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2012 Tax Forms Online

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2012 Tax Forms Online

2012 tax forms online Index A Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. 2012 tax forms online Aliens, nonresident, Withholding income taxes on the wages of nonresident alien employees. 2012 tax forms online , Withholding adjustment for nonresident alien employees. 2012 tax forms online Assistance (see Tax help) C COBRA premium assistance credit, Reminders COBRA Premium Assistance Credit, COBRA premium assistance credit. 2012 tax forms online Commodity wages, Commodity wages. 2012 tax forms online Crew leaders, Crew Leaders, 10. 2012 tax forms online Federal Unemployment (FUTA) Tax D Deposit Penalties, Deposit Penalties Deposit rules Electronic funds transfer, 7. 2012 tax forms online Depositing Taxes Lookback period, Lookback period. 2012 tax forms online Differential wage payments, Reminders Disregarded entities, Reminders E Electronic deposits, Electronic deposit requirement. 2012 tax forms online Electronic payment, Reminders Electronic reporting, Calendar Employee defined, 2. 2012 tax forms online Who Are Employees? Employer identification number (EIN), Employer identification number (EIN). 2012 tax forms online Employers of farmworkers, 2. 2012 tax forms online Who Are Employees? Exemption from withholding, Exemption from federal income tax withholding. 2012 tax forms online F Farmworkers Crew leaders, Crew Leaders Defined, 2. 2012 tax forms online Who Are Employees? Federal unemployment (FUTA) taxes, 10. 2012 tax forms online Federal Unemployment (FUTA) Tax Forms 843, Form 843. 2012 tax forms online 940, 10. 2012 tax forms online Federal Unemployment (FUTA) Tax 943, 8. 2012 tax forms online Form 943 943-X, Prior Year Adjustments I-9, Reminders W-2, Filing corrections to Forms W-2 and W-3. 2012 tax forms online W-4, Reminders, Form W-4. 2012 tax forms online W-4(SP), Reminders, Form W-4. 2012 tax forms online H H-2A visa holders, Compensation paid to H-2A visa holders. 2012 tax forms online Household employees Employment tax withholding, Household employees. 2012 tax forms online I Income tax withholding How to figure, How To Figure Federal Income Tax Withholding Percentage method, 13. 2012 tax forms online Federal Income Tax Withholding Methods Wage bracket method, 13. 2012 tax forms online Federal Income Tax Withholding Methods Who must withhold, 5. 2012 tax forms online Federal Income Tax Withholding Independent contractor, 2. 2012 tax forms online Who Are Employees? L Lookback period, Lookback period. 2012 tax forms online N Noncash wages, Commodity wages. 2012 tax forms online P Penalties, Deposit Penalties Prior year adjustments, Prior Year Adjustments Publications (see Tax help) Q Qualified subchapter S subsidiaries (QSubs), Reminders R Reconciling Forms W-2, W-3, and 943, 11. 2012 tax forms online Reconciling Wage Reporting Forms Reconciling wage reporting forms, 11. 2012 tax forms online Reconciling Wage Reporting Forms S Share farmers, Share farmers. 2012 tax forms online Social security and Medicare withholding, 4. 2012 tax forms online Social Security and Medicare Taxes Social security number (SSN), Social security number (SSN). 2012 tax forms online Spouses who own and operate a business together , Business Owned and Operated by Spouses Supplemental wages, Supplemental wages. 2012 tax forms online T Tax help, How To Get Tax Help Taxpayer identification number, 1. 2012 tax forms online Taxpayer Identification Numbers Trust fund recovery penalty, Trust fund recovery penalty. 2012 tax forms online TTY/TDD information, How To Get Tax Help W Withholding Income tax, 5. 2012 tax forms online Federal Income Tax Withholding Nonresident aliens, Withholding adjustment for nonresident alien employees. 2012 tax forms online Supplemental wages, Supplemental wages. 2012 tax forms online Prev  Up     Home   More Online Publications
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The 2012 Tax Forms Online

2012 tax forms online 8. 2012 tax forms online   Business Expenses Table of Contents Introduction Useful Items - You may want to see: Bad DebtsAccrual method. 2012 tax forms online Cash method. 2012 tax forms online Car and Truck ExpensesOffice in the home. 2012 tax forms online Methods for Deducting Car and Truck Expenses Reimbursing Your Employees for Expenses Depreciation Employees' PayFringe benefits. 2012 tax forms online InsuranceHow to figure the deduction. 2012 tax forms online Interest Legal and Professional FeesTax preparation fees. 2012 tax forms online Pension Plans Rent Expense Taxes Travel, Meals, and EntertainmentTransportation. 2012 tax forms online Taxi, commuter bus, and limousine. 2012 tax forms online Baggage and shipping. 2012 tax forms online Car or truck. 2012 tax forms online Meals and lodging. 2012 tax forms online Cleaning. 2012 tax forms online Telephone. 2012 tax forms online Tips. 2012 tax forms online More information. 2012 tax forms online Business Use of Your HomeExceptions to exclusive use. 2012 tax forms online Other Expenses You Can Deduct Expenses You Cannot Deduct Introduction You can deduct the costs of operating your business. 2012 tax forms online These costs are known as business expenses. 2012 tax forms online These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year. 2012 tax forms online To be deductible, a business expense must be both ordinary and necessary. 2012 tax forms online An ordinary expense is one that is common and accepted in your field of business. 2012 tax forms online A necessary expense is one that is helpful and appropriate for your business. 2012 tax forms online An expense does not have to be indispensable to be considered necessary. 2012 tax forms online For more information about the general rules for deducting business expenses, see chapter 1 in Publication 535, Business Expenses. 2012 tax forms online If you have an expense that is partly for business and partly personal, separate the personal part from the business part. 2012 tax forms online The personal part is not deductible. 2012 tax forms online Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 946 How To Depreciate Property See chapter 12 for information about getting publications and forms. 2012 tax forms online Bad Debts If someone owes you money you cannot collect, you have a bad debt. 2012 tax forms online There are two kinds of bad debts, business bad debts and nonbusiness bad debts. 2012 tax forms online A business bad debt is generally one that comes from operating your trade or business. 2012 tax forms online You may be able to deduct business bad debts as an expense on your business tax return. 2012 tax forms online Business bad debt. 2012 tax forms online   A business bad debt is a loss from the worthlessness of a debt that was either of the following. 2012 tax forms online Created or acquired in your business. 2012 tax forms online Closely related to your business when it became partly or totally worthless. 2012 tax forms online A debt is closely related to your business if your primary motive for incurring the debt is a business reason. 2012 tax forms online   Business bad debts are mainly the result of credit sales to customers. 2012 tax forms online They can also be the result of loans to suppliers, clients, employees, or distributors. 2012 tax forms online Goods and services customers have not paid for are shown in your books as either accounts receivable or notes receivable. 2012 tax forms online If you are unable to collect any part of these accounts or notes receivable, the uncollectible part is a business bad debt. 2012 tax forms online    You can take a bad debt deduction for these accounts and notes receivable only if the amount you were owed was included in your gross income either for the year the deduction is claimed or for a prior year. 2012 tax forms online Accrual method. 2012 tax forms online   If you use an accrual method of accounting, you normally report income as you earn it. 2012 tax forms online You can take a bad debt deduction for an uncollectible receivable if you have included the uncollectible amount in income. 2012 tax forms online Cash method. 2012 tax forms online   If you use the cash method of accounting, you normally report income when you receive payment. 2012 tax forms online You cannot take a bad debt deduction for amounts owed to you that you have not received and cannot collect if you never included those amounts in income. 2012 tax forms online More information. 2012 tax forms online   For more information about business bad debts, see chapter 10 in Publication 535. 2012 tax forms online Nonbusiness bad debts. 2012 tax forms online   All other bad debts are nonbusiness bad debts and are deductible as short-term capital losses on Form 8949 and Schedule D (Form 1040). 2012 tax forms online For more information on nonbusiness bad debts, see Publication 550, Investment Income and Expenses. 2012 tax forms online Car and Truck Expenses If you use your car or truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle. 2012 tax forms online You also may be able to deduct other costs of local transportation and traveling away from home overnight on business. 2012 tax forms online You may qualify for a tax credit for qualified plug-in electric vehicles, qualified plug-in electric drive motor vehicles, and alternative motor vehicles you place in service during the year. 2012 tax forms online See Form 8936 and Form 8910 for more information. 2012 tax forms online Local transportation expenses. 2012 tax forms online   Local transportation expenses include the ordinary and necessary costs of all the following. 2012 tax forms online 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. 2012 tax forms online Tax home is defined later. 2012 tax forms online Visiting clients or customers. 2012 tax forms online Going to a business meeting away from your regular workplace. 2012 tax forms online Getting from your home to a temporary workplace when you have one or more regular places of work. 2012 tax forms online These temporary workplaces can be either within the area of your tax home or outside that area. 2012 tax forms online Local business transportation does not include expenses you have while traveling away from home overnight. 2012 tax forms online Those expenses are deductible as travel expenses and are discussed later under Travel, Meals, and Entertainment. 2012 tax forms online However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. 2012 tax forms online   Generally, your tax home is your regular place of business, regardless of where you maintain your family home. 2012 tax forms online It includes the entire city or general area in which your business or work is located. 2012 tax forms online Example. 2012 tax forms online You operate a printing business out of rented office space. 2012 tax forms online You use your van to deliver completed jobs to your customers. 2012 tax forms online You can deduct the cost of round-trip transportation between your customers and your print shop. 2012 tax forms online    You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. 2012 tax forms online These costs are personal commuting expenses. 2012 tax forms online Office in the home. 2012 tax forms online   Your workplace can be your home if you have an office in your home that qualifies as your principal place of business. 2012 tax forms online For more information, see Business Use of Your Home, later. 2012 tax forms online Example. 2012 tax forms online You are a graphics designer. 2012 tax forms online You operate your business out of your home. 2012 tax forms online Your home qualifies as your principal place of business. 2012 tax forms online You occasionally have to drive to your clients to deliver your completed work. 2012 tax forms online You can deduct the cost of the round-trip transportation between your home and your clients. 2012 tax forms online Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. 2012 tax forms online Standard mileage rate. 2012 tax forms online Actual expenses. 2012 tax forms online Standard mileage rate. 2012 tax forms online   You may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. 2012 tax forms online For 2013, the standard mileage rate is 56. 2012 tax forms online 5 cents per mile. 2012 tax forms online    If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls. 2012 tax forms online Choosing the standard mileage rate. 2012 tax forms online   If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. 2012 tax forms online In later years, you can choose to use either the standard mileage rate or actual expenses. 2012 tax forms online   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). 2012 tax forms online Standard mileage rate not allowed. 2012 tax forms online   You cannot use the standard mileage rate if you: Operate five or more cars at the same time, Claimed a depreciation deduction using any method other than straight line, for example, ACRS or MACRS, Claimed a section 179 deduction on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. 2012 tax forms online Parking fees and tolls. 2012 tax forms online   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. 2012 tax forms online (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. 2012 tax forms online ) Actual expenses. 2012 tax forms online   If you do not choose to use the standard mileage rate, you may be able to deduct your actual car or truck expenses. 2012 tax forms online    If you qualify to use both methods, figure your deduction both ways to see which gives you a larger deduction. 2012 tax forms online   Actual car expenses include the costs of the following items. 2012 tax forms online Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. 2012 tax forms online You can divide your expenses based on the miles driven for each purpose. 2012 tax forms online Example. 2012 tax forms online You are the sole proprietor of a flower shop. 2012 tax forms online You drove your van 20,000 miles during the year. 2012 tax forms online 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use (including commuting miles). 2012 tax forms online You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. 2012 tax forms online More information. 2012 tax forms online   For more information about the rules for claiming car and truck expenses, see Publication 463. 2012 tax forms online Reimbursing Your Employees for Expenses You generally can deduct the amount you reimburse your employees for car and truck expenses. 2012 tax forms online The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. 2012 tax forms online For details, see chapter 11 in Publication 535. 2012 tax forms online That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. 2012 tax forms online Depreciation If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. 2012 tax forms online You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. 2012 tax forms online This method of deducting the cost of business property is called depreciation. 2012 tax forms online The discussion here is brief. 2012 tax forms online You will find more information about depreciation in Publication 946. 2012 tax forms online What property can be depreciated?   You can depreciate property if it meets all the following requirements. 2012 tax forms online It must be property you own. 2012 tax forms online It must be used in business or held to produce income. 2012 tax forms online You never can depreciate inventory (explained in chapter 2) because it is not held for use in your business. 2012 tax forms online It must have a useful life that extends substantially beyond the year it is placed in service. 2012 tax forms online It must have a determinable useful life, which means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. 2012 tax forms online You never can depreciate the cost of land because land does not wear out, become obsolete, or get used up. 2012 tax forms online It must not be excepted property. 2012 tax forms online This includes property placed in service and disposed of in the same year. 2012 tax forms online Repairs. 2012 tax forms online    You cannot depreciate repairs and replacements that do not increase the value of your property, make it more useful, or lengthen its useful life. 2012 tax forms online You can deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. 2012 tax forms online Depreciation method. 2012 tax forms online   The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). 2012 tax forms online MACRS is discussed in detail in Publication 946. 2012 tax forms online Section 179 deduction. 2012 tax forms online   You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. 2012 tax forms online This deduction is known as the “section 179 deduction. 2012 tax forms online ” The maximum amount you can elect to deduct during 2013 is generally $500,000 (higher limits apply to certain property). 2012 tax forms online See IRC 179(e). 2012 tax forms online   This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. 2012 tax forms online The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2013 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2013). 2012 tax forms online Special rules apply to trucks and vans. 2012 tax forms online For more information, see Publication 946. 2012 tax forms online It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction. 2012 tax forms online    Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. 2012 tax forms online For more information, see the Instructions for Form 4562 or Publication 946. 2012 tax forms online Listed property. 2012 tax forms online   You must follow special rules and recordkeeping requirements when depreciating listed property. 2012 tax forms online Listed property is any of the following. 2012 tax forms online Most passenger automobiles. 2012 tax forms online Most other property used for transportation. 2012 tax forms online Any property of a type generally used for entertainment, recreation, or amusement. 2012 tax forms online Certain computers and related peripheral equipment. 2012 tax forms online   For more information about listed property, see Publication 946. 2012 tax forms online Form 4562. 2012 tax forms online   Use Form 4562, Depreciation and Amortization, if you are claiming any of the following. 2012 tax forms online Depreciation on property placed in service during the current tax year. 2012 tax forms online A section 179 deduction. 2012 tax forms online Depreciation on any listed property (regardless of when it was placed in service). 2012 tax forms online    If you have to use Form 4562, you must file Schedule C. 2012 tax forms online You cannot use Schedule C-EZ. 2012 tax forms online   Employees' Pay You can generally deduct on Schedule C the pay you give your employees for the services they perform for your business. 2012 tax forms online The pay may be in cash, property, or services. 2012 tax forms online To be deductible, your employees' pay must be an ordinary and necessary expense and you must pay or incur it in the tax year. 2012 tax forms online In addition, the pay must meet both the following tests. 2012 tax forms online The pay must be reasonable. 2012 tax forms online The pay must be for services performed. 2012 tax forms online Chapter 2 in Publication 535 explains and defines these requirements. 2012 tax forms online You cannot deduct your own salary or any personal withdrawals you make from your business. 2012 tax forms online As a sole proprietor, you are not an employee of the business. 2012 tax forms online If you had employees during the year, you must use Schedule C. 2012 tax forms online You cannot use Schedule C-EZ. 2012 tax forms online Kinds of pay. 2012 tax forms online   Some of the ways you may provide pay to your employees are listed below. 2012 tax forms online For an explanation of each of these items, see chapter 2 in Publication 535. 2012 tax forms online Awards. 2012 tax forms online Bonuses. 2012 tax forms online Education expenses. 2012 tax forms online Fringe benefits (discussed later). 2012 tax forms online Loans or advances you do not expect the employee to repay if they are for personal services actually performed. 2012 tax forms online Property you transfer to an employee as payment for services. 2012 tax forms online Reimbursements for employee business expenses. 2012 tax forms online Sick pay. 2012 tax forms online Vacation pay. 2012 tax forms online Fringe benefits. 2012 tax forms online   A fringe benefit is a form of pay for the performance of services. 2012 tax forms online The following are examples of fringe benefits. 2012 tax forms online Benefits under qualified employee benefit programs. 2012 tax forms online Meals and lodging. 2012 tax forms online The use of a car. 2012 tax forms online Flights on airplanes. 2012 tax forms online Discounts on property or services. 2012 tax forms online Memberships in country clubs or other social clubs. 2012 tax forms online Tickets to entertainment or sporting events. 2012 tax forms online   Employee benefit programs include the following. 2012 tax forms online Accident and health plans. 2012 tax forms online Adoption assistance. 2012 tax forms online Cafeteria plans. 2012 tax forms online Dependent care assistance. 2012 tax forms online Educational assistance. 2012 tax forms online Group-term life insurance coverage. 2012 tax forms online Welfare benefit funds. 2012 tax forms online   You can generally deduct the cost of fringe benefits you provide on your Schedule C in whatever category the cost falls. 2012 tax forms online For example, if you allow an employee to use a car or other property you lease, deduct the cost of the lease as a rent or lease expense. 2012 tax forms online If you own the property, include your deduction for its cost or other basis as a section 179 deduction or a depreciation deduction. 2012 tax forms online    You may be able to exclude all or part of the fringe benefits you provide from your employees' wages. 2012 tax forms online For more information about fringe benefits and the exclusion of benefits, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. 2012 tax forms online Insurance You can generally deduct premiums you pay for the following kinds of insurance related to your business. 2012 tax forms online Fire, theft, flood, or similar insurance. 2012 tax forms online Credit insurance that covers losses from business bad debts. 2012 tax forms online Group hospitalization and medical insurance for employees, including long-term care insurance. 2012 tax forms online Liability insurance. 2012 tax forms online Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. 2012 tax forms online Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. 2012 tax forms online Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. 2012 tax forms online Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. 2012 tax forms online Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. 2012 tax forms online If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. 2012 tax forms online If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. 2012 tax forms online Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract. 2012 tax forms online Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. 2012 tax forms online Nondeductible premiums. 2012 tax forms online   You cannot deduct premiums on the following kinds of insurance. 2012 tax forms online Self-insurance reserve funds. 2012 tax forms online You cannot deduct amounts credited to a reserve set up for self-insurance. 2012 tax forms online This applies even if you cannot get business insurance coverage for certain business risks. 2012 tax forms online However, your actual losses may be deductible. 2012 tax forms online For more information, see Publication 547, Casualties, Disasters, and Thefts. 2012 tax forms online Loss of earnings. 2012 tax forms online You cannot deduct premiums for a policy that pays for your lost earnings due to sickness or disability. 2012 tax forms online However, see item (8) in the previous list. 2012 tax forms online Certain life insurance and annuities. 2012 tax forms online For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. 2012 tax forms online You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. 2012 tax forms online A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. 2012 tax forms online For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. 2012 tax forms online The disallowance applies without regard to whom the policy covers. 2012 tax forms online Insurance to secure a loan. 2012 tax forms online If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. 2012 tax forms online Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. 2012 tax forms online In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. 2012 tax forms online Self-employed health insurance deduction. 2012 tax forms online   You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family. 2012 tax forms online How to figure the deduction. 2012 tax forms online   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. 2012 tax forms online However, if any of the following apply, you must use the worksheet in chapter 6 of Publication 535. 2012 tax forms online You have more than one source of income subject to self-employment tax. 2012 tax forms online You file Form 2555 or Form 2555-EZ (relating to foreign earned income). 2012 tax forms online You are using amounts paid for qualified long-term care insurance to figure the deduction. 2012 tax forms online Prepayment. 2012 tax forms online   You cannot deduct expenses in advance, even if you pay them in advance. 2012 tax forms online This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2012 tax forms online Example. 2012 tax forms online In 2013, you signed a 3-year insurance contract. 2012 tax forms online Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. 2012 tax forms online You can deduct in 2014 and 2015 the premium allocable to those years. 2012 tax forms online More information. 2012 tax forms online   For more information about deducting insurance, see chapter 6 in Publication 535. 2012 tax forms online Interest You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your business. 2012 tax forms online Interest relates to your business if you use the proceeds of the loan for a business expense. 2012 tax forms online It does not matter what type of property secures the loan. 2012 tax forms online You can deduct interest on a debt only if you meet all of the following requirements. 2012 tax forms online You are legally liable for that debt. 2012 tax forms online Both you and the lender intend that the debt be repaid. 2012 tax forms online You and the lender have a true debtor-creditor relationship. 2012 tax forms online You cannot deduct on Schedule C or C-EZ the interest you paid on personal loans. 2012 tax forms online If a loan is part business and part personal, you must divide the interest between the personal part and the business part. 2012 tax forms online Example. 2012 tax forms online In 2013, you paid $600 interest on a car loan. 2012 tax forms online During 2013, you used the car 60% for business and 40% for personal purposes. 2012 tax forms online You are claiming actual expenses on the car. 2012 tax forms online You can only deduct $360 (60% × $600) for 2013 on Schedule C or C-EZ. 2012 tax forms online The remaining interest of $240 is a nondeductible personal expense. 2012 tax forms online More information. 2012 tax forms online   For more information about deducting interest, see chapter 4 in Publication 535. 2012 tax forms online That chapter explains the following items. 2012 tax forms online Interest you can deduct. 2012 tax forms online Interest you cannot deduct. 2012 tax forms online How to allocate interest between personal and business use. 2012 tax forms online When to deduct interest. 2012 tax forms online The rules for a below-market interest rate loan. 2012 tax forms online (This is generally a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 2012 tax forms online ) Legal and Professional Fees Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible on Schedule C or C-EZ. 2012 tax forms online However, you usually cannot deduct legal fees you pay to acquire business assets. 2012 tax forms online Add them to the basis of the property. 2012 tax forms online If the fees include payments for work of a personal nature (such as making a will), you can take a business deduction only for the part of the fee related to your business. 2012 tax forms online The personal part of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. 2012 tax forms online For more information, see Publication 529, Miscellaneous Deductions. 2012 tax forms online Tax preparation fees. 2012 tax forms online   You can deduct on Schedule C or C-EZ the cost of preparing that part of your tax return relating to your business as a sole proprietor or statutory employee. 2012 tax forms online You can deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. 2012 tax forms online   You can also deduct on Schedule C or C-EZ the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor or statutory employee. 2012 tax forms online Pension Plans You can set up and maintain the following small business retirement plans for yourself and your employees. 2012 tax forms online SEP (Simplified Employee Pension) plans. 2012 tax forms online SIMPLE (Savings Incentive Match Plan for Employees) plans. 2012 tax forms online Qualified plans (including Keogh or H. 2012 tax forms online R. 2012 tax forms online 10 plans). 2012 tax forms online SEP, SIMPLE, and qualified plans offer you and your employees a tax favored way to save for retirement. 2012 tax forms online You can deduct contributions you make to the plan for your employees on line 19 of Schedule C. 2012 tax forms online If you are a sole proprietor, you can deduct contributions you make to the plan for yourself on line 28 of Form 1040. 2012 tax forms online You can also deduct trustees' fees if contributions to the plan do not cover them. 2012 tax forms online Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. 2012 tax forms online You may also be able to claim a tax credit of 50% of the first $1,000 of qualified startup costs if you begin a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. 2012 tax forms online Under certain plans, employees can have you contribute limited amounts of their before-tax pay to a plan. 2012 tax forms online These amounts (and earnings on them) are generally tax free until your employees receive distributions from the plan. 2012 tax forms online For more information on retirement plans for small business, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). 2012 tax forms online Publication 590, Individual Retirement Arrangements (IRAs), discusses other tax favored ways to save for retirement. 2012 tax forms online Rent Expense Rent is any amount you pay for the use of property you do not own. 2012 tax forms online In general, you can deduct rent as a business expense only if the rent is for property you use in your business. 2012 tax forms online If you have or will receive equity in or title to the property, you cannot deduct the rent. 2012 tax forms online Unreasonable rent. 2012 tax forms online   You cannot take a rental deduction for unreasonable rents. 2012 tax forms online Ordinarily, the issue of reasonableness arises only if you and the lessor are related. 2012 tax forms online Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. 2012 tax forms online Rent is not unreasonable just because it is figured as a percentage of gross receipts. 2012 tax forms online   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. 2012 tax forms online For a list of the other related persons, see section 267 of the Internal Revenue Code. 2012 tax forms online Rent on your home. 2012 tax forms online   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. 2012 tax forms online You must meet the requirements for business use of your home. 2012 tax forms online For more information, see Business Use of Your Home , later. 2012 tax forms online Rent paid in advance. 2012 tax forms online   Generally, rent paid in your business is deductible in the year paid or accrued. 2012 tax forms online If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. 2012 tax forms online You can deduct the rest of your payment only over the period to which it applies. 2012 tax forms online More information. 2012 tax forms online   For more information about rent, see chapter 3 in Publication 535. 2012 tax forms online Taxes You can deduct on Schedule C or C-EZ various federal, state, local, and foreign taxes directly attributable to your business. 2012 tax forms online Income taxes. 2012 tax forms online   You can deduct on Schedule C or C-EZ a state tax on gross income (as distinguished from net income) directly attributable to your business. 2012 tax forms online You can deduct other state and local income taxes on Schedule A (Form 1040) if you itemize your deductions. 2012 tax forms online Do not deduct federal income tax. 2012 tax forms online Employment taxes. 2012 tax forms online   You can deduct the social security, Medicare, and federal unemployment (FUTA) taxes you paid out of your own funds as an employer. 2012 tax forms online Employment taxes are discussed briefly in chapter 1. 2012 tax forms online You can also deduct payments you made as an employer to a state unemployment compensation fund or to a state disability benefit fund. 2012 tax forms online Deduct these payments as taxes. 2012 tax forms online Self-employment tax. 2012 tax forms online   You can deduct one-half of your self-employment tax on line 27 of Form 1040. 2012 tax forms online Self-employment tax is discussed in chapters 1 and 10. 2012 tax forms online Personal property tax. 2012 tax forms online   You can deduct on Schedule C or C-EZ any tax imposed by a state or local government on personal property used in your business. 2012 tax forms online   You can also deduct registration fees for the right to use property within a state or local area. 2012 tax forms online Example. 2012 tax forms online May and Julius Winter drove their car 7,000 business miles out of a total of 10,000 miles. 2012 tax forms online They had to pay $25 for their annual state license tags and $20 for their city registration sticker. 2012 tax forms online They also paid $235 in city personal property tax on the car, for a total of $280. 2012 tax forms online They are claiming their actual car expenses. 2012 tax forms online Because they used the car 70% for business, they can deduct 70% of the $280, or $196, as a business expense. 2012 tax forms online Real estate taxes. 2012 tax forms online   You can deduct on Schedule C or C-EZ the real estate taxes you pay on your business property. 2012 tax forms online Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. 2012 tax forms online The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. 2012 tax forms online   For more information about real estate taxes, see chapter 5 in Publication 535. 2012 tax forms online That chapter explains special rules for deducting the following items. 2012 tax forms online Taxes for local benefits, such as those for sidewalks, streets, water mains, and sewer lines. 2012 tax forms online Real estate taxes when you buy or sell property during the year. 2012 tax forms online Real estate taxes if you use an accrual method of accounting and choose to accrue real estate tax related to a definite period ratably over that period. 2012 tax forms online Sales tax. 2012 tax forms online   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. 2012 tax forms online If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. 2012 tax forms online If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. 2012 tax forms online If the property is depreciable, add the sales tax to the basis for depreciation. 2012 tax forms online For information on the basis of property, see Publication 551, Basis of Assets. 2012 tax forms online    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. 2012 tax forms online Do not include these taxes in gross receipts or sales. 2012 tax forms online Excise taxes. 2012 tax forms online   You can deduct on Schedule C or C-EZ all excise taxes that are ordinary and necessary expenses of carrying on your business. 2012 tax forms online Excise taxes are discussed briefly in chapter 1. 2012 tax forms online Fuel taxes. 2012 tax forms online   Taxes on gasoline, diesel fuel, and other motor fuels you use in your business are usually included as part of the cost of the fuel. 2012 tax forms online Do not deduct these taxes as a separate item. 2012 tax forms online   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. 2012 tax forms online For more information, see Publication 510, Excise Taxes. 2012 tax forms online Travel, Meals, and Entertainment This section briefly explains the kinds of travel and entertainment expenses you can deduct on Schedule C or C-EZ. 2012 tax forms online Table 8-1. 2012 tax forms online When Are Entertainment Expenses Deductible? (Note. 2012 tax forms online The following is a summary of the rules for deducting entertainment expenses. 2012 tax forms online For more details about these rules, see Publication 463. 2012 tax forms online ) General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. 2012 tax forms online Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. 2012 tax forms online An ordinary expense is one that is common and accepted in your field of business, trade, or profession. 2012 tax forms online A necessary expense is one that is helpful and appropriate, although not necessarily required, for your business. 2012 tax forms online Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. 2012 tax forms online   Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion. 2012 tax forms online Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. 2012 tax forms online You cannot deduct expenses that are lavish or extravagant under the circumstances. 2012 tax forms online You generally can deduct only 50% of your unreimbursed entertainment expenses. 2012 tax forms online Travel expenses. 2012 tax forms online   These are the ordinary and necessary expenses of traveling away from home for your business. 2012 tax forms online You are traveling away from home if both the following conditions are met. 2012 tax forms online Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work. 2012 tax forms online You need to get sleep or rest to meet the demands of your work while away from home. 2012 tax forms online Generally, your tax home is your regular place of business, regardless of where you maintain your family home. 2012 tax forms online It includes the entire city or general area in which your business is located. 2012 tax forms online See Publication 463 for more information. 2012 tax forms online   The following is a brief discussion of the expenses you can deduct. 2012 tax forms online Transportation. 2012 tax forms online   You can deduct the cost of travel by airplane, train, bus, or car between your home and your business destination. 2012 tax forms online Taxi, commuter bus, and limousine. 2012 tax forms online   You can deduct fares for these and other types of transportation between the airport or station and your hotel, or between the hotel and your work location away from home. 2012 tax forms online Baggage and shipping. 2012 tax forms online   You can deduct the cost of sending baggage and sample or display material between your regular and temporary work locations. 2012 tax forms online Car or truck. 2012 tax forms online   You can deduct the costs of operating and maintaining your vehicle when traveling away from home on business. 2012 tax forms online You can deduct actual expenses or the standard mileage rate (discussed earlier under Car and Truck Expenses), as well as business-related tolls and parking. 2012 tax forms online If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. 2012 tax forms online Meals and lodging. 2012 tax forms online   You can deduct the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. 2012 tax forms online In most cases, you can deduct only 50% of your meal expenses. 2012 tax forms online Cleaning. 2012 tax forms online   You can deduct the costs of dry cleaning and laundry while on your business trip. 2012 tax forms online Telephone. 2012 tax forms online   You can deduct the cost of business calls while on your business trip, including business communication by fax machine or other communication devices. 2012 tax forms online Tips. 2012 tax forms online   You can deduct the tips you pay for any expense in this list. 2012 tax forms online More information. 2012 tax forms online   For more information about travel expenses, see Publication 463. 2012 tax forms online Entertainment expenses. 2012 tax forms online   You may be able to deduct business-related entertainment expenses for entertaining a client, customer, or employee. 2012 tax forms online In most cases, you can deduct only 50% of these expenses. 2012 tax forms online   The following are examples of entertainment expenses. 2012 tax forms online Entertaining guests at nightclubs, athletic clubs, theaters, or sporting events. 2012 tax forms online Providing meals, a hotel suite, or a car to business customers or their families. 2012 tax forms online To be deductible, the expenses must meet the rules listed in Table 8-1. 2012 tax forms online For details about these rules, see Publication 463. 2012 tax forms online Reimbursing your employees for expenses. 2012 tax forms online   You generally can deduct the amount you reimburse your employees for travel and entertainment expenses. 2012 tax forms online The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. 2012 tax forms online For details, see chapter 11 in Publication 535. 2012 tax forms online That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. 2012 tax forms online Business Use of Your Home To deduct expenses related to the part of your home used for business, you must meet specific requirements. 2012 tax forms online Even then, your deduction may be limited. 2012 tax forms online To qualify to claim expenses for business use of your home, you must meet the following tests. 2012 tax forms online Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use , later), Regular, For your business, and The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your business, or A separate structure (not attached to your home) you use in connection with your business. 2012 tax forms online Exclusive use. 2012 tax forms online   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. 2012 tax forms online The area used for business can be a room or other separately identifiable space. 2012 tax forms online The space does not need to be marked off by a permanent partition. 2012 tax forms online   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. 2012 tax forms online Example. 2012 tax forms online You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. 2012 tax forms online Your family also uses the den for recreation. 2012 tax forms online The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. 2012 tax forms online Exceptions to exclusive use. 2012 tax forms online   You do not have to meet the exclusive use test if you use part of your home in either of the following ways. 2012 tax forms online For the storage of inventory or product samples. 2012 tax forms online As a daycare facility. 2012 tax forms online For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). 2012 tax forms online Regular use. 2012 tax forms online   To qualify under the regular use test, you must use a specific area of your home for business on a continuing basis. 2012 tax forms online You do not meet the test if your business use of the area is only occasional or incidental, even if you do not use that area for any other purpose. 2012 tax forms online Principal place of business. 2012 tax forms online   You can have more than one business location, including your home, for a single trade or business. 2012 tax forms online To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that business. 2012 tax forms online To determine your principal place of business, you must consider all the facts and circumstances. 2012 tax forms online   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. 2012 tax forms online You use it exclusively and regularly for administrative or management activities of your business. 2012 tax forms online You have no other fixed location where you conduct substantial administrative or management activities of your business. 2012 tax forms online   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. 2012 tax forms online The relative importance of the activities performed at each location. 2012 tax forms online If the relative importance factor does not determine your principal place of business, you can also consider the time spent at each location. 2012 tax forms online   If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. 2012 tax forms online However, for other ways to qualify to deduct home office expenses, see Publication 587. 2012 tax forms online Deduction limit. 2012 tax forms online   If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. 2012 tax forms online If your gross income from the business use is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. 2012 tax forms online   Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation (with depreciation taken last), allocable to the business is limited to the gross income from the business use of your home minus the sum of the following. 2012 tax forms online The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). 2012 tax forms online The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. 2012 tax forms online Do not include in (2) above your deduction for one-half of your self-employment tax. 2012 tax forms online   Use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. 2012 tax forms online New simplified method. 2012 tax forms online    The IRS now provides a simplified method to determine your expenses for business use of your home. 2012 tax forms online The simplified method is an alternative to calculating and substantiating actual expenses. 2012 tax forms online In most cases, you will figure your deduction by multiplying $5 by the area of your home used for a qualified business use. 2012 tax forms online The area you use to figure your deduction is limited to 300 square feet. 2012 tax forms online For more information, see the Instructions for Schedule C. 2012 tax forms online More information. 2012 tax forms online   For more information on deducting expenses for the business use of your home, see Publication 587. 2012 tax forms online Other Expenses You Can Deduct You may also be able to deduct the following expenses. 2012 tax forms online See Publication 535 to find out whether you can deduct them. 2012 tax forms online Advertising. 2012 tax forms online Bank fees. 2012 tax forms online Donations to business organizations. 2012 tax forms online Education expenses. 2012 tax forms online Energy efficient commercial buildings deduction expenses. 2012 tax forms online Impairment-related expenses. 2012 tax forms online Interview expense allowances. 2012 tax forms online Licenses and regulatory fees. 2012 tax forms online Moving machinery. 2012 tax forms online Outplacement services. 2012 tax forms online Penalties and fines you pay for late performance or nonperformance of a contract. 2012 tax forms online Repairs that keep your property in a normal efficient operating condition. 2012 tax forms online Repayments of income. 2012 tax forms online Subscriptions to trade or professional publications. 2012 tax forms online Supplies and materials. 2012 tax forms online Utilities. 2012 tax forms online Expenses You Cannot Deduct You usually cannot deduct the following as business expenses. 2012 tax forms online For more information, see Publication 535. 2012 tax forms online Bribes and kickbacks. 2012 tax forms online Charitable contributions. 2012 tax forms online Demolition expenses or losses. 2012 tax forms online Dues to business, social, athletic, luncheon, sporting, airline, and hotel clubs. 2012 tax forms online Lobbying expenses. 2012 tax forms online Penalties and fines you pay to a governmental agency or instrumentality because you broke the law. 2012 tax forms online Personal, living, and family expenses. 2012 tax forms online Political contributions. 2012 tax forms online Repairs that add to the value of your property or significantly increase its life. 2012 tax forms online Prev  Up  Next   Home   More Online Publications