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Tax Form 1040ez Instructions

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Tax Form 1040ez Instructions

Tax form 1040ez instructions 27. Tax form 1040ez instructions   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Tax form 1040ez instructions Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Tax form 1040ez instructions  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Tax form 1040ez instructions For more information, see Transportation Expenses under What Expenses Can Be Deducted. Tax form 1040ez instructions Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Tax form 1040ez instructions To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Tax form 1040ez instructions If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Tax form 1040ez instructions Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Tax form 1040ez instructions See chapter 28. Tax form 1040ez instructions If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Tax form 1040ez instructions Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Tax form 1040ez instructions You may qualify for these other benefits even if you do not meet the requirements listed earlier. Tax form 1040ez instructions Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Tax form 1040ez instructions Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Tax form 1040ez instructions When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Tax form 1040ez instructions Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Tax form 1040ez instructions This is education that meets at least one of the following two tests. Tax form 1040ez instructions The education is required by your employer or the law to keep your present salary, status, or job. Tax form 1040ez instructions The required education must serve a bona fide business purpose of your employer. Tax form 1040ez instructions The education maintains or improves skills needed in your present work. Tax form 1040ez instructions However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Tax form 1040ez instructions You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Tax form 1040ez instructions Use Figure 27-A, later, as a quick check to see if your education qualifies. Tax form 1040ez instructions Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Tax form 1040ez instructions This additional education is qualifying work-related education if all three of the following requirements are met. Tax form 1040ez instructions It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Tax form 1040ez instructions When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Tax form 1040ez instructions See Education To Maintain or Improve Skills , later. Tax form 1040ez instructions Example. Tax form 1040ez instructions You are a teacher who has satisfied the minimum requirements for teaching. Tax form 1040ez instructions Your employer requires you to take an additional college course each year to keep your teaching job. Tax form 1040ez instructions If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Tax form 1040ez instructions Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Tax form 1040ez instructions This could include refresher courses, courses on current developments, and academic or vocational courses. Tax form 1040ez instructions Example. Tax form 1040ez instructions You repair televisions, radios, and stereo systems for XYZ Store. Tax form 1040ez instructions To keep up with the latest changes, you take special courses in radio and stereo service. Tax form 1040ez instructions These courses maintain and improve skills required in your work. Tax form 1040ez instructions Maintaining skills vs. Tax form 1040ez instructions qualifying for new job. Tax form 1040ez instructions   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Tax form 1040ez instructions Education during temporary absence. Tax form 1040ez instructions   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Tax form 1040ez instructions Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Tax form 1040ez instructions Example. Tax form 1040ez instructions You quit your biology research job to become a full-time biology graduate student for one year. Tax form 1040ez instructions If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Tax form 1040ez instructions Education during indefinite absence. Tax form 1040ez instructions   If you stop work for more than a year, your absence from your job is considered indefinite. Tax form 1040ez instructions Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Tax form 1040ez instructions Therefore, it is not qualifying work-related education. Tax form 1040ez instructions Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Tax form 1040ez instructions The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Tax form 1040ez instructions Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Tax form 1040ez instructions This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Tax form 1040ez instructions You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Tax form 1040ez instructions Example 1. Tax form 1040ez instructions You are a full-time engineering student. Tax form 1040ez instructions Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Tax form 1040ez instructions Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Tax form 1040ez instructions The education is not qualifying work-related education. Tax form 1040ez instructions Example 2. Tax form 1040ez instructions You are an accountant and you have met the minimum educational requirements of your employer. Tax form 1040ez instructions Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Tax form 1040ez instructions These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Tax form 1040ez instructions Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Tax form 1040ez instructions The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Tax form 1040ez instructions If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Tax form 1040ez instructions The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Tax form 1040ez instructions You generally will be considered a faculty member when one or more of the following occurs. Tax form 1040ez instructions You have tenure. Tax form 1040ez instructions Your years of service count toward obtaining tenure. Tax form 1040ez instructions You have a vote in faculty decisions. Tax form 1040ez instructions Your school makes contributions for you to a retirement plan other than social security or a similar program. Tax form 1040ez instructions Example 1. Tax form 1040ez instructions The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Tax form 1040ez instructions In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Tax form 1040ez instructions If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Tax form 1040ez instructions However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Tax form 1040ez instructions Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Tax form 1040ez instructions If you have all the required education except the fifth year, you have met the minimum educational requirements. Tax form 1040ez instructions The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Tax form 1040ez instructions Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Tax form 1040ez instructions Figure 27-A. Tax form 1040ez instructions Does Your Work-Related Education Qualify?" Example 2. Tax form 1040ez instructions Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Tax form 1040ez instructions The additional four education courses can be qualifying work-related education. Tax form 1040ez instructions Although you do not have all the required courses, you have already met the minimum educational requirements. Tax form 1040ez instructions Example 3. Tax form 1040ez instructions Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Tax form 1040ez instructions The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Tax form 1040ez instructions They are needed to meet the minimum educational requirements for employment as a teacher. Tax form 1040ez instructions Example 4. Tax form 1040ez instructions You have a bachelor's degree and you work as a temporary instructor at a university. Tax form 1040ez instructions At the same time, you take graduate courses toward an advanced degree. Tax form 1040ez instructions The rules of the university state that you can become a faculty member only if you get a graduate degree. Tax form 1040ez instructions Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Tax form 1040ez instructions You have not met the minimum educational requirements to qualify you as a faculty member. Tax form 1040ez instructions The graduate courses are not qualifying work-related education. Tax form 1040ez instructions Certification in a new state. Tax form 1040ez instructions   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Tax form 1040ez instructions This is true even if you must get additional education to be certified in another state. Tax form 1040ez instructions Any additional education you need is qualifying work-related education. Tax form 1040ez instructions You have already met the minimum requirements for teaching. Tax form 1040ez instructions Teaching in another state is not a new trade or business. Tax form 1040ez instructions Example. Tax form 1040ez instructions You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Tax form 1040ez instructions You move to State B and are promptly hired as a teacher. Tax form 1040ez instructions You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Tax form 1040ez instructions These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Tax form 1040ez instructions Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Tax form 1040ez instructions This is true even if you do not plan to enter that trade or business. Tax form 1040ez instructions If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Tax form 1040ez instructions Example 1. Tax form 1040ez instructions You are an accountant. Tax form 1040ez instructions Your employer requires you to get a law degree at your own expense. Tax form 1040ez instructions You register at a law school for the regular curriculum that leads to a law degree. Tax form 1040ez instructions Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Tax form 1040ez instructions Example 2. Tax form 1040ez instructions You are a general practitioner of medicine. Tax form 1040ez instructions You take a 2-week course to review developments in several specialized fields of medicine. Tax form 1040ez instructions The course does not qualify you for a new profession. Tax form 1040ez instructions It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax form 1040ez instructions Example 3. Tax form 1040ez instructions While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Tax form 1040ez instructions The program will lead to qualifying you to practice psychoanalysis. Tax form 1040ez instructions The psychoanalytic training does not qualify you for a new profession. Tax form 1040ez instructions It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax form 1040ez instructions Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Tax form 1040ez instructions They are part of a program of study that can qualify you for a new profession. Tax form 1040ez instructions Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Tax form 1040ez instructions A change in duties in any of the following ways is not considered a change to a new business. Tax form 1040ez instructions Elementary school teacher to secondary school teacher. Tax form 1040ez instructions Teacher of one subject, such as biology, to teacher of another subject, such as art. Tax form 1040ez instructions Classroom teacher to guidance counselor. Tax form 1040ez instructions Classroom teacher to school administrator. Tax form 1040ez instructions What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Tax form 1040ez instructions If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Tax form 1040ez instructions You cannot deduct expenses related to tax-exempt and excluded income. Tax form 1040ez instructions Deductible expenses. Tax form 1040ez instructions   The following education expenses can be deducted. Tax form 1040ez instructions Tuition, books, supplies, lab fees, and similar items. Tax form 1040ez instructions Certain transportation and travel costs. Tax form 1040ez instructions Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Tax form 1040ez instructions Nondeductible expenses. Tax form 1040ez instructions   You cannot deduct personal or capital expenses. Tax form 1040ez instructions For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Tax form 1040ez instructions This amount is a personal expense. Tax form 1040ez instructions Unclaimed reimbursement. Tax form 1040ez instructions   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Tax form 1040ez instructions Example. Tax form 1040ez instructions Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Tax form 1040ez instructions You do not file a voucher, and you do not get reimbursed. Tax form 1040ez instructions Because you did not file a voucher, you cannot deduct the expenses on your tax return. Tax form 1040ez instructions Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Tax form 1040ez instructions If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Tax form 1040ez instructions Temporary basis. Tax form 1040ez instructions   You go to school on a temporary basis if either of the following situations applies to you. Tax form 1040ez instructions Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Tax form 1040ez instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax form 1040ez instructions Your attendance is temporary up to the date you determine it will last more than 1 year. Tax form 1040ez instructions Note. Tax form 1040ez instructions If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Tax form 1040ez instructions Attendance not on a temporary basis. Tax form 1040ez instructions   You do not go to school on a temporary basis if either of the following situations apply to you. Tax form 1040ez instructions Your attendance at school is realistically expected to last more than 1 year. Tax form 1040ez instructions It does not matter how long you actually attend. Tax form 1040ez instructions Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax form 1040ez instructions Your attendance is not temporary after the date you determine it will last more than 1 year. Tax form 1040ez instructions Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Tax form 1040ez instructions This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Tax form 1040ez instructions Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Tax form 1040ez instructions Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Tax form 1040ez instructions Example 1. Tax form 1040ez instructions You regularly work in a nearby town, and go directly from work to home. Tax form 1040ez instructions You also attend school every work night for 3 months to take a course that improves your job skills. Tax form 1040ez instructions Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Tax form 1040ez instructions This is true regardless of the distance traveled. Tax form 1040ez instructions Example 2. Tax form 1040ez instructions Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Tax form 1040ez instructions You can deduct your transportation expenses from your regular work site to school and then home. Tax form 1040ez instructions Example 3. Tax form 1040ez instructions Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Tax form 1040ez instructions Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Tax form 1040ez instructions Example 4. Tax form 1040ez instructions Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Tax form 1040ez instructions Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Tax form 1040ez instructions If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Tax form 1040ez instructions If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Tax form 1040ez instructions Using your car. Tax form 1040ez instructions   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Tax form 1040ez instructions The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Tax form 1040ez instructions Whichever method you use, you can also deduct parking fees and tolls. Tax form 1040ez instructions See chapter 26 for information on deducting your actual expenses of using a car. Tax form 1040ez instructions Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Tax form 1040ez instructions Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Tax form 1040ez instructions For more information, see chapter 26. Tax form 1040ez instructions You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Tax form 1040ez instructions Mainly personal travel. Tax form 1040ez instructions   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Tax form 1040ez instructions You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Tax form 1040ez instructions   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Tax form 1040ez instructions An important factor is the comparison of time spent on personal activities with time spent on educational activities. Tax form 1040ez instructions If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Tax form 1040ez instructions Example 1. Tax form 1040ez instructions John works in Newark, New Jersey. Tax form 1040ez instructions He traveled to Chicago to take a deductible 1-week course at the request of his employer. Tax form 1040ez instructions His main reason for going to Chicago was to take the course. Tax form 1040ez instructions While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Tax form 1040ez instructions Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Tax form 1040ez instructions He cannot deduct his transportation expenses of going to Pleasantville. Tax form 1040ez instructions He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Tax form 1040ez instructions Example 2. Tax form 1040ez instructions Sue works in Boston. Tax form 1040ez instructions She went to a university in Michigan to take a course for work. Tax form 1040ez instructions The course is qualifying work-related education. Tax form 1040ez instructions She took one course, which is one-fourth of a full course load of study. Tax form 1040ez instructions She spent the rest of the time on personal activities. Tax form 1040ez instructions Her reasons for taking the course in Michigan were all personal. Tax form 1040ez instructions Sue's trip is mainly personal because three-fourths of her time is considered personal time. Tax form 1040ez instructions She cannot deduct the cost of her round-trip train ticket to Michigan. Tax form 1040ez instructions She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Tax form 1040ez instructions Example 3. Tax form 1040ez instructions Dave works in Nashville and recently traveled to California to take a 2-week seminar. Tax form 1040ez instructions The seminar is qualifying work-related education. Tax form 1040ez instructions While there, he spent an extra 8 weeks on personal activities. Tax form 1040ez instructions The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Tax form 1040ez instructions Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Tax form 1040ez instructions He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Tax form 1040ez instructions Cruises and conventions. Tax form 1040ez instructions   Certain cruises and conventions offer seminars or courses as part of their itinerary. Tax form 1040ez instructions Even if the seminars or courses are work-related, your deduction for travel may be limited. Tax form 1040ez instructions This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Tax form 1040ez instructions   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Tax form 1040ez instructions 50% limit on meals. Tax form 1040ez instructions   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Tax form 1040ez instructions You cannot have been reimbursed for the meals. Tax form 1040ez instructions   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Tax form 1040ez instructions Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Tax form 1040ez instructions Example. Tax form 1040ez instructions You are a French language teacher. Tax form 1040ez instructions While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Tax form 1040ez instructions You chose your itinerary and most of your activities to improve your French language skills. Tax form 1040ez instructions You cannot deduct your travel expenses as education expenses. Tax form 1040ez instructions This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Tax form 1040ez instructions No Double Benefit Allowed You cannot do either of the following. Tax form 1040ez instructions Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Tax form 1040ez instructions Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Tax form 1040ez instructions See Adjustments to Qualifying Work-Related Education Expenses , next. Tax form 1040ez instructions Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Tax form 1040ez instructions You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Tax form 1040ez instructions For more information, see chapter 12 of Publication 970. Tax form 1040ez instructions Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Tax form 1040ez instructions Amounts that do not reduce qualifying work-related education expenses. Tax form 1040ez instructions   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax form 1040ez instructions   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Tax form 1040ez instructions Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Tax form 1040ez instructions There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Tax form 1040ez instructions You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Tax form 1040ez instructions For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Tax form 1040ez instructions Deducting Business Expenses Self-employed persons and employees report business expenses differently. Tax form 1040ez instructions The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Tax form 1040ez instructions Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Tax form 1040ez instructions If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Tax form 1040ez instructions See the instructions for the form you file for information on how to complete it. Tax form 1040ez instructions Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Tax form 1040ez instructions If either (1) or (2) applies, you can deduct the total qualifying cost. Tax form 1040ez instructions If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Tax form 1040ez instructions In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Tax form 1040ez instructions (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax form 1040ez instructions ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Tax form 1040ez instructions See chapter 28. Tax form 1040ez instructions Form 2106 or 2106-EZ. Tax form 1040ez instructions   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Tax form 1040ez instructions Form not required. Tax form 1040ez instructions   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Tax form 1040ez instructions   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Tax form 1040ez instructions (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax form 1040ez instructions ) Using Form 2106-EZ. Tax form 1040ez instructions   This form is shorter and easier to use than Form 2106. Tax form 1040ez instructions Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Tax form 1040ez instructions   If you do not meet both of these requirements, use Form 2106. Tax form 1040ez instructions Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Tax form 1040ez instructions Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Tax form 1040ez instructions You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Tax form 1040ez instructions You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Tax form 1040ez instructions For more information on qualified performing artists, see chapter 6 of Publication 463. Tax form 1040ez instructions Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Tax form 1040ez instructions They are not subject to the 2%-of-adjusted-gross-income limit. Tax form 1040ez instructions To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Tax form 1040ez instructions For more information on impairment-related work expenses, see chapter 6 of Publication 463. Tax form 1040ez instructions Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Tax form 1040ez instructions Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Tax form 1040ez instructions For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Tax form 1040ez instructions Prev  Up  Next   Home   More Online Publications
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Understanding Your CP295A Notice

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    Understanding your notice

    Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

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Page Last Reviewed or Updated: 30-Jan-2014

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The Tax Form 1040ez Instructions

Tax form 1040ez instructions 3. Tax form 1040ez instructions   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. Tax form 1040ez instructions The allowance applies only for the first year you place the property in service. Tax form 1040ez instructions For qualified property placed in service in 2013, you can take an additional 50% special allowance. Tax form 1040ez instructions The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. Tax form 1040ez instructions This chapter explains what is qualified property. Tax form 1040ez instructions It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. Tax form 1040ez instructions Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. Tax form 1040ez instructions See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. Tax form 1040ez instructions See chapter 6 for information about getting publications and forms. Tax form 1040ez instructions What Is Qualified Property? Your property is qualified property if it is one of the following. Tax form 1040ez instructions Qualified reuse and recycling property. Tax form 1040ez instructions Qualified cellulosic biofuel plant property. Tax form 1040ez instructions Qualified disaster assistance property. Tax form 1040ez instructions Certain qualified property acquired after December 31, 2007. Tax form 1040ez instructions The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. Tax form 1040ez instructions Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. Tax form 1040ez instructions Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Tax form 1040ez instructions Qualified reuse and recycling property also includes software necessary to operate such equipment. Tax form 1040ez instructions The property must meet the following requirements. Tax form 1040ez instructions The property must be depreciated under MACRS. Tax form 1040ez instructions The property must have a useful life of at least 5 years. Tax form 1040ez instructions The original use of the property must begin with you after August 31, 2008. Tax form 1040ez instructions You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. Tax form 1040ez instructions The property must be placed in service for use in your trade or business after August 31, 2008. Tax form 1040ez instructions Excepted Property Qualified reuse and recycling property does not include any of the following. Tax form 1040ez instructions Any rolling stock or other equipment used to transport reuse or recyclable materials. Tax form 1040ez instructions Property required to be depreciated using the Alternative Depreciation System (ADS). Tax form 1040ez instructions For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax form 1040ez instructions Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Tax form 1040ez instructions Property for which you elected not to claim any special depreciation allowance (discussed later). Tax form 1040ez instructions Property placed in service and disposed of in the same tax year. Tax form 1040ez instructions Property converted from business use to personal use in the same tax year acquired. Tax form 1040ez instructions Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. Tax form 1040ez instructions Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. Tax form 1040ez instructions Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. Tax form 1040ez instructions Examples include bagasse (from sugar cane), corn stalks, and switchgrass. Tax form 1040ez instructions The property must meet the following requirements. Tax form 1040ez instructions The property is used in the United States solely to produce cellulosic biofuel. Tax form 1040ez instructions The original use of the property must begin with you after December 20, 2006. Tax form 1040ez instructions You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. Tax form 1040ez instructions The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. Tax form 1040ez instructions Note. Tax form 1040ez instructions For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). Tax form 1040ez instructions The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. Tax form 1040ez instructions Special Rules Sale-leaseback. Tax form 1040ez instructions   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax form 1040ez instructions   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. Tax form 1040ez instructions Syndicated leasing transactions. Tax form 1040ez instructions   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax form 1040ez instructions   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Tax form 1040ez instructions Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. Tax form 1040ez instructions Property placed in service and disposed of in the same tax year. Tax form 1040ez instructions Property converted from business use to personal use in the same tax year it is acquired. Tax form 1040ez instructions Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. Tax form 1040ez instructions Property required to be depreciated using the Alternative Depreciation System (ADS). Tax form 1040ez instructions For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax form 1040ez instructions Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. Tax form 1040ez instructions Property for which you elected not to claim any special depreciation allowance (discussed later). Tax form 1040ez instructions Property for which a deduction was taken under section 179C for certain qualified refinery property. Tax form 1040ez instructions Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. Tax form 1040ez instructions Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. Tax form 1040ez instructions A list of the federally declared disaster areas is available at the FEMA website at www. Tax form 1040ez instructions fema. Tax form 1040ez instructions gov. Tax form 1040ez instructions Your property is qualified disaster assistance property if it meets the following requirements. Tax form 1040ez instructions The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. Tax form 1040ez instructions You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. Tax form 1040ez instructions The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. Tax form 1040ez instructions The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. Tax form 1040ez instructions The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. Tax form 1040ez instructions The property is placed in service by you on or before the date which is the last day of the fourth calendar year. Tax form 1040ez instructions Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. Tax form 1040ez instructions It is not excepted property (explained later in Excepted Property ). Tax form 1040ez instructions Special Rules Sale-leaseback. Tax form 1040ez instructions   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax form 1040ez instructions   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. Tax form 1040ez instructions Syndicated leasing transactions. Tax form 1040ez instructions   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax form 1040ez instructions   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. Tax form 1040ez instructions Excepted Property Qualified disaster assistance property does not include any of the following. Tax form 1040ez instructions Property required to be depreciated using the Alternative Depreciation System (ADS). Tax form 1040ez instructions For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax form 1040ez instructions Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. Tax form 1040ez instructions Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. Tax form 1040ez instructions Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. Tax form 1040ez instructions Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. Tax form 1040ez instructions Property for which you elected not to claim any special depreciation allowance (discussed later). Tax form 1040ez instructions Property placed in service and disposed of in the same tax year. Tax form 1040ez instructions Property converted from business use to personal use in the same tax year acquired. Tax form 1040ez instructions Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. Tax form 1040ez instructions Any gambling or animal racing property (defined later). Tax form 1040ez instructions Qualified revitalization building. Tax form 1040ez instructions   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. Tax form 1040ez instructions If the building is new, the original use of the building must begin with you. Tax form 1040ez instructions If the building is not new, you must substantially rehabilitate the building and then place it in service. Tax form 1040ez instructions For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. Tax form 1040ez instructions Gambling or animal racing property. Tax form 1040ez instructions   Gambling or animal racing property includes the following personal and real property. Tax form 1040ez instructions Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. Tax form 1040ez instructions Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. Tax form 1040ez instructions Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. Tax form 1040ez instructions Your property is qualified property if it meets the following requirements. Tax form 1040ez instructions It is one of the following types of property. Tax form 1040ez instructions Tangible property depreciated under MACRS with a recovery period of 20 years or less. Tax form 1040ez instructions Water utility property. Tax form 1040ez instructions Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Tax form 1040ez instructions (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Tax form 1040ez instructions ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). Tax form 1040ez instructions You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. Tax form 1040ez instructions The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). Tax form 1040ez instructions The original use of the property must begin with you after December 31, 2007. Tax form 1040ez instructions It is not excepted property (explained later in Excepted property). Tax form 1040ez instructions Qualified leasehold improvement property. Tax form 1040ez instructions    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. Tax form 1040ez instructions The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Tax form 1040ez instructions That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Tax form 1040ez instructions The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. Tax form 1040ez instructions The improvement is section 1250 property. Tax form 1040ez instructions See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. Tax form 1040ez instructions   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Tax form 1040ez instructions The enlargement of the building. Tax form 1040ez instructions Any elevator or escalator. Tax form 1040ez instructions Any structural component benefiting a common area. Tax form 1040ez instructions The internal structural framework of the building. Tax form 1040ez instructions   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Tax form 1040ez instructions However, a lease between related persons is not treated as a lease. Tax form 1040ez instructions Related persons. Tax form 1040ez instructions   For this purpose, the following are related persons. Tax form 1040ez instructions Members of an affiliated group. Tax form 1040ez instructions An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. Tax form 1040ez instructions A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. Tax form 1040ez instructions Two corporations that are members of the same controlled group. Tax form 1040ez instructions A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. Tax form 1040ez instructions The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Tax form 1040ez instructions The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Tax form 1040ez instructions A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. Tax form 1040ez instructions Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. Tax form 1040ez instructions A corporation and a partnership if the same persons own both of the following. Tax form 1040ez instructions 80% or more of the value of the outstanding stock of the corporation. Tax form 1040ez instructions 80% or more of the capital or profits interest in the partnership. Tax form 1040ez instructions The executor and beneficiary of any estate. Tax form 1040ez instructions Long Production Period Property To be qualified property, long production period property must meet the following requirements. Tax form 1040ez instructions It must meet the requirements in (2)-(5), above. Tax form 1040ez instructions The property has a recovery period of at least 10 years or is transportation property. Tax form 1040ez instructions Transportation property is tangible personal property used in the trade or business of transporting persons or property. Tax form 1040ez instructions The property is subject to section 263A of the Internal Revenue Code. Tax form 1040ez instructions The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. Tax form 1040ez instructions Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. Tax form 1040ez instructions It must meet the requirements in (2)-(5), above. Tax form 1040ez instructions The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). Tax form 1040ez instructions The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. Tax form 1040ez instructions The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. Tax form 1040ez instructions Special Rules Sale-leaseback. Tax form 1040ez instructions   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. Tax form 1040ez instructions   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. Tax form 1040ez instructions Syndicated leasing transactions. Tax form 1040ez instructions   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. Tax form 1040ez instructions   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. Tax form 1040ez instructions Excepted Property Qualified property does not include any of the following. Tax form 1040ez instructions Property placed in service and disposed of in the same tax year. Tax form 1040ez instructions Property converted from business use to personal use in the same tax year acquired. Tax form 1040ez instructions Property converted from personal use to business use in the same or later tax year may be qualified property. Tax form 1040ez instructions Property required to be depreciated under the Alternative Depreciation System (ADS). Tax form 1040ez instructions This includes listed property used 50% or less in a qualified business use. Tax form 1040ez instructions For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . Tax form 1040ez instructions Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). Tax form 1040ez instructions Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). Tax form 1040ez instructions Property for which you elected not to claim any special depreciation allowance (discussed later). Tax form 1040ez instructions Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). Tax form 1040ez instructions Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. Tax form 1040ez instructions For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. Tax form 1040ez instructions An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. Tax form 1040ez instructions If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. Tax form 1040ez instructions If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. Tax form 1040ez instructions See Which Depreciation Method Applies in chapter 4 . Tax form 1040ez instructions Once made, the election cannot be revoked without IRS consent. Tax form 1040ez instructions Additional guidance. Tax form 1040ez instructions   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. Tax form 1040ez instructions Proc. Tax form 1040ez instructions 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. Tax form 1040ez instructions irs. Tax form 1040ez instructions gov/pub/irs-irbs/irb08-44. Tax form 1040ez instructions pdf, Rev. Tax form 1040ez instructions Proc. Tax form 1040ez instructions 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. Tax form 1040ez instructions irs. Tax form 1040ez instructions gov/pub/irs-irbs/irb09-06. Tax form 1040ez instructions pdf, and Rev. Tax form 1040ez instructions Proc. Tax form 1040ez instructions 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. Tax form 1040ez instructions irs. Tax form 1040ez instructions gov/pub/irs-irbs/irb09-29. Tax form 1040ez instructions pdf. Tax form 1040ez instructions Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. Tax form 1040ez instructions   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. Tax form 1040ez instructions irs. Tax form 1040ez instructions gov/irb. Tax form 1040ez instructions How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. Tax form 1040ez instructions For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. Tax form 1040ez instructions For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. Tax form 1040ez instructions If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. Tax form 1040ez instructions Depreciable basis. Tax form 1040ez instructions   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. Tax form 1040ez instructions   The following are examples of some credits and deductions that reduce depreciable basis. Tax form 1040ez instructions Any section 179 deduction. Tax form 1040ez instructions Any deduction for removal of barriers to the disabled and the elderly. Tax form 1040ez instructions Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Tax form 1040ez instructions Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. Tax form 1040ez instructions   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Tax form 1040ez instructions   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Tax form 1040ez instructions For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Tax form 1040ez instructions Depreciating the remaining cost. Tax form 1040ez instructions   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . Tax form 1040ez instructions Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. Tax form 1040ez instructions Example. Tax form 1040ez instructions On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. Tax form 1040ez instructions He did not elect to claim a section 179 deduction. Tax form 1040ez instructions He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. Tax form 1040ez instructions He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. Tax form 1040ez instructions Like-kind exchanges and involuntary conversions. Tax form 1040ez instructions   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. Tax form 1040ez instructions After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. Tax form 1040ez instructions In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. Tax form 1040ez instructions See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . Tax form 1040ez instructions The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. Tax form 1040ez instructions How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. Tax form 1040ez instructions To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. Tax form 1040ez instructions When to make election. Tax form 1040ez instructions   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Tax form 1040ez instructions   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Tax form 1040ez instructions Attach the election statement to the amended return. Tax form 1040ez instructions On the amended return, write “Filed pursuant to section 301. Tax form 1040ez instructions 9100-2. Tax form 1040ez instructions ” Revoking an election. Tax form 1040ez instructions   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Tax form 1040ez instructions A request to revoke the election is a request for a letter ruling. Tax form 1040ez instructions If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Tax form 1040ez instructions When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Tax form 1040ez instructions See When Do You Recapture MACRS Depreciation in chapter 4 or more information. Tax form 1040ez instructions Recapture of allowance deducted for qualified GO Zone property. Tax form 1040ez instructions   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax form 1040ez instructions For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. Tax form 1040ez instructions Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. Tax form 1040ez instructions   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax form 1040ez instructions Recapture of allowance for qualified Recovery Assistance property. Tax form 1040ez instructions   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax form 1040ez instructions For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Tax form 1040ez instructions Recapture of allowance for qualified disaster assistance property. Tax form 1040ez instructions   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. Tax form 1040ez instructions   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. Tax form 1040ez instructions Prev  Up  Next   Home   More Online Publications