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Free Tax Act

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Free Tax Act

Free tax act Publication 3 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Free tax act Tax questions. Free tax act Useful Items - You may want to see: What's New Earned income credit. Free tax act  The maximum income you can earn and still claim the earned income credit has increased. Free tax act You may be able to take the earned income credit if you earned less than $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) if you have two qualifying children; $37,870 ($43,210 for married filing jointly) if you have one qualifying child; and $14,340 ($19,680 for married filing jointly) if you do not have any qualifying children. Free tax act See Earned Income Credit , later, under Credits. Free tax act Standard mileage rate. Free tax act  The standard mileage rate for the cost of operating your car for business use in 2013 is 56. Free tax act 5 cents a mile. Free tax act The standard mileage rate for operating your car during 2013 to get medical care or to move is 24 cents a mile. Free tax act The standard mileage rate for charitable use of your vehicle is 14 cents a mile. Free tax act Filing status for same-sex married couples. Free tax act  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free tax act See Filing Returns , later. Free tax act Reminders Change of address. Free tax act  If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Free tax act Mail it to the Internal Revenue Service Center for your old address. Free tax act (Addresses for the Service Centers are on the back of the form. Free tax act ) Use Form 8822-B, Change of Address or Responsible Party—Business, if you are changing a business address. Free tax act Third party designee. Free tax act  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, a family member, or any other person you choose. Free tax act This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your tax return. Free tax act It also allows your designee to perform certain actions. Free tax act See your income tax instructions for details. Free tax act Future developments. Free tax act  For the latest information about developments related to Publication 3, such as legislation enacted after it was published, go to www. Free tax act irs. Free tax act gov/pub3. Free tax act Photographs of missing children. Free tax act  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free tax act Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free tax act You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free tax act Introduction This publication covers the special tax situations of active members of the U. Free tax act S. Free tax act Armed Forces. Free tax act It does not cover military pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. Free tax act For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income. Free tax act If you need the basic tax rules or information on another subject not covered here, you can check our other free publications. Free tax act See Publication 910, IRS Guide to Free Tax Services, for a list and descriptions of the different tax publications. Free tax act For federal tax purposes, the U. Free tax act S. Free tax act Armed Forces includes commissioned officers, warrant officers, and enlisted personnel in all regular and reserve units under control of the Secretaries of the Defense, Army, Navy, and Air Force. Free tax act The U. Free tax act S. Free tax act Armed Forces also includes the Coast Guard. Free tax act It does not include the U. Free tax act S. Free tax act Merchant Marine or the American Red Cross. Free tax act Members serving in an area designated or treated as a combat zone are granted special tax benefits. Free tax act In the event an area ceases to be a combat zone, the IRS will do its best to notify you. Free tax act Many of the relief provisions will end at that time. Free tax act Comments and suggestions. Free tax act   We welcome your comments about this publication and your suggestions for future editions. Free tax act   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free tax act NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free tax act Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free tax act   You can send your comments from www. Free tax act irs. Free tax act gov/formspubs. Free tax act Click on “More Information” and then on “Comment on Tax Forms and Publications. Free tax act ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free tax act Ordering forms and publications. Free tax act   Visit www. Free tax act irs. Free tax act gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free tax act Internal Revenue Service 1201 N. Free tax act Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free tax act   If you have a tax question, check the information available on IRS. Free tax act gov or call 1-800-829-1040. Free tax act We cannot answer tax questions sent to either of the above addresses. Free tax act Useful Items - You may want to see: Publication 54 Tax Guide for U. Free tax act S. Free tax act Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 505 Tax Withholding and Estimated Tax 516 U. Free tax act S. Free tax act Government Civilian Employees Stationed Abroad 519 U. Free tax act S. Free tax act Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 529 Miscellaneous Deductions 559 Survivors, Executors, and Administrators 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) 970 Tax Benefits for Education 3920 Tax Relief for Victims of Terrorist Attacks Form (and Instructions) 1040X Amended U. Free tax act S. Free tax act Individual Income Tax Return 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 2848 Power of Attorney and Declaration of Representative 3903 Moving Expenses 4868 Application for Automatic Extension of Time To File U. Free tax act S. Free tax act Individual Income Tax Return 8822 Change of Address 8822-B Change of Address or Responsible Party—Business 9465 Installment Agreement Request See How To Get Tax Help near the end of this publication, for information about getting IRS publications and forms. 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IRS Gives One-Week Filing Extension to Taxpayers Whose Preparers Were Affected by Hurricane Irene

IR-2011-88, Sept. 1, 2011

WASHINGTON — The Internal Revenue Service today announced it is granting taxpayers whose preparers were affected by Hurricane Irene until Sept. 22 to file returns normally due Sept. 15. The taxpayer’s preparer must be located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene, even if the preparer is located outside of the federally declared disaster areas.

This relief, which primarily applies to corporations, partnerships and trusts that previously obtained a tax filing extension, is available to taxpayers regardless of their location.

This relief does not apply to any tax payment requirements.

This relief is in addition to the filing and payment relief the IRS is providing to taxpayers located in disaster areas declared by the Federal Emergency Management Agency (FEMA). For details, visit Tax Relief in Disaster Situations on this website.

 

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The Free Tax Act

Free tax act 28. Free tax act   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. Free tax act  The 2013 rate for business use of a vehicle is 56½ cents per mile. Free tax act Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Free tax act You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Free tax act This chapter covers the following topics. Free tax act Deductions subject to the 2% limit. Free tax act Deductions not subject to the 2% limit. Free tax act Expenses you cannot deduct. Free tax act You must keep records to verify your deductions. Free tax act You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Free tax act For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Free tax act 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). Free tax act You can claim the amount of expenses that is more than 2% of your adjusted gross income. Free tax act You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Free tax act Your adjusted gross income is the amount on Form 1040, line 38. Free tax act Generally, you apply the 2% limit after you apply any other deduction limit. Free tax act 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. Free tax act Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Free tax act Unreimbursed employee expenses (line 21). Free tax act Tax preparation fees (line 22). Free tax act Other expenses (line 23). Free tax act 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. Free tax act An expense is ordinary if it is common and accepted in your trade, business, or profession. Free tax act An expense is necessary if it is appropriate and helpful to your business. Free tax act An expense does not have to be required to be considered necessary. Free tax act Examples of unreimbursed employee expenses are listed next. Free tax act The list is followed by discussions of additional unreimbursed employee expenses. Free tax act Business bad debt of an employee. Free tax act Education that is work related. Free tax act (See chapter 27. Free tax act ) Legal fees related to your job. Free tax act Licenses and regulatory fees. Free tax act Malpractice insurance premiums. Free tax act Medical examinations required by an employer. Free tax act Occupational taxes. Free tax act Passport for a business trip. Free tax act Subscriptions to professional journals and trade magazines related to your work. Free tax act Travel, transportation, entertainment, and gifts related to your work. Free tax act (See chapter 26. Free tax act ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Free tax act 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. Free tax act 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. Free tax act For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Free tax act 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. Free tax act Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Free tax act Lobbying and political activities. Free tax act   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Free tax act See Dues used for lobbying under Nondeductible Expenses, later. Free tax act 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. Free tax act If you file Form 1040A, you can deduct these expenses on line 16. Free tax act If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Free tax act However, neither spouse can deduct more than $250 of his or her qualified expenses. Free tax act 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. Free tax act 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. Free tax act The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Free tax act See Publication 587 for more detailed information and a worksheet. Free tax act 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. Free tax act 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. Free tax act Employment and outplacement agency fees. Free tax act   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Free tax act Employer pays you back. Free tax act   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. Free tax act (See Recoveries in chapter 12. Free tax act ) Employer pays the employment agency. Free tax act   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. Free tax act Résumé. Free tax act   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. Free tax act Travel and transportation expenses. Free tax act   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. Free tax act You can deduct the travel expenses if the trip is primarily to look for a new job. Free tax act 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. Free tax act   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. Free tax act   You can choose to use the standard mileage rate to figure your car expenses. Free tax act The 2013 rate for business use of a vehicle is 56½ cents per mile. Free tax act See chapter 26 for more information. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act However, you cannot deduct the cost of travel as a form of education. Free tax act 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. Free tax act You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Free tax act For more information about depreciation, see Publication 946. Free tax act Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Free tax act You can also deduct assessments for benefit payments to unemployed union members. Free tax act However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Free tax act Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Free tax act You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Free tax act See Lobbying Expenses under Nondeductible Expenses, later. Free tax act Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Free tax act You must wear them as a condition of your employment. Free tax act The clothes are not suitable for everyday wear. Free tax act It is not enough that you wear distinctive clothing. Free tax act The clothing must be specifically required by your employer. Free tax act Nor is it enough that you do not, in fact, wear your work clothes away from work. Free tax act The clothing must not be suitable for taking the place of your regular clothing. Free tax act 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. Free tax act ). Free tax act Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Free tax act 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. Free tax act Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Free tax act Protective clothing. Free tax act   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. Free tax act   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. Free tax act Military uniforms. Free tax act   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Free tax act 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. Free tax act In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Free tax act   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. Free tax act   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Free tax act Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Free tax act Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Free tax act These fees include the cost of tax preparation software programs and tax publications. Free tax act They also include any fee you paid for electronic filing of your return. Free tax act Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Free tax act 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. Free tax act 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. Free tax act Some of these other expenses are explained in the following discussions. Free tax act If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Free tax act Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Free tax act 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. Free tax act First report the loss in Section B of Form 4684, Casualties and Thefts. Free tax act You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Free tax act 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. Free tax act For other casualty and theft losses, see chapter 25. Free tax act 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. Free tax act 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. Free tax act The fees are deductible in the year paid. Free tax act 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). Free tax act You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Free tax act But if you work as an employee and also use the computer in that work, see Publication 946. Free tax act 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. Free tax act Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Free tax act 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. Free tax act For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Free tax act 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. Free tax act But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Free tax act You must add the fee to the cost of the property. Free tax act You cannot deduct the fee you pay to a broker to sell securities. Free tax act You can use the fee only to figure gain or loss from the sale. Free tax act See the Instructions for Form 8949 for information on how to report the fee. Free tax act Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Free tax act A hobby is not a business because it is not carried on to make a profit. Free tax act See Activity not for profit in chapter 12 under Other Income. Free tax act Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Free tax act Deductions of pass-through entities are passed through to the partners or shareholders. Free tax act The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Free tax act Example. Free tax act You are a member of an investment club that is formed solely to invest in securities. Free tax act The club is treated as a partnership. Free tax act The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Free tax act In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Free tax act 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. Free tax act Publicly offered mutual funds. Free tax act   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Free tax act 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. Free tax act   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). Free tax act This net figure is the amount you report on your return as income. Free tax act You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Free tax act Information returns. Free tax act   You should receive information returns from pass-through entities. Free tax act Partnerships and S corporations. Free tax act   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. Free tax act Nonpublicly offered mutual funds. Free tax act   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. Free tax act You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Free tax act See Tax Preparation Fees , earlier. Free tax act 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. Free tax act 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. Free tax act If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Free tax act If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Free tax act 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. Free tax act 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. Free tax act You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Free tax act Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Free tax act 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. Free tax act 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. Free tax act For more information about IRAs, see chapter 17. Free tax act Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Free tax act They are not subject to the 2% limit. Free tax act Report these items on Schedule A (Form 1040), line 28. Free tax act List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Free tax act Amortizable premium on taxable bonds. Free tax act Casualty and theft losses from income- producing property. Free tax act Federal estate tax on income in respect of a decedent. Free tax act Gambling losses up to the amount of gambling winnings. Free tax act Impairment-related work expenses of persons with disabilities. Free tax act Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Free tax act Losses from Ponzi-type investment schemes. Free tax act See Losses from Ponzi-type investment schemes under Theft in chapter 25. Free tax act Repayments of more than $3,000 under a claim of right. Free tax act Unrecovered investment in an annuity. Free tax act 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. Free tax act You can elect to amortize the premium on taxable bonds. Free tax act The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Free tax act Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Free tax act 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. Free tax act 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). Free tax act First, report the loss in Form 4684, Section B. Free tax act You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Free tax act 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. Free tax act For more information on casualty and theft losses, see chapter 25. Free tax act 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. Free tax act 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. Free tax act See Publication 559 for more information. Free tax act 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. Free tax act You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Free tax act You cannot deduct gambling losses that are more than your winnings. Free tax act You cannot reduce your gambling winnings by your gambling losses and report the difference. Free tax act 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. Free tax act Therefore, your records should show your winnings separately from your losses. Free tax act Diary of winnings and losses. Free tax act You must keep an accurate diary or similar record of your losses and winnings. Free tax act Your diary should contain at least the following information. Free tax act The date and type of your specific wager or wagering activity. Free tax act The name and address or location of the gambling establishment. Free tax act The names of other persons present with you at the gambling establishment. Free tax act The amount(s) you won or lost. Free tax act See Publication 529 for more information. Free tax act 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. Free tax act 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. Free tax act Self-employed. Free tax act   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. Free tax act 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. Free tax act It is not subject to the passive activity limitations. Free tax act 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. Free tax act See Repayments in chapter 12 for more information. Free tax act 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. Free tax act 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. Free tax act See chapter 10 for more information about the tax treatment of pensions and annuities. Free tax act Nondeductible Expenses Examples of nondeductible expenses are listed next. Free tax act The list is followed by discussions of additional nondeductible expenses. Free tax act List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Free tax act Burial or funeral expenses, including the cost of a cemetery lot. Free tax act Capital expenses. Free tax act Fees and licenses, such as car licenses, marriage licenses, and dog tags. Free tax act Hobby losses, but see Hobby Expenses , earlier. Free tax act Home repairs, insurance, and rent. Free tax act Illegal bribes and kickbacks. Free tax act See Bribes and kickbacks in chapter 11 of Publication 535. Free tax act Losses from the sale of your home, furniture, personal car, etc. Free tax act Personal disability insurance premiums. Free tax act Personal, living, or family expenses. Free tax act The value of wages never received or lost vacation time. Free tax act Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Free tax act See chapter 37. Free tax act Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Free tax act These include qualification and registration fees for primary elections. Free tax act Legal fees. Free tax act   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Free tax act 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. Free tax act Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Free tax act This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Free tax act 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. Free tax act Dues paid to airline, hotel, and luncheon clubs are not deductible. Free tax act Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Free tax act 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. Free tax act Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Free tax act This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Free tax act Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Free tax act 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. Free tax act Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Free tax act However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Free tax act See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Free tax act Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Free tax act Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Free tax act You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Free tax act See chapter 18 for information on alimony. Free tax act Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Free tax act 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. Free tax act Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Free tax act Dues used for lobbying. Free tax act   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. Free tax act See Lobbying Expenses in Publication 529 for information on exceptions. Free tax act Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Free tax act 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. Free tax act See chapter 25. Free tax act Example. Free tax act A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free tax act The diamond falls from the ring and is never found. Free tax act The loss of the diamond is a casualty. Free tax act Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Free tax act See chapter 26 for information on deductible expenses while traveling away from home. Free tax act Meals While Working Late You cannot deduct the cost of meals while working late. Free tax act 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. Free tax act See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Free tax act Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Free tax act Custody of children. Free tax act Breach of promise to marry suit. Free tax act Civil or criminal charges resulting from a personal relationship. Free tax act Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Free tax act Preparation of a title (or defense or perfection of a title). Free tax act Preparation of a will. Free tax act Property claims or property settlement in a divorce. Free tax act You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Free tax act Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Free tax act Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Free tax act Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Free tax act Accounting certificate fees paid for the initial right to practice accounting. Free tax act Bar exam fees and incidental expenses in securing initial admission to the bar. Free tax act Medical and dental license fees paid to get initial licensing. Free tax act Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Free tax act 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. Free tax act 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. Free tax act 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. Free tax act You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Free tax act Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Free tax act You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Free tax act 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. Free tax act Example. Free tax act During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Free tax act In earning this income, you had total expenses of $500 during the year. Free tax act You cannot identify the amount of each expense item that is for each income item. Free tax act 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. Free tax act You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Free tax act 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. Free tax act See chapter 26 for more information on deductible travel expenses. Free tax act Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Free tax act 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. Free tax act 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. Free tax act Prev  Up  Next   Home   More Online Publications