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Where Get State Tax Forms

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Where Get State Tax Forms

Where get state tax forms 15. Where get state tax forms   Estimated Tax Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Special Estimated Tax Rules for Qualified FarmersQualified Farmer Special Rules for Qualified Farmers Estimated Tax Penalty for 2013 What's New Net Investment Income Tax. Where get state tax forms . Where get state tax forms  For tax years beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Where get state tax forms NIIT is a 3. Where get state tax forms 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income (MAGI) over the threshold amount. Where get state tax forms NIIT may need to be included when calculating your estimated tax. Where get state tax forms For more information, see Publication 505,Tax Withholding and Estimated Tax. Where get state tax forms Additional Medicare Tax. Where get state tax forms  For tax years beginning in 2013, a 0. Where get state tax forms 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income over a threshold amount based on your filing status. Where get state tax forms You may need to include this amount when figuring your estimated tax. Where get state tax forms For more information, see Publication 505. Where get state tax forms Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Where get state tax forms See Publication 505 for the general rules and requirements for paying estimated tax. Where get state tax forms If you are a qualified farmer, defined below, you are subject to the special rules covered in this chapter for paying estimated tax. Where get state tax forms Topics - This chapter discusses: Special estimated tax rules for qualified farmers Estimated tax penalty Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. Where get state tax forms S. Where get state tax forms Individual Income Tax Return 1040-ES Estimated Tax for Individuals 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 16 for information about getting publications and forms. Where get state tax forms Special Estimated Tax Rules for Qualified Farmers Special rules apply to the payment of estimated tax by individuals who are qualified farmers. Where get state tax forms If you are not a qualified farmer as defined next, see Publication 505 for the estimated tax rules that apply. Where get state tax forms Qualified Farmer An individual is a qualified farmer for 2013 if at least two-thirds of his or her gross income from all sources for 2012 or 2013 was from farming. Where get state tax forms See Gross Income , next, for information on how to figure your gross income from all sources and see Gross Income From Farming , later, for information on how to figure your gross income from farming. Where get state tax forms See also Percentage From Farming , later, for information on how to determine the percentage of your gross income from farming. Where get state tax forms Gross Income Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. Where get state tax forms On a joint return, you must add your spouse's gross income to your gross income. Where get state tax forms To decide whether two-thirds of your gross income was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return. Where get state tax forms Wages, salaries, tips, etc. Where get state tax forms Taxable interest. Where get state tax forms Ordinary dividends. Where get state tax forms Taxable refunds, credits, or offsets of state and local income taxes. Where get state tax forms Alimony. Where get state tax forms Gross business income from Schedule C (Form 1040). Where get state tax forms Gross business receipts from Schedule C-EZ (Form 1040). Where get state tax forms Capital gains from Schedule D (Form 1040). Where get state tax forms Losses are not netted against gains. Where get state tax forms Gains on sales of business property. Where get state tax forms Taxable IRA distributions, pensions, annuities, and social security benefits. Where get state tax forms Gross rental income from Schedule E (Form 1040). Where get state tax forms Gross royalty income from Schedule E (Form 1040). Where get state tax forms Taxable net income from an estate or trust reported on Schedule E (Form 1040). Where get state tax forms Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040). Where get state tax forms Gross farm rental income from Form 4835. Where get state tax forms Gross farm income from Schedule F (Form 1040). Where get state tax forms Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065). Where get state tax forms Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120S). Where get state tax forms Unemployment compensation. Where get state tax forms Other income not included with any of the items listed above. Where get state tax forms Gross Income From Farming Gross income from farming is income from cultivating the soil or raising agricultural commodities. Where get state tax forms It includes the following amounts. Where get state tax forms Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Where get state tax forms Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Where get state tax forms Crop shares for the use of your land. Where get state tax forms Gains from sales of draft, breeding, dairy, or sporting livestock. Where get state tax forms Gross income from farming is the total of the following amounts from your tax return. Where get state tax forms Gross farm income from Schedule F (Form 1040). Where get state tax forms Gross farm rental income from Form 4835. Where get state tax forms Gross farm income from Schedule E (Form 1040), Parts II and III. Where get state tax forms Gains from the sale of livestock used for draft, breeding, sport, or dairy purposes reported on Form 4797. Where get state tax forms For more information about income from farming, see chapter 3. Where get state tax forms Farm income does not include any of the following: Wages you receive as a farm employee. Where get state tax forms Income you receive from contract grain harvesting and hauling with workers and machines you furnish. Where get state tax forms Gains you receive from the sale of farm land and depreciable farm equipment. Where get state tax forms Percentage From Farming Figure your gross income from all sources, discussed earlier. Where get state tax forms Then figure your gross income from farming, discussed earlier. Where get state tax forms Divide your farm gross income by your total gross income to determine the percentage of gross income from farming. Where get state tax forms Example 1. Where get state tax forms Jane Smith had the following total gross income and farm gross income amounts in 2013. Where get state tax forms Gross Income   Total Farm Taxable interest $3,000   Dividends 500   Rental income (Sch E) 41,500   Farm income (Sch F) 75,000 $75,000 Gain (Form 4797) 5,000 5,000 Total $125,000 $80,000 Schedule D showed gain from the sale of dairy cows carried over from Form 4797 ($5,000) in addition to a loss from the sale of corporate stock ($2,000). Where get state tax forms However, that loss is not netted against the gain to figure Ms. Where get state tax forms Smith's total gross income or her gross farm income. Where get state tax forms Her gross farm income is 64% of her total gross income ($80,000 ÷ $125,000 = 0. Where get state tax forms 64). Where get state tax forms Special Rules for Qualified Farmers The following special estimated tax rules apply if you are a qualified farmer for 2013. Where get state tax forms You do not have to pay estimated tax if you file your 2013 tax return and pay all the tax due by March 3, 2014. Where get state tax forms You do not have to pay estimated tax if your 2013 income tax withholding (including any amount applied to your 2013 estimated tax from your 2012 return) will be at least 662/3% (. Where get state tax forms 6667) of the total tax shown on your 2013 tax return or 100% of the total tax shown on your 2012 return. Where get state tax forms If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2014, using special rules to figure the amount of the payment. Where get state tax forms See Required Annual Payment , next, for details. Where get state tax forms Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers. Where get state tax forms Example 2. Where get state tax forms Assume the same fact as in Example 1. Where get state tax forms Ms. Where get state tax forms Smith's gross farm income is only 64% of her total income. Where get state tax forms Therefore, based on her 2013 income, she does not qualify to use the special estimated tax rules for qualified farmers. Where get state tax forms However, she does qualify if at least two-thirds of her 2012 gross income was from farming. Where get state tax forms Example 3. Where get state tax forms Assume the same facts as in Example 1 except that Ms. Where get state tax forms Smith's farm income from Schedule F was $90,000 instead of $75,000. Where get state tax forms This made her total gross income $140,000 ($3,000 + $500 + $41,500 + $90,000 + $5,000) and her farm gross income $95,000 ($90,000 + $5,000). Where get state tax forms She qualifies to use the special estimated tax rules for qualified farmers, since 67. Where get state tax forms 9% (at least two-thirds) of her gross income is from farming ($95,000 ÷ $140,000 = . Where get state tax forms 679). Where get state tax forms Required Annual Payment If you are a qualified farmer and must pay estimated tax for 2013, use the worksheet on Form 1040-ES to figure the amount of your required annual payment. Where get state tax forms Apply the following special rules for qualified farmers to the worksheet. Where get state tax forms On line 14a, multiply line 13c by 662/3% (. Where get state tax forms 6667). Where get state tax forms On line 14b, enter 100% of the tax shown on your 2012 tax return regardless of the amount of your adjusted gross income. Where get state tax forms For this purpose, the “tax shown on your 2012 tax return” is the amount on line 61 of your 2012 return modified by certain adjustments. Where get state tax forms For more information, see chapter 4 of Publication 505. Where get state tax forms Estimated Tax Penalty for 2013 If you do not pay all your required estimated tax for 2013 by January 15, 2014, or file your 2013 return and pay any tax due by March 3, 2014, you may owe a penalty. Where get state tax forms Use Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to determine if you owe a penalty. Where get state tax forms See the instructions for Form 2210-F. Where get state tax forms Figure 15-1. Where get state tax forms Estimated Tax for Farmers Please click here for the text description of the image. Where get state tax forms Figure 2–A If you receive a penalty notice, do not ignore it, even if you think it is in error. Where get state tax forms You may get a penalty notice even though you filed your return on time, attached Form 2210-F, and met the gross-income-from-farming requirement. Where get state tax forms If you receive a penalty notice for underpaying estimated tax and you think it is in error, write to the address on the notice and explain why you think the notice is in error. Where get state tax forms Include a computation similar to the one in Example 1 (earlier), showing that you met the gross income from farming requirement. Where get state tax forms Prev  Up  Next   Home   More Online Publications
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The Where Get State Tax Forms

Where get state tax forms 4. Where get state tax forms   Transportation Table of Contents Parking fees. Where get state tax forms Advertising display on car. Where get state tax forms Car pools. Where get state tax forms Hauling tools or instruments. Where get state tax forms Union members' trips from a union hall. Where get state tax forms Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. Where get state tax forms These expenses include the cost of transportation by air, rail, bus, taxi, etc. Where get state tax forms , and the cost of driving and maintaining your car. Where get state tax forms Transportation expenses include the ordinary and necessary costs of all of the following. Where get state tax forms Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Where get state tax forms Tax home is defined in chapter 1. Where get state tax forms Visiting clients or customers. Where get state tax forms Going to a business meeting away from your regular workplace. Where get state tax forms Getting from your home to a temporary workplace when you have one or more regular places of work. Where get state tax forms These temporary workplaces can be either within the area of your tax home or outside that area. Where get state tax forms Transportation expenses do not include expenses you have while traveling away from home overnight. Where get state tax forms Those expenses are travel expenses discussed in chapter 1 . Where get state tax forms However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. Where get state tax forms See Car Expenses , later. Where get state tax forms Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Where get state tax forms However, there may be exceptions to this general rule. Where get state tax forms You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Where get state tax forms Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. Where get state tax forms Illustration of transportation expenses. Where get state tax forms    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. Where get state tax forms You may want to refer to it when deciding whether you can deduct your transportation expenses. Where get state tax forms Temporary work location. Where get state tax forms   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Where get state tax forms   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Where get state tax forms   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Where get state tax forms   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Where get state tax forms It will not be treated as temporary after the date you determine it will last more than 1 year. Where get state tax forms   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Where get state tax forms You may have deductible travel expenses as discussed in chapter 1 . Where get state tax forms No regular place of work. Where get state tax forms   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Where get state tax forms   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Where get state tax forms   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Where get state tax forms These are nondeductible commuting expenses. Where get state tax forms Two places of work. Where get state tax forms   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Where get state tax forms However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Where get state tax forms   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Where get state tax forms You cannot deduct them. Where get state tax forms Armed Forces reservists. Where get state tax forms   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Where get state tax forms You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . Where get state tax forms   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Where get state tax forms In this case, your transportation generally is a nondeductible commuting expense. Where get state tax forms However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Where get state tax forms   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Where get state tax forms   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Where get state tax forms These expenses are discussed in chapter 1 . Where get state tax forms   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. Where get state tax forms For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. Where get state tax forms Commuting expenses. Where get state tax forms   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Where get state tax forms These costs are personal commuting expenses. Where get state tax forms You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Where get state tax forms You cannot deduct commuting expenses even if you work during the commuting trip. Where get state tax forms Example. Where get state tax forms You sometimes use your cell phone to make business calls while commuting to and from work. Where get state tax forms Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Where get state tax forms These activities do not change the trip from personal to business. Where get state tax forms You cannot deduct your commuting expenses. Where get state tax forms Parking fees. Where get state tax forms    Fees you pay to park your car at your place of business are nondeductible commuting expenses. Where get state tax forms You can, however, deduct business-related parking fees when visiting a customer or client. Where get state tax forms Advertising display on car. Where get state tax forms   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Where get state tax forms If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Where get state tax forms Car pools. Where get state tax forms   You cannot deduct the cost of using your car in a nonprofit car pool. Where get state tax forms Do not include payments you receive from the passengers in your income. Where get state tax forms These payments are considered reimbursements of your expenses. Where get state tax forms However, if you operate a car pool for a profit, you must include payments from passengers in your income. Where get state tax forms You can then deduct your car expenses (using the rules in this publication). Where get state tax forms Hauling tools or instruments. Where get state tax forms   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Where get state tax forms However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Where get state tax forms Union members' trips from a union hall. Where get state tax forms   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Where get state tax forms Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Where get state tax forms Office in the home. Where get state tax forms   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Where get state tax forms (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Where get state tax forms ) Examples of deductible transportation. Where get state tax forms   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Where get state tax forms Example 1. Where get state tax forms You regularly work in an office in the city where you live. Where get state tax forms Your employer sends you to a 1-week training session at a different office in the same city. Where get state tax forms You travel directly from your home to the training location and return each day. Where get state tax forms You can deduct the cost of your daily round-trip transportation between your home and the training location. Where get state tax forms Example 2. Where get state tax forms Your principal place of business is in your home. Where get state tax forms You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Where get state tax forms Example 3. Where get state tax forms You have no regular office, and you do not have an office in your home. Where get state tax forms In this case, the location of your first business contact inside the metropolitan area is considered your office. Where get state tax forms Transportation expenses between your home and this first contact are nondeductible commuting expenses. Where get state tax forms Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Where get state tax forms While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. Where get state tax forms Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. Where get state tax forms You generally can use one of the two following methods to figure your deductible expenses. Where get state tax forms Standard mileage rate. Where get state tax forms Actual car expenses. Where get state tax forms If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Where get state tax forms See Leasing a Car , later. Where get state tax forms In this publication, “car” includes a van, pickup, or panel truck. Where get state tax forms For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. Where get state tax forms Rural mail carriers. Where get state tax forms   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. Where get state tax forms Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. Where get state tax forms   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Where get state tax forms You must complete Form 2106 and attach it to your Form 1040, U. Where get state tax forms S. Where get state tax forms Individual Income Tax Return. Where get state tax forms   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Where get state tax forms It is given as an equipment maintenance allowance (EMA) to employees of the U. Where get state tax forms S. Where get state tax forms Postal Service. Where get state tax forms It is at the rate contained in the 1991 collective bargaining agreement. Where get state tax forms Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Where get state tax forms See your employer for information on your reimbursement. Where get state tax forms    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Where get state tax forms Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Where get state tax forms For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Where get state tax forms If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. Where get state tax forms You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. Where get state tax forms See Choosing the standard mileage rate and Standard mileage rate not allowed, later. Where get state tax forms You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Where get state tax forms See chapter 6 for more information on reimbursements . Where get state tax forms Choosing the standard mileage rate. Where get state tax forms   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Where get state tax forms Then, in later years, you can choose to use either the standard mileage rate or actual expenses. Where get state tax forms   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Where get state tax forms For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. Where get state tax forms   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Where get state tax forms You cannot revoke the choice. Where get state tax forms However, in later years, you can switch from the standard mileage rate to the actual expenses method. Where get state tax forms If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Where get state tax forms Example. Where get state tax forms Larry is an employee who occasionally uses his own car for business purposes. Where get state tax forms He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. Where get state tax forms Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. Where get state tax forms   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. Where get state tax forms Standard mileage rate not allowed. Where get state tax forms   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Where get state tax forms (See Rural mail carriers , earlier. Where get state tax forms ) Note. Where get state tax forms You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. Where get state tax forms Five or more cars. Where get state tax forms   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. Where get state tax forms However, you may be able to deduct your actual expenses for operating each of the cars in your business. Where get state tax forms See Actual Car Expenses , later, for information on how to figure your deduction. Where get state tax forms   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. Where get state tax forms   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. Where get state tax forms Example 1. Where get state tax forms Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. Where get state tax forms She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. Where get state tax forms Example 2. Where get state tax forms Tony and his employees use his four pickup trucks in his landscaping business. Where get state tax forms During the year, he traded in two of his old trucks for two newer ones. Where get state tax forms Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. Where get state tax forms Example 3. Where get state tax forms Chris owns a repair shop and an insurance business. Where get state tax forms He and his employees use his two pickup trucks and van for the repair shop. Where get state tax forms Chris alternates using his two cars for the insurance business. Where get state tax forms No one else uses the cars for business purposes. Where get state tax forms Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. Where get state tax forms Example 4. Where get state tax forms Maureen owns a car and four vans that are used in her housecleaning business. Where get state tax forms Her employees use the vans, and she uses the car to travel to various customers. Where get state tax forms Maureen cannot use the standard mileage rate for the car or the vans. Where get state tax forms This is because all five vehicles are used in Maureen's business at the same time. Where get state tax forms She must use actual expenses for all vehicles. Where get state tax forms Interest. Where get state tax forms   If you are an employee, you cannot deduct any interest paid on a car loan. Where get state tax forms This applies even if you use the car 100% for business as an employee. Where get state tax forms   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. Where get state tax forms For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). Where get state tax forms You cannot deduct the part of the interest expense that represents your personal use of the car. Where get state tax forms    If you use a home equity loan to purchase your car, you may be able to deduct the interest. Where get state tax forms See Publication 936, Home Mortgage Interest Deduction, for more information. Where get state tax forms Personal property taxes. Where get state tax forms   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. Where get state tax forms You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. Where get state tax forms   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Where get state tax forms If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). Where get state tax forms Parking fees and tolls. Where get state tax forms   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Where get state tax forms (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Where get state tax forms ) Sale, trade-in, or other disposition. Where get state tax forms   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. Where get state tax forms See Disposition of a Car , later. Where get state tax forms Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. Where get state tax forms If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. Where get state tax forms Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Where get state tax forms Continue to keep records, as explained later in chapter 5 . Where get state tax forms Business and personal use. Where get state tax forms   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. Where get state tax forms You can divide your expense based on the miles driven for each purpose. Where get state tax forms Example. Where get state tax forms You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. Where get state tax forms You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. Where get state tax forms Employer-provided vehicle. Where get state tax forms   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. Where get state tax forms You cannot use the standard mileage rate. Where get state tax forms See Vehicle Provided by Your Employer in chapter 6. Where get state tax forms Interest on car loans. Where get state tax forms   If you are an employee, you cannot deduct any interest paid on a car loan. Where get state tax forms This interest is treated as personal interest and is not deductible. Where get state tax forms If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. Where get state tax forms Taxes paid on your car. Where get state tax forms   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Where get state tax forms Enter the amount paid on line 7 of Schedule A (Form 1040). Where get state tax forms Sales taxes. Where get state tax forms   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. Where get state tax forms Fines and collateral. Where get state tax forms   You cannot deduct fines you pay or collateral you forfeit for traffic violations. Where get state tax forms Casualty and theft losses. Where get state tax forms   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. Where get state tax forms See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. Where get state tax forms Depreciation and section 179 deductions. Where get state tax forms   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Where get state tax forms Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. Where get state tax forms However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Where get state tax forms Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. Where get state tax forms The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. Where get state tax forms   Generally, there are limits on these deductions. Where get state tax forms Special rules apply if you use your car 50% or less in your work or business. Where get state tax forms   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. Where get state tax forms   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. Where get state tax forms Car defined. Where get state tax forms   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Where get state tax forms Its unloaded gross vehicle weight must not be more than 6,000 pounds. Where get state tax forms A car includes any part, component, or other item physically attached to it or usually included in the purchase price. Where get state tax forms   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. Where get state tax forms Qualified nonpersonal use vehicles. Where get state tax forms   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Where get state tax forms They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Where get state tax forms Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. Where get state tax forms More information. Where get state tax forms   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. Where get state tax forms Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. Where get state tax forms If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. Where get state tax forms There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. Where get state tax forms See Depreciation Limits, later. Where get state tax forms You can claim the section 179 deduction only in the year you place the car in service. Where get state tax forms For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. Where get state tax forms Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. Where get state tax forms A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. Where get state tax forms Example. Where get state tax forms In 2012, you bought a new car and used it for personal purposes. Where get state tax forms In 2013, you began to use it for business. Where get state tax forms Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. Where get state tax forms However, you can claim a depreciation deduction for the business use of the car starting in 2013. Where get state tax forms See Depreciation Deduction , later. Where get state tax forms More than 50% business use requirement. Where get state tax forms   You must use the property more than 50% for business to claim any section 179 deduction. Where get state tax forms If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Where get state tax forms The result is the cost of the property that can qualify for the section 179 deduction. Where get state tax forms Example. Where get state tax forms Peter purchased a car in April 2013 for $24,500 and used it 60% for business. Where get state tax forms Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). Where get state tax forms But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. Where get state tax forms Limits. Where get state tax forms   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. Where get state tax forms Limit on the amount of the section 179 deduction. Where get state tax forms   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. Where get state tax forms   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. Where get state tax forms If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Where get state tax forms   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. Where get state tax forms   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Where get state tax forms   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. Where get state tax forms You must allocate the dollar limit (after any reduction) between you. Where get state tax forms   For more information on the above section 179 deduction limits, see Publication 946. Where get state tax forms Limit for sport utility and certain other vehicles. Where get state tax forms   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. Where get state tax forms This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. Where get state tax forms However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Where get state tax forms    Limit on total section 179, special depreciation allowance, and depreciation deduction. Where get state tax forms   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. Where get state tax forms The limit is reduced if your business use of the car is less than 100%. Where get state tax forms See Depreciation Limits , later, for more information. Where get state tax forms Example. Where get state tax forms In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. Where get state tax forms However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). Where get state tax forms Cost of car. Where get state tax forms   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. Where get state tax forms For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. Where get state tax forms Your cost includes only the cash you paid. Where get state tax forms Basis of car for depreciation. Where get state tax forms   The amount of the section 179 deduction reduces your basis in your car. Where get state tax forms If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. Where get state tax forms The resulting amount is the basis in your car you use to figure your depreciation deduction. Where get state tax forms When to choose. Where get state tax forms   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. Where get state tax forms How to choose. Where get state tax forms    Employees use Form 2106 to make this choice and report the section 179 deduction. Where get state tax forms All others use Form 4562. Where get state tax forms   File the appropriate form with either of the following. Where get state tax forms Your original tax return filed for the year the property was placed in service (whether or not you file it timely). Where get state tax forms An amended return filed within the time prescribed by law. Where get state tax forms An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Where get state tax forms The amended return must also include any resulting adjustments to taxable income. Where get state tax forms    You must keep records that show the specific identification of each piece of qualifying section 179 property. Where get state tax forms These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Where get state tax forms Revoking an election. Where get state tax forms   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. Where get state tax forms Recapture of section 179 deduction. Where get state tax forms   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. Where get state tax forms If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Where get state tax forms Any section 179 deduction claimed on the car is included in calculating the excess depreciation. Where get state tax forms For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. Where get state tax forms Dispositions. Where get state tax forms   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. Where get state tax forms You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). Where get state tax forms For information on the disposition of a car, see Disposition of a Car , later. Where get state tax forms Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. Where get state tax forms The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). Where get state tax forms The special depreciation allowance applies only for the first year the car is placed in service. Where get state tax forms To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). Where get state tax forms Combined depreciation. Where get state tax forms   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Where get state tax forms For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Where get state tax forms See Depreciation Limits , later in this chapter. Where get state tax forms Qualified car. Where get state tax forms   To be a qualified car (including trucks and vans), the car must meet all of the following tests. Where get state tax forms You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. Where get state tax forms Election not to claim the special depreciation allowance. Where get state tax forms   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. Where get state tax forms If you make this election, it applies to all 5-year property placed in service during the year. Where get state tax forms   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. Where get state tax forms    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. Where get state tax forms Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. Where get state tax forms This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. Where get state tax forms You generally need to know the following things about the car you intend to depreciate. Where get state tax forms Your basis in the car. Where get state tax forms The date you place the car in service. Where get state tax forms The method of depreciation and recovery period you will use. Where get state tax forms Basis. Where get state tax forms   Your basis in a car for figuring depreciation is generally its cost. Where get state tax forms This includes any amount you borrow or pay in cash, other property, or services. Where get state tax forms   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). Where get state tax forms However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). Where get state tax forms For one of these situations see Exception under Methods of depreciation, later. Where get state tax forms   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Where get state tax forms Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . Where get state tax forms Placed in service. Where get state tax forms   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Where get state tax forms Depreciation begins when the car is placed in service for use in your work or business or for the production of income. Where get state tax forms   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. Where get state tax forms Car placed in service and disposed of in the same year. Where get state tax forms   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. Where get state tax forms Methods of depreciation. Where get state tax forms   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). Where get state tax forms MACRS is discussed later in this chapter. Where get state tax forms Exception. Where get state tax forms   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. Where get state tax forms You must use straight line depreciation over the estimated remaining useful life of the car. Where get state tax forms   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. Where get state tax forms The rate per mile varies depending on the year(s) you used the standard mileage rate. Where get state tax forms For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. Where get state tax forms   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . Where get state tax forms You must use your adjusted basis in your car to figure your depreciation deduction. Where get state tax forms For additional information on the straight line method of depreciation, see Publication 946. Where get state tax forms More-than-50%-use test. Where get state tax forms   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. Where get state tax forms You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. Where get state tax forms   If your business use is 50% or less, you must use the straight line method to depreciate your car. Where get state tax forms This is explained later under Car Used 50% or Less for Business . Where get state tax forms Qualified business use. Where get state tax forms   A qualified business use is any use in your trade or business. Where get state tax forms It does not include use for the production of income (investment use). Where get state tax forms However, you do combine your business and investment use to compute your depreciation deduction for the tax year. Where get state tax forms Use of your car by another person. Where get state tax forms   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. Where get state tax forms It is directly connected with your business. Where get state tax forms It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). Where get state tax forms It results in a payment of fair market rent. Where get state tax forms This includes any payment to you for the use of your car. Where get state tax forms Business use changes. Where get state tax forms   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. Where get state tax forms See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. Where get state tax forms    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. Where get state tax forms Use for more than one purpose. Where get state tax forms   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. Where get state tax forms You do this on the basis of mileage. Where get state tax forms Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. Where get state tax forms Change from personal to business use. Where get state tax forms   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. Where get state tax forms In this case, you figure the percentage of business use for the year as follows. Where get state tax forms Determine the percentage of business use for the period following the change. Where get state tax forms Do this by dividing business miles by total miles driven during that period. Where get state tax forms Multiply the percentage in (1) by a fraction. Where get state tax forms The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. Where get state tax forms Example. Where get state tax forms You use a car only for personal purposes during the first 6 months of the year. Where get state tax forms During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. Where get state tax forms This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Where get state tax forms Your business use for the year is 40% (80% × 6/12). Where get state tax forms Limits. Where get state tax forms   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. Where get state tax forms The maximum amount you can claim depends on the year in which you placed your car in service. Where get state tax forms You have to reduce the maximum amount if you did not use the car exclusively for business. Where get state tax forms See Depreciation Limits , later. Where get state tax forms Unadjusted basis. Where get state tax forms   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Where get state tax forms Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. Where get state tax forms   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. Where get state tax forms Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Where get state tax forms Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Where get state tax forms Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. Where get state tax forms 1, 2006), and alternative motor vehicle credit. Where get state tax forms   See Form 8910 for information on the alternative motor vehicle credit. Where get state tax forms If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. Where get state tax forms See Car Used 50% or Less for Business, later, for more information. Where get state tax forms If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. Where get state tax forms Improvements. Where get state tax forms   A major improvement to a car is treated as a new item of 5-year recovery property. Where get state tax forms It is treated as placed in service in the year the improvement is made. Where get state tax forms It does not matter how old the car is when the improvement is added. Where get state tax forms Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. Where get state tax forms However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Where get state tax forms Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. Where get state tax forms See Depreciation Limits , later. Where get state tax forms Car trade-in. Where get state tax forms   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. Where get state tax forms You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Where get state tax forms If you make this election, you treat the old car as disposed of at the time of the trade-in. Where get state tax forms The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. Where get state tax forms You then figure your depreciation deduction for the new car beginning with the date you placed it in service. Where get state tax forms You make this election by completing Form 2106, Part II, Section D. Where get state tax forms This method is explained later, beginning at Effect of trade-in on basis . Where get state tax forms If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. Where get state tax forms You must apply two depreciation limits (see Depreciation Limits , later). Where get state tax forms The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. Where get state tax forms The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. Where get state tax forms You must use Form 4562 to compute your depreciation deduction. Where get state tax forms You cannot use Form 2106, Part II, Section D. Where get state tax forms This method is explained in Publication 946. Where get state tax forms   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). Where get state tax forms Otherwise, you must use the method described in (2). Where get state tax forms Effect of trade-in on basis. Where get state tax forms   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Where get state tax forms For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. Where get state tax forms 168(i)-6(d)(3). Where get state tax forms Traded car used only for business. Where get state tax forms   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. Where get state tax forms Example. Where get state tax forms Paul trades in a car that has an adjusted basis of $5,000 for a new car. Where get state tax forms In addition, he pays cash of $20,000 for the new car. Where get state tax forms His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). Where get state tax forms Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. Where get state tax forms Traded car used partly in business. Where get state tax forms   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. Where get state tax forms This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. Where get state tax forms (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. Where get state tax forms See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. Where get state tax forms )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Where get state tax forms Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. Where get state tax forms For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. Where get state tax forms Modified Accelerated Cost Recovery System (MACRS). Where get state tax forms   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Where get state tax forms   The maximum amount you can deduct is limited, depending on the year you placed your car in service. Where get state tax forms See Depreciation Limits , later. Where get state tax forms Recovery period. Where get state tax forms   Under MACRS, cars are classified as 5-year property. Where get state tax forms You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. Where get state tax forms This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. Where get state tax forms Depreciation deduction for certain Indian reservation property. Where get state tax forms   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. Where get state tax forms The recovery that applies for a business-use car is 3 years instead of 5 years. Where get state tax forms However, the depreciation limits, discussed later, will still apply. Where get state tax forms   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. Where get state tax forms Depreciation methods. Where get state tax forms   You can use one of the following methods to depreciate your car. Where get state tax forms The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Where get state tax forms The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Where get state tax forms The straight line method (SL) over a 5-year recovery period. Where get state tax forms    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. Where get state tax forms This is because the chart has the switch to the straight line method built into its rates. Where get state tax forms   Before choosing a method, you may wish to consider the following facts. Where get state tax forms Using the straight line method provides equal yearly deductions throughout the recovery period. Where get state tax forms Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. Where get state tax forms MACRS depreciation chart. Where get state tax forms   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Where get state tax forms Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. Where get state tax forms A similar chart appears in the Instructions for Form 2106. Where get state tax forms    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. Where get state tax forms   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. Where get state tax forms You file your return on a fiscal year basis. Where get state tax forms You file your return for a short tax year (less than 12 months). Where get state tax forms During the year, all of the following conditions apply. Where get state tax forms You placed some property in service from January through September. Where get state tax forms You placed some property in service from October through December. Where get state tax forms Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. Where get state tax forms   You placed qualified property in service on an Indian reservation. Where get state tax forms Depreciation in future years. Where get state tax forms   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. Where get state tax forms However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. Where get state tax forms In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. Where get state tax forms See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Where get state tax forms    In future years, do not use the chart in this edition of the publication. Where get state tax forms Instead, use the chart in the publication or the form instructions for those future years. Where get state tax forms Disposition of car during recovery period. Where get state tax forms   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. Where get state tax forms See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. Where get state tax forms How to use the 2013 chart. Where get state tax forms   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Where get state tax forms Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. Where get state tax forms If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. Where get state tax forms    Your deduction cannot be more than the maximum depreciation limit for cars. Where get state tax forms See Depreciation Limits, later. Where get state tax forms Example. Where get state tax forms Phil bought a used truck in February 2012 to use exclusively in his landscape business. Where get state tax forms He paid $9,200 for the truck with no trade-in. Where get state tax forms Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. Where get state tax forms Phil used the MACRS depreciation chart in 2012 to find his percentage. Where get state tax forms The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. Where get state tax forms He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. Where get state tax forms In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. Where get state tax forms His records show that the business use of his truck was 90% in 2013. Where get state tax forms Phil used Table 4-1 to find his percentage. Where get state tax forms Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. Where get state tax forms He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. Where get state tax forms Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. Where get state tax forms The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. Where get state tax forms The maximum amount you can deduct each year depends on the year you place the car in service. Where get state tax forms These limits are shown in the following tables. Where get state tax forms   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Where get state tax forms 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Where get state tax forms 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Where get state tax forms 4$7,660 if you acquired the car before 5/6/2003. Where get state tax forms $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. Where get state tax forms 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. Where get state tax forms Trucks and vans. Where get state tax forms   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. Where get state tax forms A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. Where get state tax forms For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. Where get state tax forms Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. Where get state tax forms 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. Where get state tax forms Car used less than full year. Where get state tax forms   The depreciation limits are not reduced if you use a car for less than a full year. Where get state tax forms This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. Where get state tax forms However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. Where get state tax forms See Reduction for personal use , next. Where get state tax forms Reduction for personal use. Where get state tax forms   The depreciation limits are reduced based on your percentage of personal use. Where get state tax forms If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. Where get state tax forms Section 179 deduction. Where get state tax forms   The section 179 deduction is treated as a depreciation deduction. Where get state tax forms If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. Where get state tax forms Example. Where get state tax forms On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. Where get state tax forms He used it 80% for his business, and he chooses to take a section 179 deduction for the car. Where get state tax forms The car is not qualified property for purposes of the special depreciation allowance. Where get state tax forms Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. Where get state tax forms This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). Where get state tax forms Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). Where get state tax forms He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. Where get state tax forms Jack has reached his maximum depreciation deduction for 2013. Where get state tax forms For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. Where get state tax forms Deductions in years after the recovery period. Where get state tax forms   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. Where get state tax forms If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. Where get state tax forms Unrecovered basis. Where get state tax forms   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. Where get state tax forms The recovery period. Where get state tax forms   For 5-year property, your recovery period is 6 calendar years. Where get state tax forms A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. Where get state tax forms   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. Where get state tax forms You determine your unrecovered basis in the 7th year after you placed the car in service. Where get state tax forms How to treat unrecovered basis. Where get state tax forms   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. Where get state tax forms The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. Where get state tax forms For example, no deduction is allowed for a year you use your car 100% for personal purposes. Where get state tax forms Example. Where get state tax forms In April 2007, Bob bought and placed in service a car he used exclusively in his business. Where get state tax forms The car cost $31,500. Where get state tax forms Bob did not claim a section 179 deduction or the special depreciation allowance for the car. Where get state tax forms He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). Where get state tax forms For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. Where get state tax forms Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. Where get state tax forms      MACRS     Deprec. Where get state tax forms Year % Amount Limit Allowed 2007 20. Where get state tax forms 00 $6,300 $3,060 $ 3,060 2008 32. Where get state tax forms 00 10,080 4,900 4,900 2009 19. Where get state tax forms 20 6,048 2,850 2,850 2010 11. Where get state tax forms 52 3,629 1,775 1,775 2011 11. Where get state tax forms 52 3,629 1,775 1,775 2012 5. Where get state tax forms 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. Where get state tax forms   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). Where get state tax forms If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. Where get state tax forms   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. Where get state tax forms However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. Where get state tax forms For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. Where get state tax forms Table 4-1. Where get state tax forms 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Where get state tax forms ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. Where get state tax forms   First, using the left column, find the date you first placed the car in service in 2013. Where get state tax forms Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. Where get state tax forms For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. Where get state tax forms Refer back to the MACRS Depreciation Chart for the year you placed the car in service. Where get state tax forms (See Car Used 50% or Less for Business . Where get state tax forms )  Multiply the unadjusted basis of your car by your business use percentage. Where get state tax forms Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. Where get state tax forms (Also see Depreciation Limits . Where get state tax forms )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. Where get state tax forms 1—Sept. Where get state tax forms 30 percentage instead of the Oct. Where get state tax forms 1—Dec. Where get state tax forms 31 percentage for your car. Where get state tax forms               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. Where get state tax forms If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. Where get state tax forms 1—Sept. Where get state tax forms 30 for figuring depreciation for your car. Where get state tax forms See Which Convention Applies? in chapter 4 of Publication 946 for more details. Where get state tax forms               Example. Where get state tax forms You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. Where get state tax forms You