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Taxact 1040nr

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Taxact 1040nr

Taxact 1040nr 4. Taxact 1040nr   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Taxact 1040nr Rent-to-own contract. Taxact 1040nr What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? Introduction The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Taxact 1040nr MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Taxact 1040nr Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Taxact 1040nr To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Taxact 1040nr This chapter explains how to determine which MACRS depreciation system applies to your property. Taxact 1040nr It also discusses other information you need to know before you can figure depreciation under MACRS. Taxact 1040nr This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Taxact 1040nr It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Taxact 1040nr Finally, it explains when and how to recapture MACRS depreciation. Taxact 1040nr Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Taxact 1040nr Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Taxact 1040nr You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Taxact 1040nr If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Taxact 1040nr Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Taxact 1040nr If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Taxact 1040nr Required use of ADS. Taxact 1040nr   You must use ADS for the following property. Taxact 1040nr Listed property used 50% or less in a qualified business use. Taxact 1040nr See chapter 5 for information on listed property. Taxact 1040nr Any tangible property used predominantly outside the United States during the year. Taxact 1040nr Any tax-exempt use property. Taxact 1040nr Any tax-exempt bond-financed property. Taxact 1040nr All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Taxact 1040nr Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Taxact 1040nr If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Taxact 1040nr Electing ADS. Taxact 1040nr   Although your property may qualify for GDS, you can elect to use ADS. Taxact 1040nr The election generally must cover all property in the same property class that you placed in service during the year. Taxact 1040nr However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Taxact 1040nr Once you make this election, you can never revoke it. Taxact 1040nr   You make the election by completing line 20 in Part III of Form 4562. Taxact 1040nr Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Taxact 1040nr These property classes are also listed under column (a) in section B, Part III, of Form 4562. Taxact 1040nr For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Taxact 1040nr 3-year property. Taxact 1040nr Tractor units for over-the-road use. Taxact 1040nr Any race horse over 2 years old when placed in service. Taxact 1040nr (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Taxact 1040nr ) Any other horse (other than a race horse) over 12 years old when placed in service. Taxact 1040nr Qualified rent-to-own property (defined later). Taxact 1040nr 5-year property. Taxact 1040nr Automobiles, taxis, buses, and trucks. Taxact 1040nr Computers and peripheral equipment. Taxact 1040nr Office machinery (such as typewriters, calculators, and copiers). Taxact 1040nr Any property used in research and experimentation. Taxact 1040nr Breeding cattle and dairy cattle. Taxact 1040nr Appliances, carpets, furniture, etc. Taxact 1040nr , used in a residential rental real estate activity. Taxact 1040nr Certain geothermal, solar, and wind energy property. Taxact 1040nr 7-year property. Taxact 1040nr Office furniture and fixtures (such as desks, files, and safes). Taxact 1040nr Agricultural machinery and equipment. Taxact 1040nr Any property that does not have a class life and has not been designated by law as being in any other class. Taxact 1040nr Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Taxact 1040nr Any natural gas gathering line placed in service after April 11, 2005. Taxact 1040nr See Natural gas gathering line and electric transmission property , later. Taxact 1040nr 10-year property. Taxact 1040nr Vessels, barges, tugs, and similar water transportation equipment. Taxact 1040nr Any single purpose agricultural or horticultural structure. Taxact 1040nr Any tree or vine bearing fruits or nuts. Taxact 1040nr Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Taxact 1040nr 15-year property. Taxact 1040nr Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Taxact 1040nr Any retail motor fuels outlet (defined later), such as a convenience store. Taxact 1040nr Any municipal wastewater treatment plant. Taxact 1040nr Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Taxact 1040nr Any qualified restaurant property (defined later) placed in service before January 1, 2014. Taxact 1040nr Initial clearing and grading land improvements for gas utility property. Taxact 1040nr Electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity placed in service after April 11, 2005. Taxact 1040nr See Natural gas gathering line and electric transmission property , later. Taxact 1040nr Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Taxact 1040nr Any qualified retail improvement property placed in service before January 1, 2014. Taxact 1040nr 20-year property. Taxact 1040nr Farm buildings (other than single purpose agricultural or horticultural structures). Taxact 1040nr Municipal sewers not classified as 25-year property. Taxact 1040nr Initial clearing and grading land improvements for electric utility transmission and distribution plants. Taxact 1040nr 25-year property. Taxact 1040nr This class is water utility property, which is either of the following. Taxact 1040nr Property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20-year property. Taxact 1040nr Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Taxact 1040nr Residential rental property. Taxact 1040nr This is any building or structure, such as a rental home (including a mobile home), if 80% or more of its gross rental income for the tax year is from dwelling units. Taxact 1040nr A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Taxact 1040nr It does not include a unit in a hotel, motel, or other establishment where more than half the units are used on a transient basis. Taxact 1040nr If you occupy any part of the building or structure for personal use, its gross rental income includes the fair rental value of the part you occupy. Taxact 1040nr Nonresidential real property. Taxact 1040nr This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Taxact 1040nr 5 years. Taxact 1040nr Qualified rent-to-own property. Taxact 1040nr   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Taxact 1040nr It is tangible personal property generally used in the home for personal use. Taxact 1040nr It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Taxact 1040nr Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Taxact 1040nr   If some of the property you rent to others under a rent-to-own agreement is of a type that may be used by the renters for either personal or business purposes, you still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Taxact 1040nr However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Taxact 1040nr Rent-to-own dealer. Taxact 1040nr   You are a rent-to-own dealer if you meet all the following requirements. Taxact 1040nr You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Taxact 1040nr A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Taxact 1040nr The property is tangible personal property of a type generally used within the home for personal use. Taxact 1040nr Rent-to-own contract. Taxact 1040nr   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Taxact 1040nr Provides a beginning date and a maximum period of time, not to exceed 156 weeks or 36 months from the beginning date, for which the contract can be in effect (including renewals or options to extend). Taxact 1040nr Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Taxact 1040nr If the payments are decreasing, no payment can be less than 40% of the largest payment. Taxact 1040nr Provides for total payments that generally exceed the normal retail price of the property plus interest. Taxact 1040nr Provides for total payments that do not exceed $10,000 for each item of property. Taxact 1040nr Provides that the customer has no legal obligation to make all payments outlined in the contract and that, at the end of each weekly or monthly payment period, the customer can either continue to use the property by making the next payment or return the property in good working order with no further obligations and no entitlement to a return of any prior payments. Taxact 1040nr Provides that legal title to the property remains with the rent-to-own dealer until the customer makes either all the required payments or the early purchase payments required under the contract to acquire legal title. Taxact 1040nr Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Taxact 1040nr Motorsports entertainment complex. Taxact 1040nr   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Taxact 1040nr The events must be open to the public for the price of admission. Taxact 1040nr Qualified smart electric grid system. Taxact 1040nr   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service after October 3, 2008, by a taxpayer who is a supplier of electrical energy or a provider of electrical energy services. Taxact 1040nr Smart grid property includes electronics and related equipment that is capable of: Sensing, collecting, and monitoring data of or from all portions of a utility's electric distribution grid, Providing real-time, two-way communications to monitor or to manage the grid, and Providing real-time analysis of an event prediction based on collected data that can be used to provide electric distribution system reliability, quality, and performance. Taxact 1040nr Retail motor fuels outlet. Taxact 1040nr   Real property is a retail motor fuels outlet if it is used to a substantial extent in the retail marketing of petroleum or petroleum products (whether or not it is also used to sell food or other convenience items) and meets any one of the following three tests. Taxact 1040nr It is not larger than 1,400 square feet. Taxact 1040nr 50% or more of the gross revenues generated from the property are derived from petroleum sales. Taxact 1040nr 50% or more of the floor space in the property is devoted to petroleum marketing sales. Taxact 1040nr A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Taxact 1040nr Qualified leasehold improvement property. Taxact 1040nr    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Taxact 1040nr   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Taxact 1040nr A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Taxact 1040nr Examples include the following. Taxact 1040nr A complete liquidation of a subsidiary. Taxact 1040nr A transfer to a corporation controlled by the transferor. Taxact 1040nr An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Taxact 1040nr Qualified restaurant property. Taxact 1040nr   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Taxact 1040nr Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Taxact 1040nr Qualified smart electric meter. Taxact 1040nr   A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier of electric energy or a provider of electric energy services and which is capable of being used by you as part of a system that: Measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day; Provides for the exchange of information between the supplier or provider and the customer's smart electric meter in support of time-based rates or other forms of demand response; Provides data to the supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Taxact 1040nr Net metering means allowing a customer a credit, if any, as complies with applicable federal and state laws and regulations for providing electricity to the supplier or provider. Taxact 1040nr Natural gas gathering line and electric transmission property. Taxact 1040nr   Any natural gas gathering line placed in service after April 11, 2005, is treated as 7-year property, and electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Taxact 1040nr The original use of the property must have begun with you after April 11, 2005. Taxact 1040nr Original use means the first use to which the property is put, whether or not by you. Taxact 1040nr Therefore, property used by any person before April 12, 2005, is not original use. Taxact 1040nr Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Taxact 1040nr However, original use does not include the cost of reconditioned or rebuilt property you acquired. Taxact 1040nr Property containing used parts will not be treated as reconditioned or rebuilt if the cost of the used parts is not more than 20% of the total cost of the property. Taxact 1040nr The property must not be placed in service under a binding contract in effect before April 12, 2005. Taxact 1040nr The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Taxact 1040nr Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Taxact 1040nr What Is the Placed in Service Date? You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. Taxact 1040nr The placed in service date for your property is the date the property is ready and available for a specific use. Taxact 1040nr It is therefore not necessarily the date it is first used. Taxact 1040nr If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Taxact 1040nr See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Taxact 1040nr What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Taxact 1040nr 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 . Taxact 1040nr Reduce that amount by any credits and deductions allocable to the property. Taxact 1040nr The following are examples of some credits and deductions that reduce basis. Taxact 1040nr Any deduction for section 179 property. Taxact 1040nr Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Taxact 1040nr Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Taxact 1040nr Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Taxact 1040nr Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Taxact 1040nr Any deduction for removal of barriers to the disabled and the elderly. Taxact 1040nr Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Taxact 1040nr Any special depreciation allowance. Taxact 1040nr Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Taxact 1040nr For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Taxact 1040nr Enter the basis for depreciation under column (c) in Part III of Form 4562. Taxact 1040nr 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 . Taxact 1040nr Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Taxact 1040nr It is determined based on the depreciation system (GDS or ADS) used. Taxact 1040nr Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Taxact 1040nr Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Taxact 1040nr 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Taxact 1040nr 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Taxact 1040nr 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Taxact 1040nr 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Taxact 1040nr 431. Taxact 1040nr 5 years for property placed in service before May 13, 1993 (or before January 1, 1994, if the purchase or construction of the property is under a binding contract in effect before May 13, 1993, or if construction began before May 13, 1993). Taxact 1040nr The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Taxact 1040nr Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Taxact 1040nr Enter the appropriate recovery period on Form 4562 under column (d) in section B of Part III, unless already shown (for 25-year property, residential rental property, and nonresidential real property). Taxact 1040nr Office in the home. Taxact 1040nr   If your home is a personal-use single family residence and you begin to use part of your home as an office, depreciate that part of your home as nonresidential real property over 39 years (31. Taxact 1040nr 5 years if you began using it for business before May 13, 1993). Taxact 1040nr However, if your home is an apartment in an apartment building that you own and the building is residential rental property as defined earlier under Which Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Taxact 1040nr 5 years. Taxact 1040nr See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Taxact 1040nr Home changed to rental use. Taxact 1040nr   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Taxact 1040nr 5 years. Taxact 1040nr Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Taxact 1040nr The following table shows these shorter recovery periods. Taxact 1040nr Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Taxact 1040nr Use this chart to find the correct percentage table to use for qualified Indian reservation property. Taxact 1040nr IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Taxact 1040nr   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Taxact 1040nr You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Taxact 1040nr The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Taxact 1040nr   The following property is not qualified property. Taxact 1040nr Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Taxact 1040nr Property acquired directly or indirectly from a related person. Taxact 1040nr Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Taxact 1040nr These activities are defined in section 4 of the Indian Regulatory Act (25 U. Taxact 1040nr S. Taxact 1040nr C. Taxact 1040nr 2703). Taxact 1040nr Any property you must depreciate under ADS. Taxact 1040nr Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Taxact 1040nr Qualified infrastructure property. Taxact 1040nr   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Taxact 1040nr Qualified infrastructure property is property that meets all the following rules. Taxact 1040nr It is qualified property, as defined earlier, except that it is outside the reservation. Taxact 1040nr It benefits the tribal infrastructure. Taxact 1040nr It is available to the general public. Taxact 1040nr It is placed in service in connection with the active conduct of a trade or business within a reservation. Taxact 1040nr Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Taxact 1040nr Related person. Taxact 1040nr   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Taxact 1040nr Indian reservation. Taxact 1040nr   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Taxact 1040nr S. Taxact 1040nr C. Taxact 1040nr 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Taxact 1040nr S. Taxact 1040nr C. Taxact 1040nr 1903(10)). Taxact 1040nr Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Taxact 1040nr For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Taxact 1040nr Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Taxact 1040nr The following table shows some of the ADS recovery periods. Taxact 1040nr Property Recovery  Period Rent-to-own property 4 years Automobiles and light duty trucks 5 years Computers and peripheral equipment 5 years High technology telephone station equipment installed on customer premises 5 years High technology medical equipment 5 years Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit or nuts 20 years Initial clearing and grading land  improvements for gas utility property 20 years Initial clearing and grading land  improvements for electric utility  transmission and distribution plants 25 years Electric transmission property used in the transmission at 69 or more kilovolts of electricity 30 years Natural gas distribution lines 35 years Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Taxact 1040nr Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Taxact 1040nr Tax-exempt use property subject to a lease. Taxact 1040nr   The ADS recovery period for any property leased under a lease agreement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership) cannot be less than 125% of the lease term. Taxact 1040nr Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Taxact 1040nr See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Taxact 1040nr Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Taxact 1040nr The recovery period begins on the later of the following dates. Taxact 1040nr The date you place the addition or improvement in service. Taxact 1040nr The date you place in service the property to which you made the addition or improvement. Taxact 1040nr If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Taxact 1040nr Example. Taxact 1040nr You own a rental home that you have been renting out since 1981. Taxact 1040nr If you put an addition on the home and place the addition in service this year, you would use MACRS to figure your depreciation deduction for the addition. Taxact 1040nr Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Taxact 1040nr 5 years because the home to which the addition is made would be residential rental property if you had placed it in service this year. Taxact 1040nr Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Taxact 1040nr The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Taxact 1040nr The mid-month convention. Taxact 1040nr   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Taxact 1040nr   Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. Taxact 1040nr This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Taxact 1040nr   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Taxact 1040nr The mid-quarter convention. Taxact 1040nr   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year. Taxact 1040nr   Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. Taxact 1040nr This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Taxact 1040nr   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Taxact 1040nr    For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. Taxact 1040nr However, it does not reflect any reduction in basis for any special depreciation allowance. Taxact 1040nr The half-year convention. Taxact 1040nr   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Taxact 1040nr   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Taxact 1040nr This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Taxact 1040nr   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Taxact 1040nr Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Taxact 1040nr The 200% declining balance method over a GDS recovery period. Taxact 1040nr The 150% declining balance method over a GDS recovery period. Taxact 1040nr The straight line method over a GDS recovery period. Taxact 1040nr The straight line method over an ADS recovery period. Taxact 1040nr For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Taxact 1040nr If you made this election, continue to use the same method and recovery period for that property. Taxact 1040nr Table 4–1 lists the types of property you can depreciate under each method. Taxact 1040nr It also gives a brief explanation of the method, including any benefits that may apply. Taxact 1040nr Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate it under GDS using the 150% declining balance method unless you are a farmer who must depreciate the property under ADS using the straight line method or you elect to depreciate the property under GDS or ADS using the straight line method. Taxact 1040nr You can depreciate real property using the straight line method under either GDS or ADS. Taxact 1040nr Fruit or nut trees and vines. Taxact 1040nr   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Taxact 1040nr ADS required for some farmers. Taxact 1040nr   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Taxact 1040nr You must use ADS for all property you place in service in any year the election is in effect. Taxact 1040nr See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Taxact 1040nr Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Taxact 1040nr You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Taxact 1040nr However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Taxact 1040nr Attach the election to the amended return and write “Filed pursuant to section 301. Taxact 1040nr 9100-2” on the election statement. Taxact 1040nr File the amended return at the same address you filed the original return. Taxact 1040nr Once you make the election, you cannot change it. Taxact 1040nr If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Taxact 1040nr However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Taxact 1040nr 150% election. Taxact 1040nr   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Taxact 1040nr Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Taxact 1040nr Straight line election. Taxact 1040nr   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Taxact 1040nr Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Taxact 1040nr Election of ADS. Taxact 1040nr   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Taxact 1040nr ADS uses the straight line method of depreciation over fixed ADS recovery periods. Taxact 1040nr Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Taxact 1040nr   Make the election by completing line 20 in Part III of Form 4562. Taxact 1040nr Farm property. Taxact 1040nr   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Taxact 1040nr The straight line method over a GDS recovery period. Taxact 1040nr The straight line method over an ADS recovery period. Taxact 1040nr Table 4-1. Taxact 1040nr Depreciation Methods Note. Taxact 1040nr The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Taxact 1040nr Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction GDS using 150% DB • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1 GDS using SL • Nonresidential real property • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • Provides for equal yearly deductions (except for the first and last years) ADS using SL • Listed property used 50% or less for business • Property used predominantly outside the U. Taxact 1040nr S. Taxact 1040nr  • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Taxact 1040nr 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Taxact 1040nr Then, you are ready to figure your depreciation deduction. Taxact 1040nr You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Taxact 1040nr Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Taxact 1040nr These percentage tables are in Appendix A near the end of this publication. Taxact 1040nr Which table to use. Taxact 1040nr    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Taxact 1040nr The percentage tables immediately follow the guide. Taxact 1040nr Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Taxact 1040nr You must apply the rates in the percentage tables to your property's unadjusted basis. Taxact 1040nr You cannot use the percentage tables for a short tax year. Taxact 1040nr See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Taxact 1040nr Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Taxact 1040nr You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Taxact 1040nr Basis adjustments other than those made due to the items listed in (4) include an increase in basis for the recapture of a clean-fuel deduction or credit and a reduction in basis for a casualty loss. Taxact 1040nr Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Taxact 1040nr   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Taxact 1040nr For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Taxact 1040nr See Figuring the Deduction Without Using the Tables, later. Taxact 1040nr Basis adjustment due to casualty loss. Taxact 1040nr   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Taxact 1040nr For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Taxact 1040nr See Figuring the Deduction Without Using the Tables, later. Taxact 1040nr Example. Taxact 1040nr On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Taxact 1040nr It cost $39,000 and she elected a section 179 deduction of $24,000. Taxact 1040nr She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Taxact 1040nr Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Taxact 1040nr She figured her MACRS depreciation deduction using the percentage tables. Taxact 1040nr For 2012, her MACRS depreciation deduction was $268. Taxact 1040nr In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Taxact 1040nr She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Taxact 1040nr Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Taxact 1040nr She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Taxact 1040nr She must now figure her depreciation for 2013 without using the percentage tables. Taxact 1040nr Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Taxact 1040nr Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Taxact 1040nr However, you do reduce your original basis by other amounts, including the following. Taxact 1040nr Any amortization taken on the property. Taxact 1040nr Any section 179 deduction claimed. Taxact 1040nr Any special depreciation allowance taken on the property. Taxact 1040nr For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Taxact 1040nr If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Taxact 1040nr MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Taxact 1040nr Use a separate worksheet for each item of property. Taxact 1040nr Then, use the information from this worksheet to prepare Form 4562. Taxact 1040nr Do not use this worksheet for automobiles. Taxact 1040nr Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Taxact 1040nr MACRS Worksheet Part I   1. Taxact 1040nr MACRS system (GDS or ADS)   2. Taxact 1040nr Property class   3. Taxact 1040nr Date placed in service   4. Taxact 1040nr Recovery period   5. Taxact 1040nr Method and convention   6. Taxact 1040nr Depreciation rate (from tables)   Part II   7. Taxact 1040nr Cost or other basis* $     8. Taxact 1040nr Business/investment use   %   9. Taxact 1040nr Multiply line 7 by line 8   $ 10. Taxact 1040nr Total claimed for section 179 deduction and other items   $ 11. Taxact 1040nr Subtract line 10 from line 9. Taxact 1040nr This is your tentative basis for depreciation   $ 12. Taxact 1040nr Multiply line 11 by . Taxact 1040nr 50 if the 50% special depreciation allowance applies. Taxact 1040nr This is your special depreciation allowance. Taxact 1040nr Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   $ 13. Taxact 1040nr Subtract line 12 from line 11. Taxact 1040nr This is your basis for depreciation     14. Taxact 1040nr Depreciation rate (from line 6)     15. Taxact 1040nr Multiply line 13 by line 14. Taxact 1040nr This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Taxact 1040nr The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Taxact 1040nr Example. Taxact 1040nr You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Taxact 1040nr You use the furniture only for business. Taxact 1040nr This is the only property you placed in service this year. Taxact 1040nr You did not elect a section 179 deduction and the property is not qualified property for purposes of claiming a special depreciation allowance so your property's unadjusted basis is its cost, $10,000. Taxact 1040nr You use GDS and the half-year convention to figure your depreciation. Taxact 1040nr You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Taxact 1040nr Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Taxact 1040nr You figure your depreciation deduction using the MACRS worksheet as follows. Taxact 1040nr MACRS Worksheet Part I 1. Taxact 1040nr MACRS system (GDS or ADS) GDS 2. Taxact 1040nr Property class 7-year 3. Taxact 1040nr Date placed in service 8/11/13 4. Taxact 1040nr Recovery period 7-Year 5. Taxact 1040nr Method and convention 200%DB/Half-Year 6. Taxact 1040nr Depreciation rate (from tables) . Taxact 1040nr 1429 Part II 7. Taxact 1040nr Cost or other basis* $10,000     8. Taxact 1040nr Business/investment use 100 %   9. Taxact 1040nr Multiply line 7 by line 8   $10,000 10. Taxact 1040nr Total claimed for section 179 deduction and other items   -0- 11. Taxact 1040nr Subtract line 10 from line 9. Taxact 1040nr This is your tentative basis for depreciation   $10,000 12. Taxact 1040nr Multiply line 11 by . Taxact 1040nr 50 if the 50% special depreciation allowance applies. Taxact 1040nr This is your special depreciation allowance. Taxact 1040nr Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   -0- 13. Taxact 1040nr Subtract line 12 from line 11. Taxact 1040nr This is your basis for depreciation   $10,000 14. Taxact 1040nr Depreciation rate (from line 6)   . Taxact 1040nr 1429 15. Taxact 1040nr Multiply line 13 by line 14. Taxact 1040nr This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Taxact 1040nr If there are no adjustments to the basis of the property other than depreciation, your depreciation deduction for each subsequent year of the recovery period will be as follows. Taxact 1040nr Year   Basis Percentage Deduction 2014 $ 10,000 24. Taxact 1040nr 49%   $2,449   2015   10,000 17. Taxact 1040nr 49   1,749   2016   10,000 12. Taxact 1040nr 49   1,249   2017   10,000 8. Taxact 1040nr 93   893   2018   10,000 8. Taxact 1040nr 92   892   2019   10,000 8. Taxact 1040nr 93   893   2020   10,000 4. Taxact 1040nr 46   446   Examples The following examples are provided to show you how to use the percentage tables. Taxact 1040nr In both examples, assume the following. Taxact 1040nr You use the property only for business. Taxact 1040nr You use the calendar year as your tax year. Taxact 1040nr You use GDS for all the properties. Taxact 1040nr Example 1. Taxact 1040nr You bought a building and land for $120,000 and placed it in service on March 8. Taxact 1040nr The sales contract showed that the building cost $100,000 and the land cost $20,000. Taxact 1040nr It is nonresidential real property. Taxact 1040nr The building's unadjusted basis is its original cost, $100,000. Taxact 1040nr You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Taxact 1040nr March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Taxact 1040nr Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Taxact 1040nr 033%   $2,033   2nd   100,000 2. Taxact 1040nr 564   2,564   3rd   100,000 2. Taxact 1040nr 564   2,564   Example 2. Taxact 1040nr During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Taxact 1040nr You placed the machine in service in January, the furniture in September, and the computer in October. Taxact 1040nr You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Taxact 1040nr You placed property in service during the last 3 months of the year, so you must first determine if you have to use the mid-quarter convention. Taxact 1040nr The total bases of all property you placed in service during the year is $10,000. Taxact 1040nr The $5,000 basis of the computer, which you placed in service during the last 3 months (the fourth quarter) of your tax year, is more than 40% of the total bases of all property ($10,000) you placed in service during the year. Taxact 1040nr Therefore, you must use the mid-quarter convention for all three items. Taxact 1040nr You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Taxact 1040nr The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Taxact 1040nr The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Taxact 1040nr Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Taxact 1040nr Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Taxact 1040nr Year Property Basis Percentage Deduction 1st Machine $4,000 25. Taxact 1040nr 00 $1,000   2nd Machine 4,000 21. Taxact 1040nr 43 857   1st Furniture 1,000 10. Taxact 1040nr 71 107   2nd Furniture 1,000 25. Taxact 1040nr 51 255   1st Computer 5,000 5. Taxact 1040nr 00 250   2nd Computer 5,000 38. Taxact 1040nr 00 1,900   Sale or Other Disposition Before the Recovery Period Ends If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. Taxact 1040nr You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. Taxact 1040nr After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Taxact 1040nr Half-year convention used. Taxact 1040nr   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Taxact 1040nr Mid-quarter convention used. Taxact 1040nr   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Taxact 1040nr Quarter Percentage First 12. Taxact 1040nr 5% Second 37. Taxact 1040nr 5 Third 62. Taxact 1040nr 5 Fourth 87. Taxact 1040nr 5 Example. Taxact 1040nr On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Taxact 1040nr You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Taxact 1040nr Your unadjusted basis for the property was $10,000. Taxact 1040nr You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Taxact 1040nr Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Taxact 1040nr Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Taxact 1040nr 80% of $10,000). Taxact 1040nr You disposed of the property on April 6, 2013. Taxact 1040nr To determine your depreciation deduction for 2013, first figure the deduction for the full year. Taxact 1040nr This is $1,368 (13. Taxact 1040nr 68% of $10,000). Taxact 1040nr April is in the second quarter of the year, so you multiply $1,368 by 37. Taxact 1040nr 5% to get your depreciation deduction of $513 for 2013. Taxact 1040nr Mid-month convention used. Taxact 1040nr   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Taxact 1040nr The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Taxact 1040nr The denominator is 12. Taxact 1040nr Example. Taxact 1040nr On July 2, 2011, you purchased and placed in service residential rental property. Taxact 1040nr The property cost $100,000, not including the cost of land. Taxact 1040nr You used Table A-6 to figure your MACRS depreciation for this property. Taxact 1040nr You sold the property on March 2, 2013. Taxact 1040nr You file your tax return based on the calendar year. Taxact 1040nr A full year of depreciation for 2013 is $3,636. Taxact 1040nr This is $100,000 multiplied by . Taxact 1040nr 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Taxact 1040nr You then apply the mid-month convention for the 2½ months of use in 2013. Taxact 1040nr Treat the month of disposition as one-half month of use. Taxact 1040nr Multiply $3,636 by the fraction, 2. Taxact 1040nr 5 over 12, to get your 2013 depreciation deduction of $757. Taxact 1040nr 50. Taxact 1040nr Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Taxact 1040nr Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Taxact 1040nr Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Taxact 1040nr Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Taxact 1040nr You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Taxact 1040nr The straight line method is explained later. Taxact 1040nr You figure depreciation for the year you place property in service as follows. Taxact 1040nr Multiply your adjusted basis in the property by the declining balance rate. Taxact 1040nr Apply the applicable convention. Taxact 1040nr You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Taxact 1040nr Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Taxact 1040nr Multiply this new adjusted basis by the same declining balance rate used in earlier years. Taxact 1040nr If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Taxact 1040nr Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Taxact 1040nr Declining balance rate. Taxact 1040nr   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Taxact 1040nr For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Taxact 1040nr 00 (200%) by 3 to get 0. Taxact 1040nr 6667, or a 66. Taxact 1040nr 67% declining balance rate. Taxact 1040nr For 15-year property depreciated using the 150% declining balance method, divide 1. Taxact 1040nr 50 (150%) by 15 to get 0. Taxact 1040nr 10, or a 10% declining balance rate. Taxact 1040nr   The following table shows the declining balance rate for each property class and the first year for which the straight line method gives an equal or greater deduction. Taxact 1040nr Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Taxact 1040nr 667% 3rd 5-year 200% DB 40. Taxact 1040nr 0 4th 7-year 200% DB 28. Taxact 1040nr 571 5th 10-year 200% DB 20. Taxact 1040nr 0 7th 15-year 150% DB 10. Taxact 1040nr 0 7th 20-year 150% DB 7. Taxact 1040nr 5 9th Straight Line Method When using the straight line method, you apply a different depreciation rate each year to the adjusted basis of your property. Taxact 1040nr You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Taxact 1040nr You figure depreciation for the year you place property in service as follows. Taxact 1040nr Multiply your adjusted basis in the property by the straight line rate. Taxact 1040nr Apply the applicable convention. Taxact 1040nr You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Taxact 1040nr Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Taxact 1040nr Determine the depreciation rate for the year. Taxact 1040nr Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Taxact 1040nr If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Taxact 1040nr Straight line rate. Taxact 1040nr   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Taxact 1040nr When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Taxact 1040nr If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Taxact 1040nr 0 (100%). Taxact 1040nr Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Taxact 1040nr It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Taxact 1040nr See Straight line rate in the previous discussion. Taxact 1040nr Use the applicable convention as explained in the following discussions. Taxact 1040nr Half-year convention. Taxact 1040nr   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Taxact 1040nr You deduct a full year of depreciation for any other year during the recovery period. Taxact 1040nr   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Taxact 1040nr If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Taxact 1040nr If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final 6 months of the recovery period is the amount of your unrecovered basis in the property. Taxact 1040nr Mid-quarter convention. Taxact 1040nr   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Taxact 1040nr   A quarter of a full 12-month tax year is a period of 3 months. Taxact 1040nr The first quarter in a year begins on the first day of the tax year. Taxact 1040nr The second quarter begins on the first day of the fourth month of the tax year. Taxact 1040nr The third quarter begins on the first day of the seventh month of the tax year. Taxact 1040nr The fourth quarter begins on the first day of the tenth month of the tax year. Taxact 1040nr A calendar year is divided into the following quarters. Taxact 1040nr Quarter Months First January, February, March Second April, May, June Third July, August, September Fourth October, November, December   Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by the percentage listed below for the quarter you place the property in service. Taxact 1040nr Quarter Percentage First 87. Taxact 1040nr 5% Second 62. Taxact 1040nr 5 Third 37. Taxact 1040nr 5 Fourth 12. Taxact 1040nr 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Taxact 1040nr Quarter Percentage First 12. Taxact 1040nr 5% Second 37. Taxact 1040nr 5 Third 62. Taxact 1040nr 5 Fourth 87. Taxact 1040nr 5   If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final quarter of the recovery period is the amount of your unrecovered basis in the property. Taxact 1040nr Mid-month convention. Taxact 1040nr   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Taxact 1040nr Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Taxact 1040nr The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Taxact 1040nr 5). Taxact 1040nr The denominator is 12. Taxact 1040nr   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Taxact 1040nr If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Taxact 1040nr Example. Taxact 1040nr You use the calendar year and place nonresidential real property in service in August. Taxact 1040nr The property is in service 4 full months (September, October, November, and December). Taxact 1040nr Your numerator is 4. Taxact 1040nr 5 (4 full months plus 0. Taxact 1040nr 5). Taxact 1040nr You multiply the depreciation for a full year by 4. Taxact 1040nr 5/12, or 0. Taxact 1040nr 375. Taxact 1040nr Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Taxact 1040nr Figures are rounded for purposes of the examples. Taxact 1040nr Assume for all the examples that you use a calendar year as your tax year. Taxact 1040nr Example 1—200% DB method and half-year convention. Taxact 1040nr In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Taxact 1040nr You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Taxact 1040nr You use GDS and the 200% declining balance (DB) method to figure your depreciation. Taxact 1040nr When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Taxact 1040nr You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Taxact 1040nr First year. Taxact 1040nr You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Taxact 1040nr The result is 40%. Taxact 1040nr You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Taxact 1040nr You apply the half-year convention by dividing the result ($400) by 2. Taxact 1040nr Depreciation for the first year under the 200% DB method is $200. Taxact 1040nr You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Taxact 1040nr The result is 20%. Taxact 1040nr You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Taxact 1040nr You apply the half-year convention by dividing the result ($200) by 2. Taxact 1040nr Depreciation for the first year under the SL method is $100. Taxact 1040nr The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Taxact 1040nr Second year. Taxact 1040nr You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Taxact 1040nr You multiply the result ($800) by the DB rate (40%). Taxact 1040nr Depreciation for the second year under the 200% DB method is $320. Taxact 1040nr You figure the SL depreciation rate by dividing 1 by 4. Taxact 1040nr 5, the number of years remaining in the recovery period. Taxact 1040nr (Based on the half-year convention, you used only half a year of the recovery period in the first year. Taxact 1040nr ) You multiply the reduced adjusted basis ($800) by the result (22. Taxact 1040nr 22%). Taxact 1040nr Depreciation under the SL method for the second year is $178. Taxact 1040nr The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Taxact 1040nr Third year. Taxact 1040nr You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Taxact 1040nr You multiply the result ($480) by the DB rate (40%). Taxact 1040nr Depreciation for the third year under the 200% DB method is $192. Taxact 1040nr You figure the SL depreciation rate by dividing 1 by 3. Taxact 1040nr 5. Taxact 1040nr You multiply the reduced adjusted basis ($480) by the result (28. Taxact 1040nr 57%). Taxact 1040nr Depreciation under the SL method for the third year is $137. Taxact 1040nr The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Taxact 1040nr Fourth year. Taxact 1040nr You reduce the adjusted basis ($480) by the de
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The Taxact 1040nr

Taxact 1040nr Index A Alien Resident, Resident alien. Taxact 1040nr American Institute in Taiwan, U. Taxact 1040nr S. Taxact 1040nr employees of, American Institute in Taiwan. Taxact 1040nr American Samoa, possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Apprentices, treaty benefits for, Common Benefits Assistance (see Tax help) B Binational social security agreements, Bilateral Social Security (Totalization) Agreements Blocked income, Blocked Income Bona fide residence test Defined, Bona Fide Residence Test First year, Bona fide resident for part of a year. Taxact 1040nr Last year, Bona fide resident for part of a year. Taxact 1040nr Meeting the requirements, Publication 54 - Additional Material Qualifying for, Bona fide residence. Taxact 1040nr , Reassignment. Taxact 1040nr Treaty provisions, Special agreements and treaties. Taxact 1040nr Voting by absentee ballot, Effect of voting by absentee ballot. Taxact 1040nr Waiver of time requirements, Waiver of Time Requirements, U. Taxact 1040nr S. Taxact 1040nr Travel Restrictions C Camps, foreign, Foreign camps. Taxact 1040nr Carryover of housing deduction, Carryover. Taxact 1040nr Change of address, Reminders Choosing the exclusion, Choosing the Exclusion, When You Can Choose the Exclusion Clergy, self-employment tax on, Members of the Clergy Community income, Community income. Taxact 1040nr Competent authority assistance, Competent Authority Assistance Contributions To foreign charitable organizations, Contributions to Foreign Charitable Organizations To IRAs, Contributions to Individual Retirement Arrangements Conventions, income tax, Purpose of Tax Treaties Credit Earned income, Earned income credit. Taxact 1040nr , Earned income credit. Taxact 1040nr Foreign tax, Foreign tax credit. Taxact 1040nr , Taxes of Foreign Countries and U. Taxact 1040nr S. Taxact 1040nr Possessions, Deduction for Other Foreign Taxes, Common Benefits Related to excluded income, Items Related to Excluded Income Currency Foreign, Foreign Currency D Deductions Contributions to foreign charitable organizations, Contributions to Foreign Charitable Organizations Foreign taxes, Taxes of Foreign Countries and U. Taxact 1040nr S. Taxact 1040nr Possessions, Deduction for Other Foreign Taxes, Common Benefits, Publication 54 - Additional Material Housing, foreign, Foreign Housing Deduction IRA contributions, Contributions to Individual Retirement Arrangements Moving expenses, Moving Expenses, Forms To File Related to excluded income, Items Related to Excluded Income Reporting, How To Report Deductions Dependents Exemption for, Exemptions, Publication 54 - Additional Material Individual taxpayer identification number (ITIN), Social security number. Taxact 1040nr Social security number, Social security number. Taxact 1040nr Deposit of foreign currency with disbursing officer, Deposit of foreign currency with disbursing officer. Taxact 1040nr E Earned income Foreign, Foreign Earned Income, Foreign camps. Taxact 1040nr , Publication 54 - Additional Material Source of, Source of Earned Income Types of, Earned and Unearned Income, Storage expense reimbursements. Taxact 1040nr Earned income credit, Earned income credit. Taxact 1040nr , Earned income credit. Taxact 1040nr Employer-provided amounts, Employer-provided amounts. Taxact 1040nr Estimated tax, Estimated Tax Exclusion Foreign earned income, Foreign Earned Income Exclusion, When You Can Choose the Exclusion Housing, Foreign Housing Exclusion, Choosing the exclusion. Taxact 1040nr Meals and lodging, Exclusion of Meals and Lodging U. Taxact 1040nr S. Taxact 1040nr possessions, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Exemptions Dependents, Exemptions, Publication 54 - Additional Material Spouse, Exemptions, Publication 54 - Additional Material Extensions Filing income tax return, Extensions, Return filed before test is met. Taxact 1040nr Meeting bona fide residence or physical presence test, Extension of time to meet tests. Taxact 1040nr F Fellowships, Scholarships and fellowships. Taxact 1040nr Figuring estimated tax on nonconvertible foreign income, Figuring estimated tax on nonconvertible foreign currency. Taxact 1040nr Figuring U. Taxact 1040nr S. Taxact 1040nr income tax, Figuring actual tax. Taxact 1040nr Filing information Estimated tax, Estimated Tax Filing requirements, Filing Requirements Nonresident spouse treated as resident, Nonresident Alien Spouse Treated as a Resident, Foreign earned income exclusion. Taxact 1040nr Filing requirements By filing status, Filing Requirements Foreign currency, Foreign Currency When to file and pay, When To File and Pay, Return filed before test is met. Taxact 1040nr , Publication 54 - Additional Material Where to file, Where To File, Publication 54 - Additional Material Foreign Camps, Foreign camps. Taxact 1040nr Country, defined, Foreign Country Currency, Foreign Currency Earned income, Foreign Earned Income, Foreign camps. Taxact 1040nr , Publication 54 - Additional Material Household, second, Second foreign household. Taxact 1040nr Foreign currency, deposit with disbursing officer, Deposit of foreign currency with disbursing officer. Taxact 1040nr Foreign earned income Defined, Foreign Earned Income, More information. Taxact 1040nr U. Taxact 1040nr S. Taxact 1040nr Government employees, U. Taxact 1040nr S. Taxact 1040nr Government Employees, More information. Taxact 1040nr Foreign earned income exclusion Choosing, Choosing the Exclusion, When You Can Choose the Exclusion Defined, Foreign Earned Income Exclusion Earned income credit, Earned income credit. Taxact 1040nr Foreign tax credit, Foreign tax credit or deduction. Taxact 1040nr Income received after year earned, Paid in year following work. Taxact 1040nr , Example. Taxact 1040nr Limit, Limit on Excludable Amount, Physical presence test. Taxact 1040nr , Publication 54 - Additional Material Maximum exclusion, Limit on Excludable Amount, Physical presence test. Taxact 1040nr Part-year exclusion, Part-year exclusion. Taxact 1040nr Physical presence test, maximum exclusion, Physical presence test. Taxact 1040nr Requirements, Who Qualifies for the Exclusions and the Deduction?, Foreign camps. Taxact 1040nr Revoking choice, Revoking the Exclusion Foreign housing exclusion Earned income credit, Earned income credit. Taxact 1040nr Foreign tax credit, Foreign tax credit or deduction. Taxact 1040nr Foreign housing exclusion/deduction Carryover of deduction, Carryover. Taxact 1040nr Deduction, figuring, Foreign Housing Deduction Exclusion, figuring, Foreign Housing Exclusion, Choosing the exclusion. Taxact 1040nr Housing amount, Housing Amount Housing expenses, Housing expenses. Taxact 1040nr Married couples, Married Couples Requirements, Who Qualifies for the Exclusions and the Deduction?, Foreign camps. Taxact 1040nr Second foreign household, Second foreign household. Taxact 1040nr Foreign tax credit Earned income exclusion, Foreign tax credit or deduction. Taxact 1040nr , Foreign tax credit or deduction. Taxact 1040nr Foreign taxes Credit for, Foreign tax credit. Taxact 1040nr , Taxes of Foreign Countries and U. Taxact 1040nr S. Taxact 1040nr Possessions, Deduction for Other Foreign Taxes, Common Benefits Deduction for, Taxes of Foreign Countries and U. Taxact 1040nr S. Taxact 1040nr Possessions, Deduction for Other Foreign Taxes, Common Benefits, Publication 54 - Additional Material Paid on excluded income, Foreign taxes paid on excluded income. Taxact 1040nr Form 1040-ES, Estimated Tax 1040X, Return filed before test is met. Taxact 1040nr , How To Make the Choice 1116, Credit for Foreign Income Taxes 2032, Foreign affiliate. Taxact 1040nr 2350, How to get an extension. Taxact 1040nr 2555, Choosing the Exclusion, Form 2555 and Form 2555-EZ, Form 2555 2555-EZ, Choosing the Exclusion, Form 2555 and Form 2555-EZ, Form 2555 3115, Blocked Income 3903, Forms To File 4361, Members of the Clergy 4563, American Samoa. Taxact 1040nr 4868, Automatic 6-month extension. Taxact 1040nr 673, Statement. Taxact 1040nr 8689, Non-USVI resident with USVI income. Taxact 1040nr 8822, Reminders W-4, Foreign tax credit. Taxact 1040nr Free tax services, Free help with your tax return. Taxact 1040nr Frequently asked questions (FAQs), Publication 54 - Additional Material Fulbright grant, Fulbright Grant, Publication 54 - Additional Material G General tax questions, Publication 54 - Additional Material Green card test, Resident alien. Taxact 1040nr Guam Possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residents of, Resident of Guam. Taxact 1040nr Where to file, Resident of Guam. Taxact 1040nr H Help (see Tax help) Housing Amount, Housing Amount, Self-employed and employer-provided amounts. Taxact 1040nr Deduction, Foreign Housing Exclusion and Deduction, Foreign Housing Deduction Exclusion, Foreign Housing Exclusion and Deduction, Choosing the exclusion. Taxact 1040nr Expenses, Housing expenses. Taxact 1040nr I Income Apprentices, treaty benefits for, Common Benefits Artist, Income of an artist. Taxact 1040nr Blocked, Blocked Income Community, Community income. Taxact 1040nr Corporation, Income from a corporation. Taxact 1040nr Earned, Foreign Earned Income, Foreign camps. Taxact 1040nr , Publication 54 - Additional Material Employer's property or facilities, use of, Use of employer's property or facilities. Taxact 1040nr Investment, treaty benefits for, Common Benefits Partnership, Income from a sole proprietorship or partnership. Taxact 1040nr Pensions and annuities, Pensions and annuities. Taxact 1040nr , Common Benefits Personal service, treaty benefits for, Common Benefits Professional fees, Professional fees. Taxact 1040nr Professors, treaty benefits for, Common Benefits Railroad retirement benefits, Publication 54 - Additional Material Reimbursement of employee expenses, Reimbursement of employee expenses. Taxact 1040nr Reimbursement of moving expenses, Reimbursement of moving expenses. Taxact 1040nr Rental, Rental income. Taxact 1040nr Royalties, Royalties. Taxact 1040nr Social security benefits, Publication 54 - Additional Material Sole proprietorship, Income from a sole proprietorship or partnership. Taxact 1040nr Source of, Source of Earned Income Stock options, Stock options. Taxact 1040nr Students, treaty benefits for, Common Benefits Teachers, treaty benefits for, Common Benefits Trainees, treaty benefits for, Common Benefits Unearned, Earned and Unearned Income Indefinite assignment, Temporary or Indefinite Assignment Individual retirement arrangements (IRAs), Contributions to Individual Retirement Arrangements Individual taxpayer identification number (ITIN), Social security number. Taxact 1040nr Investment income, treaty benefits for, Common Benefits IRAs, Contributions to Individual Retirement Arrangements L Limit on Foreign housing deduction, Limit Housing expenses, Limit on housing expenses. Taxact 1040nr Income exclusion, Limit on Excludable Amount, Physical presence test. Taxact 1040nr Lodging, exclusion of, Exclusion of Meals and Lodging M Married couples, Married Couples Meals and lodging, exclusion of, Exclusion of Meals and Lodging Moving Allocating expenses, Allocation of Moving Expenses Deducting expenses, Moving Expenses, Forms To File Reimbursement of expenses, Reimbursement of moving expenses. Taxact 1040nr N Nonresident spouse Social security number, Social Security Number (SSN) Treated as resident, Nonresident Alien Spouse Treated as a Resident, Foreign earned income exclusion. Taxact 1040nr Northern Mariana Islands Possession exclusion, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residents of, Resident of the Commonwealth of the Northern Mariana Islands. Taxact 1040nr Where to file, Resident of the Commonwealth of the Northern Mariana Islands. Taxact 1040nr P Part-year exclusion, Part-year exclusion. Taxact 1040nr Pay for personal services, Earned income. Taxact 1040nr , Common Benefits Paying U. Taxact 1040nr S. Taxact 1040nr tax in foreign currency, Paying U. Taxact 1040nr S. Taxact 1040nr tax in foreign currency. Taxact 1040nr Payment of tax, When To File and Pay Penalties and interest, Publication 54 - Additional Material Pensions and annuities Income from, Pensions and annuities. Taxact 1040nr , Common Benefits Withholding from, Withholding from pension payments. Taxact 1040nr Physical presence test 12-month period, How to figure the 12-month period. Taxact 1040nr Defined, Physical Presence Test Maximum exclusion, Physical presence test. Taxact 1040nr Meeting the requirements, Publication 54 - Additional Material Waiver of time requirements, Waiver of Time Requirements, U. Taxact 1040nr S. Taxact 1040nr Travel Restrictions Professors, treaty benefits for, Common Benefits Publications (see Tax help) Puerto Rico Possession exclusion, Puerto Rico and U. Taxact 1040nr S. Taxact 1040nr Virgin Islands Residents of, Puerto Rico. Taxact 1040nr Q Questions and answers, Publication 54 - Additional Material R Railroad retirement benefits, Publication 54 - Additional Material Reimbursement Accountable plan, Accountable plan. Taxact 1040nr Employee expenses, Reimbursement of employee expenses. Taxact 1040nr Moving expenses, Reimbursement of moving expenses. Taxact 1040nr Resident alien defined, Resident alien. Taxact 1040nr Revoking choice to exclude, Revoking the Exclusion S Scholarship and fellowship grants, Publication 54 - Additional Material Scholarships, Scholarships and fellowships. Taxact 1040nr Second foreign household, Second foreign household. Taxact 1040nr , Married Couples Self-employment tax Clergy, Members of the Clergy Exemption from, Exemption From Social Security and Medicare Taxes How to pay, Publication 54 - Additional Material Who must pay, Who Must Pay Self-Employment Tax? Social security and Medicare taxes, Social Security and Medicare Taxes Social security benefits, Publication 54 - Additional Material Social security number Dependents, Social security number. Taxact 1040nr Nonresident spouse, Social Security Number (SSN) Source of earned income, Source of Earned Income Spouse, exemption for, Exemptions, Publication 54 - Additional Material Students, treaty benefits for, Common Benefits Substantial presence test, Resident alien. Taxact 1040nr T Taiwan, American Institute in, American Institute in Taiwan. Taxact 1040nr Tax help, How To Get Tax Help Tax home, Tax Home in Foreign Country, Temporary or Indefinite Assignment Tax treaties Benefits of, Common Benefits, More information on treaties. Taxact 1040nr Competent authority assistance, Competent Authority Assistance Determining residence, Special agreements and treaties. Taxact 1040nr Obtaining copies of, Obtaining Copies of Tax Treaties Purpose of, Purpose of Tax Treaties Teachers, treaty benefits for, Common Benefits Temporary assignment, expenses, Temporary or Indefinite Assignment Totalization agreements, Bilateral Social Security (Totalization) Agreements Trainees, treaty benefits for, Common Benefits Travel restrictions, U. Taxact 1040nr S. Taxact 1040nr Travel Restrictions Treaties (see Tax treaties) TTY/TDD information, How To Get Tax Help U U. Taxact 1040nr S. Taxact 1040nr Government employees, U. Taxact 1040nr S. Taxact 1040nr Government Employees, More information. Taxact 1040nr U. Taxact 1040nr S. Taxact 1040nr Virgin Islands Possession exclusion, Puerto Rico and U. Taxact 1040nr S. Taxact 1040nr Virgin Islands V Virgin Islands Nonresidents of, Non-USVI resident with USVI income. Taxact 1040nr Residents of, Resident of U. Taxact 1040nr S. Taxact 1040nr Virgin Islands (USVI). Taxact 1040nr Where to file, Resident of U. Taxact 1040nr S. Taxact 1040nr Virgin Islands (USVI). Taxact 1040nr W Waiver of time requirements, Waiver of Time Requirements, U. Taxact 1040nr S. Taxact 1040nr Travel Restrictions When to file and pay, When To File and Pay, Return filed before test is met. Taxact 1040nr , Publication 54 - Additional Material Where to file Claiming exclusion/deduction, Where To File Commonwealth of the Northern Mariana Islands residents, Resident of the Commonwealth of the Northern Mariana Islands. Taxact 1040nr Guam residents, Resident of Guam. Taxact 1040nr No legal residence in U. Taxact 1040nr S. Taxact 1040nr , Where To File Virgin Islands residents, nonresidents, Resident of U. Taxact 1040nr S. Taxact 1040nr Virgin Islands (USVI). Taxact 1040nr Withholding Income tax, Income Tax Withholding , Publication 54 - Additional Material Pension payments, Withholding from pension payments. Taxact 1040nr Prev  Up     Home   More Online Publications