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File tax amendment 28. File tax amendment   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. File tax amendment  The 2013 rate for business use of a vehicle is 56½ cents per mile. File tax amendment Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). File tax amendment You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. File tax amendment This chapter covers the following topics. File tax amendment Deductions subject to the 2% limit. File tax amendment Deductions not subject to the 2% limit. File tax amendment Expenses you cannot deduct. File tax amendment You must keep records to verify your deductions. File tax amendment You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. File tax amendment For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. File tax amendment Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). File tax amendment You can claim the amount of expenses that is more than 2% of your adjusted gross income. File tax amendment You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. File tax amendment Your adjusted gross income is the amount on Form 1040, line 38. File tax amendment Generally, you apply the 2% limit after you apply any other deduction limit. File tax amendment For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. File tax amendment Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). File tax amendment Unreimbursed employee expenses (line 21). File tax amendment Tax preparation fees (line 22). File tax amendment Other expenses (line 23). File tax amendment Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. File tax amendment An expense is ordinary if it is common and accepted in your trade, business, or profession. File tax amendment An expense is necessary if it is appropriate and helpful to your business. File tax amendment An expense does not have to be required to be considered necessary. File tax amendment Examples of unreimbursed employee expenses are listed next. File tax amendment The list is followed by discussions of additional unreimbursed employee expenses. File tax amendment Business bad debt of an employee. File tax amendment Education that is work related. File tax amendment (See chapter 27. File tax amendment ) Legal fees related to your job. File tax amendment Licenses and regulatory fees. File tax amendment Malpractice insurance premiums. File tax amendment Medical examinations required by an employer. File tax amendment Occupational taxes. File tax amendment Passport for a business trip. File tax amendment Subscriptions to professional journals and trade magazines related to your work. File tax amendment Travel, transportation, entertainment, and gifts related to your work. File tax amendment (See chapter 26. File tax amendment ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. File tax amendment Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. File tax amendment Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. File tax amendment For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. File tax amendment Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. File tax amendment Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. File tax amendment Lobbying and political activities. File tax amendment   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. File tax amendment See Dues used for lobbying under Nondeductible Expenses, later. File tax amendment Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. File tax amendment If you file Form 1040A, you can deduct these expenses on line 16. File tax amendment If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. File tax amendment However, neither spouse can deduct more than $250 of his or her qualified expenses. File tax amendment Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. File tax amendment You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. File tax amendment The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. File tax amendment See Publication 587 for more detailed information and a worksheet. File tax amendment Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. File tax amendment You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. File tax amendment Employment and outplacement agency fees. File tax amendment   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. File tax amendment Employer pays you back. File tax amendment   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. File tax amendment (See Recoveries in chapter 12. File tax amendment ) Employer pays the employment agency. File tax amendment   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. File tax amendment Résumé. File tax amendment   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. File tax amendment Travel and transportation expenses. File tax amendment   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. File tax amendment You can deduct the travel expenses if the trip is primarily to look for a new job. File tax amendment The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. File tax amendment   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. File tax amendment   You can choose to use the standard mileage rate to figure your car expenses. File tax amendment The 2013 rate for business use of a vehicle is 56½ cents per mile. File tax amendment See chapter 26 for more information. File tax amendment Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. File tax amendment Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. File tax amendment If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. File tax amendment Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. File tax amendment If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. File tax amendment Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. File tax amendment You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. File tax amendment However, you cannot deduct the cost of travel as a form of education. File tax amendment Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. File tax amendment You can depreciate the cost of tools that have a useful life substantially beyond the tax year. File tax amendment For more information about depreciation, see Publication 946. File tax amendment Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. File tax amendment You can also deduct assessments for benefit payments to unemployed union members. File tax amendment However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. File tax amendment Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. File tax amendment You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. File tax amendment See Lobbying Expenses under Nondeductible Expenses, later. File tax amendment Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. File tax amendment You must wear them as a condition of your employment. File tax amendment The clothes are not suitable for everyday wear. File tax amendment It is not enough that you wear distinctive clothing. File tax amendment The clothing must be specifically required by your employer. File tax amendment Nor is it enough that you do not, in fact, wear your work clothes away from work. File tax amendment The clothing must not be suitable for taking the place of your regular clothing. File tax amendment Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. File tax amendment ). File tax amendment Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. File tax amendment However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. File tax amendment Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. File tax amendment Protective clothing. File tax amendment   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. File tax amendment   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. File tax amendment Military uniforms. File tax amendment   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. File tax amendment However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. File tax amendment In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. File tax amendment   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. File tax amendment   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. File tax amendment Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. File tax amendment Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. File tax amendment These fees include the cost of tax preparation software programs and tax publications. File tax amendment They also include any fee you paid for electronic filing of your return. File tax amendment Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. File tax amendment On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. File tax amendment You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. File tax amendment Some of these other expenses are explained in the following discussions. File tax amendment If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. File tax amendment Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. File tax amendment Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. File tax amendment First report the loss in Section B of Form 4684, Casualties and Thefts. File tax amendment You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. File tax amendment To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. File tax amendment For other casualty and theft losses, see chapter 25. File tax amendment Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. File tax amendment Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. File tax amendment The fees are deductible in the year paid. File tax amendment Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). File tax amendment You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. File tax amendment But if you work as an employee and also use the computer in that work, see Publication 946. File tax amendment Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. File tax amendment Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. File tax amendment The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. File tax amendment For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. File tax amendment Fees to Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. File tax amendment But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. File tax amendment You must add the fee to the cost of the property. File tax amendment You cannot deduct the fee you pay to a broker to sell securities. File tax amendment You can use the fee only to figure gain or loss from the sale. File tax amendment See the Instructions for Form 8949 for information on how to report the fee. File tax amendment Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. File tax amendment A hobby is not a business because it is not carried on to make a profit. File tax amendment See Activity not for profit in chapter 12 under Other Income. File tax amendment Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. File tax amendment Deductions of pass-through entities are passed through to the partners or shareholders. File tax amendment The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. File tax amendment Example. File tax amendment You are a member of an investment club that is formed solely to invest in securities. File tax amendment The club is treated as a partnership. File tax amendment The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. File tax amendment In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. File tax amendment However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. File tax amendment Publicly offered mutual funds. File tax amendment   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. File tax amendment A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. File tax amendment   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). File tax amendment This net figure is the amount you report on your return as income. File tax amendment You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. File tax amendment Information returns. File tax amendment   You should receive information returns from pass-through entities. File tax amendment Partnerships and S corporations. File tax amendment   These entities issue Schedule K-1, which lists the items and amounts you must report and identifies the tax return schedules and lines to use. File tax amendment Nonpublicly offered mutual funds. File tax amendment   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. File tax amendment You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. File tax amendment Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. File tax amendment Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. File tax amendment You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce, if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. File tax amendment You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F), on the appropriate schedule. File tax amendment You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). File tax amendment See Tax Preparation Fees , earlier. File tax amendment Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. File tax amendment Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. File tax amendment If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. File tax amendment If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. File tax amendment Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. File tax amendment Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. File tax amendment You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. File tax amendment Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. File tax amendment These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. File tax amendment Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. File tax amendment For more information about IRAs, see chapter 17. File tax amendment Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. File tax amendment They are not subject to the 2% limit. File tax amendment Report these items on Schedule A (Form 1040), line 28. File tax amendment List of Deductions Each of the following items is discussed in detail after the list (except where indicated). File tax amendment Amortizable premium on taxable bonds. File tax amendment Casualty and theft losses from income- producing property. File tax amendment Federal estate tax on income in respect of a decedent. File tax amendment Gambling losses up to the amount of gambling winnings. File tax amendment Impairment-related work expenses of persons with disabilities. File tax amendment Loss from other activities from Schedule K-1 (Form 1065-B), box 2. File tax amendment Losses from Ponzi-type investment schemes. File tax amendment See Losses from Ponzi-type investment schemes under Theft in chapter 25. File tax amendment Repayments of more than $3,000 under a claim of right. File tax amendment Unrecovered investment in an annuity. File tax amendment Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. File tax amendment You can elect to amortize the premium on taxable bonds. File tax amendment The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. File tax amendment Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. File tax amendment For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. File tax amendment Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). File tax amendment First, report the loss in Form 4684, Section B. File tax amendment You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. File tax amendment To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. File tax amendment For more information on casualty and theft losses, see chapter 25. File tax amendment Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. File tax amendment Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. File tax amendment See Publication 559 for more information. File tax amendment Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. File tax amendment You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. File tax amendment You cannot deduct gambling losses that are more than your winnings. File tax amendment You cannot reduce your gambling winnings by your gambling losses and report the difference. File tax amendment You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. File tax amendment Therefore, your records should show your winnings separately from your losses. File tax amendment Diary of winnings and losses. File tax amendment You must keep an accurate diary or similar record of your losses and winnings. File tax amendment Your diary should contain at least the following information. File tax amendment The date and type of your specific wager or wagering activity. File tax amendment The name and address or location of the gambling establishment. File tax amendment The names of other persons present with you at the gambling establishment. File tax amendment The amount(s) you won or lost. File tax amendment See Publication 529 for more information. File tax amendment Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. File tax amendment Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. File tax amendment Self-employed. File tax amendment   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. File tax amendment Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28. File tax amendment It is not subject to the passive activity limitations. File tax amendment Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. File tax amendment See Repayments in chapter 12 for more information. File tax amendment Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. File tax amendment If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. File tax amendment See chapter 10 for more information about the tax treatment of pensions and annuities. File tax amendment Nondeductible Expenses Examples of nondeductible expenses are listed next. File tax amendment The list is followed by discussions of additional nondeductible expenses. File tax amendment List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. File tax amendment Burial or funeral expenses, including the cost of a cemetery lot. File tax amendment Capital expenses. File tax amendment Fees and licenses, such as car licenses, marriage licenses, and dog tags. File tax amendment Hobby losses, but see Hobby Expenses , earlier. File tax amendment Home repairs, insurance, and rent. File tax amendment Illegal bribes and kickbacks. File tax amendment See Bribes and kickbacks in chapter 11 of Publication 535. File tax amendment Losses from the sale of your home, furniture, personal car, etc. File tax amendment Personal disability insurance premiums. File tax amendment Personal, living, or family expenses. File tax amendment The value of wages never received or lost vacation time. File tax amendment Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. File tax amendment See chapter 37. File tax amendment Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. File tax amendment These include qualification and registration fees for primary elections. File tax amendment Legal fees. File tax amendment   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. File tax amendment Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. File tax amendment Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. File tax amendment This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. File tax amendment You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. File tax amendment Dues paid to airline, hotel, and luncheon clubs are not deductible. File tax amendment Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). File tax amendment If you haul tools, instruments, or other items, in your car to and from work, you can deduct only the additional cost of hauling the items such as the rent on a trailer to carry the items. File tax amendment Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. File tax amendment This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). File tax amendment Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. File tax amendment Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. File tax amendment Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. File tax amendment However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. File tax amendment See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. File tax amendment Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. File tax amendment Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. File tax amendment You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. File tax amendment See chapter 18 for information on alimony. File tax amendment Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. File tax amendment These include expenses to: Influence legislation, Participate or intervene in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. File tax amendment Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. File tax amendment Dues used for lobbying. File tax amendment   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. File tax amendment See Lobbying Expenses in Publication 529 for information on exceptions. File tax amendment Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. File tax amendment However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. File tax amendment See chapter 25. File tax amendment Example. File tax amendment A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. File tax amendment The diamond falls from the ring and is never found. File tax amendment The loss of the diamond is a casualty. File tax amendment Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. File tax amendment See chapter 26 for information on deductible expenses while traveling away from home. File tax amendment Meals While Working Late You cannot deduct the cost of meals while working late. File tax amendment However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. File tax amendment See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. File tax amendment Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. File tax amendment Custody of children. File tax amendment Breach of promise to marry suit. File tax amendment Civil or criminal charges resulting from a personal relationship. File tax amendment Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. File tax amendment Preparation of a title (or defense or perfection of a title). File tax amendment Preparation of a will. File tax amendment Property claims or property settlement in a divorce. File tax amendment You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. File tax amendment Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. File tax amendment Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. File tax amendment Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. File tax amendment Accounting certificate fees paid for the initial right to practice accounting. File tax amendment Bar exam fees and incidental expenses in securing initial admission to the bar. File tax amendment Medical and dental license fees paid to get initial licensing. File tax amendment Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. File tax amendment Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. File tax amendment Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. File tax amendment Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. File tax amendment You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. File tax amendment Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. File tax amendment You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. File tax amendment If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. File tax amendment Example. File tax amendment During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. File tax amendment In earning this income, you had total expenses of $500 during the year. File tax amendment You cannot identify the amount of each expense item that is for each income item. File tax amendment Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. File tax amendment You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). File tax amendment Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. File tax amendment See chapter 26 for more information on deductible travel expenses. File tax amendment Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. File tax amendment However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. File tax amendment Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. File tax amendment Prev  Up  Next   Home   More Online Publications
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The File Tax Amendment

File tax amendment 6. File tax amendment   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. File tax amendment Vehicles not considered highway vehicles. File tax amendment Idling reduction device. File tax amendment Separate purchase. File tax amendment Leases. File tax amendment Exported vehicle. File tax amendment Tax on resale of tax-paid trailers and semitrailers. File tax amendment Use treated as sale. File tax amendment Sale. File tax amendment Long-term lease. File tax amendment Short-term lease. File tax amendment Related person. File tax amendment Exclusions from tax base. File tax amendment Sales not at arm's length. File tax amendment Installment sales. File tax amendment Repairs and modifications. File tax amendment Further manufacture. File tax amendment Rail trailers and rail vans. File tax amendment Parts and accessories. File tax amendment Trash containers. File tax amendment House trailers. File tax amendment Camper coaches or bodies for self-propelled mobile homes. File tax amendment Farm feed, seed, and fertilizer equipment. File tax amendment Ambulances and hearses. File tax amendment Truck-tractors. File tax amendment Concrete mixers. File tax amendment Registration requirement. File tax amendment Further manufacture. File tax amendment A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. File tax amendment Truck chassis and bodies. File tax amendment Truck trailer and semitrailer chassis and bodies. File tax amendment Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. File tax amendment A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. File tax amendment A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. File tax amendment A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. File tax amendment A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. File tax amendment The seller is liable for the tax. File tax amendment Chassis or body. File tax amendment   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. File tax amendment Highway vehicle. File tax amendment   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. File tax amendment Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. File tax amendment A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. File tax amendment A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). File tax amendment A special kind of cargo, goods, supplies, or materials. File tax amendment Some off-highway task unrelated to highway transportation, except as discussed next. File tax amendment Vehicles not considered highway vehicles. File tax amendment   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. File tax amendment Specially designed mobile machinery for nontransportation functions. File tax amendment A self-propelled vehicle is not a highway vehicle if all the following apply. File tax amendment The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. File tax amendment The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. File tax amendment The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. File tax amendment Vehicles specially designed for off-highway transportation. File tax amendment A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. File tax amendment To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. File tax amendment It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. File tax amendment Nontransportation trailers and semitrailers. File tax amendment A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. File tax amendment For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. File tax amendment Gross vehicle weight. File tax amendment   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. File tax amendment It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. File tax amendment Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. File tax amendment   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. File tax amendment Platform truck bodies 21 feet or less in length. File tax amendment Dry freight and refrigerated truck van bodies 24 feet or less in length. File tax amendment Dump truck bodies with load capacities of 8 cubic yards or less. File tax amendment Refuse packer truck bodies with load capacities of 20 cubic yards or less. File tax amendment For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. File tax amendment R. File tax amendment B. File tax amendment 2005-14 at www. File tax amendment irs. File tax amendment gov/pub/irs-irbs/irb05-14. File tax amendment pdf. File tax amendment   The gross vehicle weight means the maximum total weight of a loaded vehicle. File tax amendment Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. File tax amendment The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. File tax amendment The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. File tax amendment See Regulations section 145. File tax amendment 4051-1(e)(3) for more information. File tax amendment Parts or accessories. File tax amendment   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. File tax amendment For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. File tax amendment The tax applies in this case whether or not the retailer bills the parts or accessories separately. File tax amendment   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. File tax amendment The tax applies unless there is evidence to the contrary. File tax amendment For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. File tax amendment The tax does not apply to parts and accessories that are spares or replacements. File tax amendment   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. File tax amendment Idling reduction device. File tax amendment   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. File tax amendment The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. File tax amendment The EPA discusses idling reduction technologies on its website at www. File tax amendment epa. File tax amendment gov/smartway/technology/idling. File tax amendment htm. File tax amendment Separate purchase. File tax amendment   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. File tax amendment The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. File tax amendment The installation occurs within 6 months after the vehicle is first placed in service. File tax amendment   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. File tax amendment   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. File tax amendment This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. File tax amendment   The tax does not apply if the installed part or accessory is a replacement part or accessory. File tax amendment The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. File tax amendment However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. File tax amendment Example. File tax amendment You bought a taxable vehicle and placed it in service on April 8. File tax amendment On May 3, you bought and installed parts and accessories at a cost of $850. File tax amendment On July 15, you bought and installed parts and accessories for $300. File tax amendment Tax of $138 (12% of $1,150) applies on July 15. File tax amendment Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. File tax amendment First retail sale defined. File tax amendment   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. File tax amendment There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). File tax amendment The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). File tax amendment The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. File tax amendment There is no registration requirement. File tax amendment Leases. File tax amendment   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. File tax amendment The tax is imposed on the lessor at the time of the lease. File tax amendment   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. File tax amendment The tax is imposed on the lessor at the time of the lease. File tax amendment Exported vehicle. File tax amendment   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. File tax amendment Tax on resale of tax-paid trailers and semitrailers. File tax amendment   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. File tax amendment The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. File tax amendment The credit cannot exceed the tax on the resale. File tax amendment See Regulations section 145. File tax amendment 4052-1(a)(4) for information on the conditions to allowance for the credit. File tax amendment Use treated as sale. File tax amendment   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. File tax amendment Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. File tax amendment The tax attaches when the use begins. File tax amendment   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. File tax amendment   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. File tax amendment   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. File tax amendment Presumptive retail sales price. File tax amendment   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. File tax amendment If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. File tax amendment Table 6-1 outlines the appropriate tax base calculation for various transactions. File tax amendment   The presumed markup percentage to be used for trucks and truck-tractors is 4%. File tax amendment But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. File tax amendment Sale. File tax amendment   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. File tax amendment Long-term lease. File tax amendment   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. File tax amendment Short-term lease. File tax amendment   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. File tax amendment   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. File tax amendment   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. File tax amendment Related person. File tax amendment   A related person is any member of the same controlled group as the manufacturer, producer, or importer. File tax amendment Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. File tax amendment Table 6-1. File tax amendment Tax Base IF the transaction is a. File tax amendment . File tax amendment . File tax amendment THEN figuring the base by using the. File tax amendment . File tax amendment . File tax amendment Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. File tax amendment   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. File tax amendment   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. File tax amendment However, you do add a markup if all the following apply. File tax amendment You do not perform any significant activities relating to the processing of the sale of a taxable article. File tax amendment The main reason for processing the sale through you is to avoid or evade the presumed markup. File tax amendment You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. File tax amendment In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. File tax amendment Determination of tax base. File tax amendment   These rules apply to both normal retail sales price and presumptive retail sales price computations. File tax amendment To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. File tax amendment However, see Presumptive retail sales price, earlier. File tax amendment Exclusions from tax base. File tax amendment   Exclude from the tax base the retail excise tax imposed on the sale. File tax amendment Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. File tax amendment Also exclude the value of any used component of the article furnished by the first user of the article. File tax amendment   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. File tax amendment These expenses are those incurred in delivery from the retail dealer to the customer. File tax amendment In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. File tax amendment   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. File tax amendment For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. File tax amendment Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. File tax amendment Sales not at arm's length. File tax amendment   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. File tax amendment   A sale is not at arm's length if either of the following apply. File tax amendment One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. File tax amendment The sale is made under special arrangements between a seller and a purchaser. File tax amendment Installment sales. File tax amendment   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. File tax amendment The tax is figured on the entire sales price. File tax amendment No part of the tax is deferred because the sales price is paid in installments. File tax amendment Repairs and modifications. File tax amendment   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. File tax amendment This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. File tax amendment However, this exception generally does not apply to an article that was not subject to the tax when it was new. File tax amendment Further manufacture. File tax amendment   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. File tax amendment Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. File tax amendment Combining an article with an item in this list does not give rise to taxability. File tax amendment However, see Parts or accessories discussed earlier. File tax amendment Articles exempt from tax. File tax amendment   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. File tax amendment Rail trailers and rail vans. File tax amendment   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). File tax amendment Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. File tax amendment Parts and accessories. File tax amendment   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. File tax amendment Trash containers. File tax amendment   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. File tax amendment It is designed to be used as a trash container. File tax amendment It is not designed to carry freight other than trash. File tax amendment It is not designed to be permanently mounted on or affixed to a truck chassis or body. File tax amendment House trailers. File tax amendment   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. File tax amendment Camper coaches or bodies for self-propelled mobile homes. File tax amendment   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. File tax amendment Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. File tax amendment Farm feed, seed, and fertilizer equipment. File tax amendment   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. File tax amendment This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. File tax amendment Ambulances and hearses. File tax amendment   This is any ambulance, hearse, or combination ambulance-hearse. File tax amendment Truck-tractors. File tax amendment   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. File tax amendment Concrete mixers. File tax amendment   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. File tax amendment This exemption does not apply to the chassis on which the article is mounted. File tax amendment Sales exempt from tax. File tax amendment   The following sales are ordinarily exempt from tax. File tax amendment Sales to a state or local government for its exclusive use. File tax amendment Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. File tax amendment Sales to a nonprofit educational organization for its exclusive use. File tax amendment Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. File tax amendment Sales for use by the purchaser for further manufacture of other taxable articles (see below). File tax amendment Sales for export or for resale by the purchaser to a second purchaser for export. File tax amendment Sales to the United Nations for official use. File tax amendment Registration requirement. File tax amendment   In general, the seller and buyer must be registered for a sale to be tax free. File tax amendment See the Form 637 instructions for more information. File tax amendment Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. File tax amendment Further manufacture. File tax amendment   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. File tax amendment Credits or refunds. File tax amendment   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. File tax amendment The person using the article as a component part is eligible for the credit or refund. File tax amendment   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. File tax amendment A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. File tax amendment   See also Conditions to allowance in chapter 5. File tax amendment Tire credit. File tax amendment   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. File tax amendment The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). File tax amendment This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. File tax amendment Prev  Up  Next   Home   More Online Publications