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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

State Income Taxes

Efile State TaxesForm 1040xWhen Can I File An Amended Tax Return For 2013File Federal Taxes Online FreeFree State Tax Forms OnlineHttp Www Irs Gov Freefile2011 1040 FormMyfreetaxes De Com2011 Tax Form 10402009 1040ezHow To File An Amended Tax Return For 2012Form 1040x 2010Form 1040nrCollege Student TaxesFile 1040 Ez Online FreeAmend Taxes Online FreeForm1040How Do I File My 2010 Tax ReturnIrs 1040 FormFiling 2009 TaxesFree 1040ezIrs Amended Tax Return Form2011 Federal Tax Forms 1040 Ez2013 Form 1040ez InstructionsH&r Block 2011Amending A Tax ReturnFree Online State And Federal Tax FilingFree Online Taxes 20122010 Federal Tax Forms InstructionsFiling Amended Tax Return 2011Military State Income TaxFree Tax Usa 2012How Can I File State Taxes For FreeWww Irs Gov 1040xWww.irs.gov Form 1040x1040x Form DownloadFree Fillable 1040x FormExtensionFile Previous Years Taxes2012 Tax Software Download

State Income Taxes

State income taxes Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. State income taxes Dispositions — mass asset accounts. State income taxes Early dispositions — 15-year real property. State income taxes Early dispositions — 18- and 19-year real property. State income taxes Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. State income taxes It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. State income taxes These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. State income taxes If you placed property in service during this period, you must continue to figure your depreciation under ACRS. State income taxes If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. State income taxes Listed property includes cars, other means of transportation, and certain computers. State income taxes Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. State income taxes ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. State income taxes It does not matter that the underlying property is depreciated under ACRS or one of the other methods. State income taxes ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. State income taxes The alternate ACRS method used a recovery percentage based on a modified straight line method. State income taxes The law prescribes fixed percentages to be uses for each class of property. State income taxes Property depreciable under ACRS is called recovery property. State income taxes The recovery class of property determines the recovery period. State income taxes Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. State income taxes Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. State income taxes To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. State income taxes You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. State income taxes For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. State income taxes What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. State income taxes It includes new or used and real or personal property. State income taxes The property must be for use in a trade or business or for the production of income. State income taxes Property you acquired before 1981 or after 1986 is not ACRS recovery property. State income taxes For information on depreciating property acquired before 1981, see chapter 2. State income taxes For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. State income taxes Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. State income taxes It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. State income taxes Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. State income taxes Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. State income taxes Intangible property. State income taxes   Intangible property is not depreciated under ACRS. State income taxes Property depreciated under methods not expressed in a term of years. State income taxes   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. State income taxes This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). State income taxes Public utility property. State income taxes   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. State income taxes Additions or improvements to ACRS property after 1986. State income taxes   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. State income taxes ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. State income taxes It does not matter that the underlying property is depreciated under ACRS or one of the other methods. State income taxes How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. State income taxes Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. State income taxes Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. State income taxes Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. State income taxes However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. State income taxes If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. State income taxes If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. State income taxes See Publication 551. State income taxes Classes of Recovery Property All recovery property under ACRS is in one of the following classes. State income taxes The class for your property was determined when you began to depreciate it. State income taxes 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. State income taxes Race horses over 2 years old when placed in service are 3-year property. State income taxes Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. State income taxes The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. State income taxes You cannot claim depreciation for this property after 1988. State income taxes 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. State income taxes It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). State income taxes The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. State income taxes You cannot claim depreciation for this property after 1990. State income taxes 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. State income taxes Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. State income taxes You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. State income taxes For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. State income taxes The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. State income taxes Example. State income taxes On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. State income taxes You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. State income taxes On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. State income taxes The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). State income taxes Your ACRS deduction was $3,000 (8% × $37,500). State income taxes In 1987, your ACRS deduction was $5,250 (14% × $37,500). State income taxes In 1988, your ACRS deduction was $4,500 (12% × $37,500). State income taxes In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). State income taxes In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). State income taxes 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. State income taxes It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. State income taxes Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. State income taxes You could group 15-year real property by month and year placed in service. State income taxes In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. State income taxes You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. State income taxes Example. State income taxes On March 5, 1984, you placed an apartment building in service in your business. State income taxes It is 15-year real property. State income taxes After subtracting the value of the land, your unadjusted basis in the building is $250,000. State income taxes You use the calendar year as your tax year. State income taxes March is the third month of your tax year. State income taxes Your ACRS deduction for 1984 was $25,000 (10% × $250,000). State income taxes For 1985, the percentage for the third month of the second year of the recovery period is 11%. State income taxes Your deduction was $27,500 (11% × $250,000). State income taxes For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. State income taxes For 1989 through 1992, the percentage for the third month is 6%. State income taxes Your deduction each year is $15,000 (6% × $250,000). State income taxes For 1993, 1994, and 1995, the percentage for the third month is 5%. State income taxes Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. State income taxes Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. State income taxes Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. State income taxes Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. State income taxes Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. State income taxes The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. State income taxes Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. State income taxes Use the percentages listed under that month for each year of the recovery period. State income taxes Table 2 shows percentages for low-income housing placed in service before May 9, 1985. State income taxes Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. State income taxes Example. State income taxes In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. State income taxes You use the calendar year as your tax year. State income taxes You use Table C–3 because the property was placed in service after May 8, 1985. State income taxes Your unadjusted basis for the property, not including the land, was $59,000. State income taxes Your deduction for 1986 through 2001 is shown in the following table. State income taxes Year Rate Deduction 1986 8. State income taxes 9% $5,251 1987 12. State income taxes 1% 7,139 1988 10. State income taxes 5% 6,195 1989 9. State income taxes 1% 5,369 1990 7. State income taxes 9% 4,661 1991 6. State income taxes 9% 4,071 1992 5. State income taxes 9% 3,481 1993 5. State income taxes 2% 3,068 1994 4. State income taxes 6% 2,714 1995 4. State income taxes 6% 2,714 1996 4. State income taxes 6% 2,714 1997 4. State income taxes 6% 2,714 1998 4. State income taxes 6% 2,714 1999 4. State income taxes 5% 2,655 2000 4. State income taxes 5% 2,655 2001 1. State income taxes 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. State income taxes It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. State income taxes The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. State income taxes There are also tables for 18-year real property in the Appendix. State income taxes Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. State income taxes Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. State income taxes Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. State income taxes Use the percentages listed under that month for each year of the recovery period. State income taxes Example. State income taxes On April 28, 1985, you bought and placed in service a rental house. State income taxes The house, not including the land, cost $95,000. State income taxes This is your unadjusted basis for the house. State income taxes You use the calendar year as your tax year. State income taxes Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. State income taxes You use Table 4 to figure your deduction for the house. State income taxes April is the fourth month of your tax year. State income taxes Your deduction for 1985 through 2003 is shown in the following table. State income taxes Year Rate Deduction 1985 7. State income taxes 0% $6,650 1986 9. State income taxes 0% 8,550 1987 8. State income taxes 0% 7,600 1988 7. State income taxes 0% 6,650 1989 7. State income taxes 0% 6,650 1990 6. State income taxes 0% 5,700 1991 5. State income taxes 0% 4,750 1992 5. State income taxes 0% 4,750 1993 5. State income taxes 0% 4,750 1994 5. State income taxes 0% 4,750 1995 5. State income taxes 0% 4,750 1996 5. State income taxes 0% 4,750 1997 5. State income taxes 0% 4,750 1998 4. State income taxes 0% 3,800 1999 4. State income taxes 0% 3,800 2000 4. State income taxes 0% 3,800 2001 4. State income taxes 0% 3,800 2002 4. State income taxes 0% 3,800 2003 1. State income taxes 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. State income taxes It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. State income taxes The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. State income taxes Table 6 shows the percentages for 19-year real property. State income taxes You find the month in your tax year that you placed the property in service. State income taxes You use the percentages listed under that month for each year of the recovery period. State income taxes Recovery Periods Each item of recovery property is assigned to a class of property. State income taxes The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. State income taxes The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. State income taxes This alternate ACRS method uses a recovery percentage based on a modified straight line method. State income taxes This alternate ACRS method generally uses percentages other than those from the tables. State income taxes If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. State income taxes This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. State income taxes   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. State income taxes 00% 10 years 10. State income taxes 00% 12 years 8. State income taxes 333% 15 years 6. State income taxes 667% 25 years 4. State income taxes 00% 35 years 2. State income taxes 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. State income taxes There are tables for 18- and 19-year real property later in this publication in the Appendix. State income taxes For 15-year real property, see 15-year real property, later. State income taxes 3-, 5-, and 10-year property. State income taxes   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. State income taxes This applies throughout the recovery period you selected. State income taxes Half-year convention. State income taxes   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. State income taxes This applied regardless of when in the tax year you placed the property in service. State income taxes For each of the remaining years in the recovery period, you take a full year's deduction. State income taxes If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. State income taxes Example. State income taxes You operate a small upholstery business. State income taxes On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. State income taxes You elected to use the alternate ACRS method. State income taxes You did not elect to take a section 179 deduction. State income taxes You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. State income taxes The saw is 5-year property, but you decided to recover its cost over 12 years. State income taxes For 1986, your ACRS deduction reflected the half-year convention. State income taxes In the first year, you deducted half of the amount determined for a full year. State income taxes Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. State income taxes 00     Electric saw   12 years straight line = 8. State income taxes 333% 8. State income taxes 333% ÷ $500 = $41. State income taxes 67 Half-year convention -½ of $41. State income taxes 67= 20. State income taxes 84 Total ACRS deduction for 1986 $1,320. State income taxes 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. State income taxes Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. State income taxes 333% 8. State income taxes 333% ÷ $500 = $41. State income taxes 67 Total annual ACRS deduction for 1987 through 1990 $2,641. State income taxes 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. State income taxes Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. State income taxes 00     Electric saw   12 years straight line = 8. State income taxes 333% 8. State income taxes 333% ÷ $500 = $41. State income taxes 67 Total ACRS deduction for 1991 $1,341. State income taxes 67       The truck is fully depreciated after 1991. State income taxes You take a full year of depreciation for the saw for the years 1992 through 1997. State income taxes Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. State income taxes 333% 8. State income taxes 333% ÷ $500 = $41. State income taxes 67 Total annual ACRS deduction for 1992 through 1997 $41. State income taxes 67       You take a half-year of depreciation for the saw for 1998. State income taxes Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. State income taxes 333% 8. State income taxes 333% ÷ $500 = $41. State income taxes 67 Half-year convention -½ of $41. State income taxes 67= 20. State income taxes 84 Total ACRS deduction for 1998 $20. State income taxes 84       The saw is fully depreciated after 1998. State income taxes 15-year real property. State income taxes   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. State income taxes The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. State income taxes If you selected a 15-year recovery period, you use the percentage (6. State income taxes 667%) from the schedule above. State income taxes You prorate this percentage for the number of months the property was in service in the first year. State income taxes If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. State income taxes Alternate periods for 18-year real property. State income taxes   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. State income taxes The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. State income taxes There are two tables for each alternate recovery period. State income taxes One table shows the percentage for property placed in service after June 22, 1984. State income taxes The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. State income taxes Alternate periods for 19-year real property. State income taxes   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. State income taxes If you selected a 19-year recovery period, use Table 9 to determine your deduction. State income taxes If you select a 35- or 45-year recovery period, use either Table 13 or 14. State income taxes Example. State income taxes You placed in service an apartment building on August 3, 1986. State income taxes The building is 19-year real property. State income taxes The sales contract allocated $300,000 to the building and $100,000 to the land. State income taxes You use the calendar year as your tax year. State income taxes You chose the alternate ACRS method over a recovery period of 35 years. State income taxes For 1986, you figure your ACRS deduction usingTable 13. State income taxes August is the eighth month of your tax year. State income taxes The percentage from Table 13 for the eighth month is 1. State income taxes 1%. State income taxes Your deduction was $3,300 ($300,000 ÷ 1. State income taxes 1%). State income taxes The deduction rate from ACRS Table 13 for years 2 through 20 is 2. State income taxes 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. State income taxes 9%). State income taxes Alternate periods for low-income housing. State income taxes   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. State income taxes If you selected a 15-year period for this property, use 6. State income taxes 667% as the percentage. State income taxes If you selected a 35- or 45-year period, use either Table 11, 12, or 15. State income taxes Election. State income taxes   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. State income taxes Revocation of election. State income taxes   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. State income taxes The Commissioner grants consent only in extraordinary circumstances. State income taxes Any request for a revocation will be considered a request for a ruling. State income taxes ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. State income taxes Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. State income taxes You figure this by multiplying the unadjusted basis by the recovery percentage. State income taxes You then multiply the ACRS deduction determined for a full tax year by a fraction. State income taxes The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. State income taxes For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. State income taxes The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. State income taxes The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. State income taxes The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). State income taxes You use the full ACRS percentages during the remaining years of the recovery period. State income taxes For the first tax year after the recovery period, the unrecovered basis will be deductible. State income taxes Exception. State income taxes   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. State income taxes You compute the number of months using either a full month or mid-month convention. State income taxes This is true regardless of the number of months in the tax year and the recovery period and method used. State income taxes Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. State income taxes You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. State income taxes You generally recognize gain or loss on the disposition of an asset by sale. State income taxes However, nonrecognition rules can allow you to postpone some gain. State income taxes See Publication 544. State income taxes If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. State income taxes Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. State income taxes Early dispositions. State income taxes   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. State income taxes When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. State income taxes Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. State income taxes   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. State income taxes This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. State income taxes Dispositions — mass asset accounts. State income taxes   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. State income taxes A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. State income taxes Examples of mass assets include minor items of office, plant, and store furniture and fixtures. State income taxes   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. State income taxes You leave the unadjusted basis of the property in the account until recovered in future years. State income taxes If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. State income taxes Early dispositions — 15-year real property. State income taxes   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. State income taxes You use a full-month convention. State income taxes For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. State income taxes This applies whether you use the regular ACRS method or elected the alternate ACRS method. State income taxes Example. State income taxes You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). State income taxes You file your return based on a calendar year. State income taxes Your rate from Table 1 for the third month is 10%. State income taxes Your ACRS deduction for 1984 was $9,800 ($98. State income taxes 000 ÷ 10%). State income taxes For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. State income taxes For 1989 through 1992, you figured your ACRS deductions using 6% for each year. State income taxes The deduction each year was $98,000 ÷ 6%. State income taxes For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. State income taxes You sell the house on June 1, 1995. State income taxes You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. State income taxes The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). State income taxes You then prorate this amount to the 5 months in 1995 during which it was rented. State income taxes Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). State income taxes Early dispositions — 18- and 19-year real property. State income taxes   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. State income taxes For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. State income taxes For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. State income taxes Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. State income taxes Count the month of disposition as half a month of use. State income taxes Example. State income taxes You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). State income taxes You file your return based on a calendar year. State income taxes Your rate from Table 4 for the seventh month is 4%. State income taxes You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). State income taxes In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. State income taxes You sell the house on September 24, 1995. State income taxes Figure your ACRS deduction for 1995 for the months of use. State income taxes The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). State income taxes Prorate this amount for the 8. State income taxes 5 months in 1995 that you held the property. State income taxes Under the mid-month convention, you count September as half a month. State income taxes Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. State income taxes 5/12). State income taxes Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. State income taxes Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. State income taxes This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. State income taxes You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. State income taxes Section 1245 property generally includes all personal property. State income taxes See Section 1245 property in chapter 4 of Publication 544 for more information. State income taxes You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. State income taxes You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. State income taxes Section 1250 property includes most real property. State income taxes See Section 1250 property in chapter 4 of Publication 544 for more information. State income taxes This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. State income taxes Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. State income taxes Any 15-, 18-, or 19-year real property that is subsidized low-income housing. State income taxes For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. State income taxes See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. State income taxes Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding Your CP15B Notice

We charged you a Trust Fund Recovery Penalty (TFRP) for not paying employment or excise taxes.


What you need to do

  • Read your notice carefully — it explains your due date, amount due, and payment options.
  • Make your payment by your due date. Go to the payments page to find out more about your payment options.

You may want to


Answers to Common Questions

Q. Why was I assessed this penalty?

A. We charged you the Trust Fund Recovery Penalty for willfully failing to collect, account for, or pay over employment (or excise) taxes. Find additional information for Employment Taxes and the Trust Fund Recovery Penalty (TFRP).

Q. What happens if I can't pay the full amount I owe now?

A. See if you may be able to set up a payment plan through our Online Payment Agreement Application.

Q. What happens if I don’t respond to this notice?

A. Interest will continue to be charged until the balance is paid.

Q. Am I charged interest on the money I owe?

A. Not if you pay the full amount you owe by the date on the payment coupon. However, interest adds up on the unpaid amount after that date.

Q. What should I do if I disagree with the notice?

A. If you disagree with the penalty charge you may file a suit for refund. To do so, you must:

If you want to suspend collection of the penalty while the suit is pending, you must post a bond with the IRS for one and half times the balance.

 

Page Last Reviewed or Updated: 21-Jan-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 State Income Taxes

State income taxes 4. State income taxes   Deductions Table of Contents Standard DeductionStandard Deduction for Dependents Itemized DeductionsMedical and Dental Expenses Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. State income taxes You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. State income taxes If you have a choice, you should use the method that gives you the lower tax. State income taxes Standard Deduction The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. State income taxes Generally, the standard deduction amounts are adjusted each year for inflation. State income taxes In most cases, you can use Worksheet 4-1 to figure your standard deduction amount. State income taxes Persons not eligible for the standard deduction. State income taxes   Your standard deduction is zero and you should itemize any deductions you have if: You are married and filing a separate return, and your spouse itemizes deductions, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. State income taxes You are considered a dual-status alien if you were both a nonresident alien and a resident alien during the year. State income taxes   If you are a nonresident alien who is married to a U. State income taxes S. State income taxes citizen or resident alien at the end of the year, you can choose to be treated as a U. State income taxes S. State income taxes resident. State income taxes See Publication 519, U. State income taxes S. State income taxes Tax Guide for Aliens. State income taxes If you make this choice, you can take the standard deduction. State income taxes Decedent's final return. State income taxes   The amount of the standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. State income taxes However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. State income taxes Higher standard deduction for age (65 or older). State income taxes   If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. State income taxes You are considered age 65 on the day before your 65th birthday. State income taxes Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. State income taxes Higher standard deduction for blindness. State income taxes   If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. State income taxes You qualify for this benefit if you are totally or partly blind. State income taxes Not totally blind. State income taxes   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is not more than 20 degrees. State income taxes   If your eye condition will never improve beyond these limits, the statement should include this fact. State income taxes You must keep the statement in your records. State income taxes   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. State income taxes Spouse 65 or older or blind. State income taxes   You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and an exemption for your spouse could not be claimed by another taxpayer. State income taxes    You cannot claim the higher standard deduction for an individual other than yourself and your spouse. State income taxes Example. State income taxes This example illustrates how to determine your standard deduction using Worksheet 4-1. State income taxes Bill and Lisa are filing a joint return for 2013. State income taxes Both are over age 65. State income taxes Neither is blind, and neither can be claimed as a dependent. State income taxes They do not itemize deductions, so they use Worksheet 4-1. State income taxes Because they are married filing jointly, they enter $12,200 on line 1. State income taxes They check the “No” box on line 2, so they also enter $12,200 on line 4. State income taxes Because they are both over age 65, they enter $2,400 ($1,200 × 2) on line 5. State income taxes They enter $14,600 ($12,200 + $2,400) on line 6, so their standard deduction is $14,600. State income taxes Standard Deduction for Dependents The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). State income taxes However, the standard deduction may be higher if the individual is 65 or older or blind. State income taxes If an exemption for you (or your spouse if you are filing jointly) can be claimed on someone else's return, use Worksheet 4-1, if applicable, to determine your standard deduction. State income taxes Worksheet 4-1. State income taxes 2013 Standard Deduction Worksheet Caution. State income taxes If you are married filing separately and your spouse itemizes deductions, or if you are a dual-status alien, do not complete this worksheet. State income taxes If you were born before January 2, 1949, and/or blind, check the correct number of boxes below. State income taxes Put the total number of boxes checked in box c and go to line 1. State income taxes a. State income taxes You   Born before  January 2, 1949     Blind b. State income taxes Your spouse, if claiming  spouse's exemption   Born before January 2, 1949     Blind c. State income taxes Total boxes checked             1. State income taxes Enter the amount shown below for your filing status. State income taxes               Single or married filing separately — $6,100 Married filing jointly or Qualifying widow(er) — $12,200 Head of household — $8,950   1. State income taxes           2. State income taxes Can you (or your spouse if filing jointly) be claimed as a dependent on someone else's return?  No. State income taxes Skip line 3; enter the amount from line 1 on line 4. State income taxes   Yes. State income taxes Go to line 3. State income taxes         3. State income taxes Is your earned income* more than $650?               Yes. State income taxes Add $350 to your earned income. State income taxes Enter the total   3. State income taxes         No. State income taxes Enter $1,000 4. State income taxes Enter the smaller of line 1 or line 3 4. State income taxes   5. State income taxes If born before January 2, 1949, or blind, multiply the number in box c by $1,200 ($1,500 if single or head of household). State income taxes Enter the result here. State income taxes Otherwise, enter -0- 5. State income taxes   6. State income taxes Add lines 4 and 5. State income taxes This is your standard deduction for 2013. State income taxes 6. State income taxes   * Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. State income taxes It also includes any amount received as a scholarship that you must include in your income. State income taxes Generally, your earned income is the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the amount you reported on Form 1040A, line 7). State income taxes Itemized Deductions Some individuals should itemize their deductions because it will save them money. State income taxes Others should itemize because they do not qualify for the standard deduction. State income taxes See the discussion under Standard Deduction , earlier, to decide if it would be to your advantage to itemize deductions. State income taxes You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than $150,000. State income taxes For more information, see Overall limitation, later. State income taxes Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, casualty and theft losses, and certain other miscellaneous expenses may be itemized as deductions on Schedule A (Form 1040). State income taxes You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Cannot take the standard deduction, Had uninsured medical or dental expenses that are more than 10% of your adjusted gross income (or more than 7. State income taxes 5% of your adjusted gross income if either you or your spouse is age 65 or older), Paid interest on your home, Paid real estate or personal property taxes, Paid mortgage insurance premiums, Paid state and local income or general sales taxes, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities (see Publication 526, Charitable Contributions), or Have total itemized deductions that are more than the standard deduction that applies to you. State income taxes See the Schedule A (Form 1040) instructions for more information. State income taxes Overall limitation. State income taxes   You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000, if married filing separately, $250,000, if single, $275,000, if head of household, or $300,000, if married filing jointly or qualifying widow(er). State income taxes  If your adjusted gross income exceeds the applicable amount, you will use the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040) to figure your total itemized deductions. State income taxes Medical and Dental Expenses You can deduct certain medical and dental expenses you paid for yourself, your spouse, and your dependent(s) if you itemize your deductions on Schedule A (Form 1040). State income taxes Table 4-1 shows some common items that you can or cannot include in figuring your medical expense deduction. State income taxes For more information, see the following discussions of selected items, which are presented in alphabetical order. State income taxes A more extensive list of items and further details can be found in Publication 502, Medical and Dental Expenses. State income taxes Table 4-1. State income taxes Medical and Dental Expenses Checklist You can include: You cannot include: Bandages Capital expenses for equipment or improvements to your home needed for medical care (see Publication 502) Certain weight-loss expenses for obesity Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. State income taxes ) Lead-based paint removal (see Publication 502) Long-term care contracts, qualified (see Publication 502) Meals and lodging provided by a hospital during medical treatment Medical and hospital insurance premiums Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Publication 502) Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchair, etc. State income taxes ) Special education for mentally or physically disabled persons (see Publication 502) Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services (see Publication 502) Contributions to Archer MSAs (see Publication 969) Bottled water Diaper service Expenses for your general health (even if following your doctor's advice) such as: —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pretax basis) (see Publication 502) Funeral, burial, or cremation expenses Health savings account payments for medical expenses (see Publication 502) Illegal operation or treatment Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. State income taxes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases (see Publication 502) Surgery for purely cosmetic reasons (see Publication 502) Toothpaste, toiletries, cosmetics, etc. State income taxes Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease You can deduct only the amount of your medical and dental expenses that is more than 10% of your adjusted gross income (or that is more than 7. State income taxes 5% of your adjusted gross income if you or your spouse is age 65 or older). State income taxes What to include. State income taxes   Generally, you can include only the medical and dental expenses you paid this year, regardless of when the services were provided. State income taxes If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. State income taxes If you use a pay-by-phone or online account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. State income taxes You can include medical expenses you charge to your credit card in the year the charge is made. State income taxes It does not matter when you actually pay the amount charged. State income taxes Home Improvements You can include in medical expenses amounts you pay for home improvements if their main purpose is medical care for you, your spouse, or your dependent. State income taxes Only reasonable costs to accommodate a home to your disabled condition (or that of your spouse or your dependent(s) who live with you) are considered medical care. State income taxes Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. State income taxes Publication 502 contains additional information and examples, including a capital expense worksheet, to assist you in figuring the amount of the capital expense that you can include in your medical expenses. State income taxes Also, see Publication 502 for information about deductible operating and upkeep expenses related to such capital expense items, and for information about improvements, for medical reasons, to property rented by a person with disabilities. State income taxes Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. State income taxes This is a personal expense that is not deductible. State income taxes However, you may be able to include certain expenses paid to a person providing nursing-type services. State income taxes For more information, see Nursing Services , later. State income taxes Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. State income taxes For more information, see Qualified long-term care services under Long-Term Care, later. State income taxes Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. State income taxes This includes amounts paid for meals and lodging. State income taxes Also, see Meals and Lodging , later. State income taxes Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. State income taxes Qualified long-term care services. State income taxes   Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided under a plan of care prescribed by a licensed health care practitioner. State income taxes Chronically ill individual. State income taxes    An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. State income taxes He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. State income taxes Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. State income taxes He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. State income taxes Maintenance and personal care services. State income taxes    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). State income taxes Qualified long-term care insurance contracts. State income taxes   A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. State income taxes The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. State income taxes   The amount of qualified long-term care premiums you can include is limited. State income taxes You can include the following as medical expenses on Schedule A (Form 1040). State income taxes Qualified long-term care premiums up to the following amounts. State income taxes Age 40 or under – $360. State income taxes Age 41 to 50 – $680. State income taxes Age 51 to 60 – $1,360. State income taxes Age 61 to 70 – $3,640. State income taxes Age 71 or over – $4,550. State income taxes Unreimbursed expenses for qualified long-term care services. State income taxes Note. State income taxes The limit on premiums is for each person. State income taxes Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if your main reason for being there is to receive medical care. State income taxes You may be able to include in medical expenses the cost of lodging (but not meals) not provided in a hospital or similar institution. State income taxes You can include the cost of such lodging while away from home if all of the following requirements are met. State income taxes The lodging is primarily for, and essential to, medical care. State income taxes The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. State income taxes The lodging is not lavish or extravagant under the circumstances. State income taxes There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. State income taxes The amount you include in medical expenses for lodging cannot be more than $50 per night for each person. State income taxes You can include lodging for a person traveling with the person receiving the medical care. State income taxes For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. State income taxes (Meals are not included. State income taxes ) Nursing home. State income taxes   You can include in medical expenses the cost of medical care in a nursing home or a home for the aged for yourself, your spouse, or your dependent(s). State income taxes This includes the cost of meals and lodging in the home if a main reason for being there is to get medical care. State income taxes   Do not include the cost of meals and lodging if the reason for being in the home is personal. State income taxes However, you can include in medical expenses the part of the cost that is for medical or nursing care. State income taxes Medical Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. State income taxes Policies can provide payment for: Hospitalization, surgical fees, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Qualified long-term care insurance contracts (subject to the additional limits included in the discussion on qualified long-term care insurance contracts under Long-Term Care , earlier). State income taxes If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. State income taxes The cost of the medical portion must be separately stated in the insurance contract or given to you in a separate statement. State income taxes Medicare Part A. State income taxes   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare Part A. State income taxes The payroll tax paid for Medicare Part A is not a medical expense. State income taxes If you are not covered under social security (or were not a government employee who paid Medicare tax), you can enroll voluntarily in Medicare Part A. State income taxes In this situation you can include the premiums you paid for Medicare Part A as a medical expense. State income taxes Medicare Part B. State income taxes   Medicare Part B is a supplemental medical insurance. State income taxes Premiums you pay for Medicare Part B are a medical expense. State income taxes If you applied for it at age 65 or after you became disabled, you can include in medical expenses the monthly premiums you paid. State income taxes If you were over age 65 or disabled when you first enrolled, check with your local Social Security Administration office, or go to their website at www. State income taxes SSA. State income taxes gov, to find out your premium. State income taxes Medicare Part D. State income taxes   Medicare Part D is a voluntary prescription drug insurance program for persons with Medicare Part A or Part B. State income taxes You can include as a medical expense premiums you pay for Medicare Part D. State income taxes Prepaid insurance premiums. State income taxes   Insurance premiums you pay before you are age 65 for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). State income taxes Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. State income taxes A prescribed drug is one that requires a prescription by a doctor for its use by an individual. State income taxes You can also include amounts you pay for insulin. State income taxes Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. State income taxes Imported medicines and drugs. State income taxes   If you import medicines or drugs from other countries, see Medicines and Drugs From Other Countries, under What Expenses Are Not Includible, in Publication 502. State income taxes Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. State income taxes The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. State income taxes This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. State income taxes These services can be provided in your home or another care facility. State income taxes Generally, only the amount spent for nursing services is a medical expense. State income taxes If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. State income taxes However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. State income taxes See Maintenance and personal care services under Qualified long-term care services, earlier. State income taxes Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. State income taxes See Child and Dependent Care Credit , later, and Publication 503, Child and Dependent Care Expenses. State income taxes You can also include in medical expenses part of the amount you pay for that attendant's meals. State income taxes Divide the food expense among the household members to find the cost of the attendant's food. State income taxes Then divide that cost in the same manner as in the preceding paragraph. State income taxes If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. State income taxes This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. State income taxes Employment taxes. State income taxes   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for a nurse, attendant, or other person who provides medical care. State income taxes If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier under Nursing Services. State income taxes For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. State income taxes Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. State income taxes Car expenses. State income taxes    You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. State income taxes You cannot include depreciation, insurance, general repair, or maintenance expenses. State income taxes   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. State income taxes   You can also include parking fees and tolls. State income taxes You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. State income taxes You can also include:    Bus, taxi, train, or plane fares or ambulance service, and Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone. State income taxes Do not include transportation expenses if, for purely personal reasons, you choose to travel to another city for an operation or other medical care prescribed by your doctor. State income taxes Prev  Up  Next   Home   More Online Publications