any OID previously deducted. Print 1040ez forms Then follow steps (2) and (3), earlier. Print 1040ez forms Example—Year 2. Print 1040ez forms Carol figured the deduction for 2014 as follows. Print 1040ez forms Issue price $98,500 Plus: Points (OID) deducted  in 2013 +93 Adjusted issue price $98,593 Multiplied by: YTM × . Print 1040ez forms 102467 Total 10,103 Minus: QSI –10,000 Points (OID) deductible in 2014 $103 Loan or mortgage ends. Print 1040ez forms    If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. Print 1040ez forms A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Print 1040ez forms However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. Print 1040ez forms Points when loan refinance is more than the previous outstanding balance. Print 1040ez forms   When you refinance a rental property for more than the previous outstanding balance, the portion of the points allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Print 1040ez forms For example, if an individual refinanced a loan with a balance of $100,000, the amount of the new loan was $120,000, and the taxpayer used $20,000 to purchase a car, points allocable to the $20,000 would be treated as nondeductible personal interest. Print 1040ez forms Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Print 1040ez forms Improvements. Print 1040ez forms   You must capitalize any expense you pay to improve your rental property. Print 1040ez forms An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Print 1040ez forms Betterments. Print 1040ez forms   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Print 1040ez forms Restoration. Print 1040ez forms   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Print 1040ez forms Adaptation. Print 1040ez forms   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Print 1040ez forms Separate the costs of repairs and improvements, and keep accurate records. Print 1040ez forms You will need to know the cost of improvements when you sell or depreciate your property. Print 1040ez forms The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Print 1040ez forms Table 1-1. Print 1040ez forms Examples of Improvements Additions Bedroom Bathroom Deck Garage Porch Patio  Lawn & Grounds Landscaping Driveway Walkway Fence Retaining wall Sprinkler system Swimming pool Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system   Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances Kitchen modernization Flooring Wall-to-wall carpeting  Insulation Attic Walls, floor Pipes, duct work Prev  Up  Next   Home   More Online Publications