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Free tax Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Free tax Text message. Free tax Credit card. Free tax Pay-by-phone account. Free tax Stock certificate. Free tax Promissory note. Free tax Option. Free tax Borrowed funds. Free tax Conditional gift. Free tax Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Free tax Total deduction over $500. Free tax Deduction over $5,000 for one item. Free tax Vehicle donations. Free tax Clothing and household items not in good used condition. Free tax Easement on building in historic district. Free tax Deduction over $500,000. Free tax How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Free tax Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Free tax How to check whether an organization can receive deductible charitable contributions. Free tax   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Free tax Or go to IRS. Free tax gov. Free tax Click on “Tools” and then on “Exempt Organizations Select Check” (www. Free tax irs. Free tax gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Free tax This online tool will enable you to search for qualified organizations. Free tax You can also call the IRS to find out if an organization is qualified. Free tax Call 1-877-829-5500. Free tax People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Free tax Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Free tax gsa. Free tax gov/fedrelay. Free tax Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Free tax A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Free tax It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Free tax Certain organizations that foster national or international amateur sports competition also qualify. Free tax War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Free tax Domestic fraternal societies, orders, and associations operating under the lodge system. Free tax (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Free tax ) Certain nonprofit cemetery companies or corporations. Free tax (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Free tax ) The United States or any state, the District of Columbia, a U. Free tax S. Free tax possession (including Puerto Rico), a political subdivision of a state or U. Free tax S. Free tax possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Free tax (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Free tax ) Example 1. Free tax You contribute cash to your city's police department to be used as a reward for information about a crime. Free tax The city police department is a qualified organization, and your contribution is for a public purpose. Free tax You can deduct your contribution. Free tax Example 2. Free tax You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Free tax Because the trust fund is part of the U. Free tax S. Free tax Government, you contributed to a qualified organization. Free tax You can deduct your contribution. Free tax Examples. Free tax   The following list gives some examples of qualified organizations. Free tax Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Free tax Most nonprofit charitable organizations such as the American Red Cross and the United Way. Free tax Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Free tax This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Free tax However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Free tax Nonprofit hospitals and medical research organizations. Free tax Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Free tax Nonprofit volunteer fire companies. Free tax Nonprofit organizations that develop and maintain public parks and recreation facilities. Free tax Civil defense organizations. Free tax Canadian charities. Free tax   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Free tax To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Free tax See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Free tax Mexican charities. Free tax   Under the U. Free tax S. Free tax -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Free tax S. Free tax law. Free tax To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Free tax The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Free tax Israeli charities. Free tax   Under the U. Free tax S. Free tax -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Free tax S. Free tax law. Free tax To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Free tax The limits described in Limits on Deductions , later, apply. Free tax The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Free tax Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Free tax A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Free tax The contributions must be made to a qualified organization and not set aside for use by a specific person. Free tax If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Free tax See Contributions of Property , later. Free tax Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Free tax In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Free tax See Limits on Deductions , later. Free tax Table 1 in this publication gives examples of contributions you can and cannot deduct. Free tax Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Free tax Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Free tax If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Free tax For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Free tax Example 1. Free tax You pay $65 for a ticket to a dinner-dance at a church. Free tax Your entire $65 payment goes to the church. Free tax The ticket to the dinner-dance has a fair market value of $25. Free tax When you buy your ticket, you know its value is less than your payment. Free tax To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Free tax You can deduct $40 as a charitable contribution to the church. Free tax Example 2. Free tax At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Free tax The amount you pay is no more than the fair rental value. Free tax You have not made a deductible charitable contribution. Free tax Athletic events. Free tax   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Free tax   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Free tax Subtract the price of the tickets from your payment. Free tax You can deduct 80% of the remaining amount as a charitable contribution. Free tax Example 1. Free tax You pay $300 a year for membership in a university's athletic scholarship program. Free tax The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Free tax You can deduct $240 (80% of $300) as a charitable contribution. Free tax Example 2. Free tax The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Free tax You must subtract the usual price of a ticket ($120) from your $300 payment. Free tax The result is $180. Free tax Your deductible charitable contribution is $144 (80% of $180). Free tax Charity benefit events. Free tax   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Free tax   If there is an established charge for the event, that charge is the value of your benefit. Free tax If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Free tax Whether you use the tickets or other privileges has no effect on the amount you can deduct. Free tax However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Free tax    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Free tax If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Free tax Example. Free tax You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Free tax Printed on the ticket is “Contribution–$40. Free tax ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Free tax Membership fees or dues. Free tax   You may be able to deduct membership fees or dues you pay to a qualified organization. Free tax However, you can deduct only the amount that is more than the value of the benefits you receive. Free tax   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Free tax They are not qualified organizations. Free tax Certain membership benefits can be disregarded. Free tax   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Free tax Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Free tax Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Free tax 20. Free tax Token items. Free tax   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Free tax You receive only a small item or other benefit of token value. Free tax The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Free tax The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Free tax Written statement. Free tax   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Free tax The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Free tax It must also give you a good faith estimate of the value of those goods or services. Free tax   The organization can give you the statement either when it solicits or when it receives the payment from you. Free tax Exception. Free tax   An organization will not have to give you this statement if one of the following is true. Free tax The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Free tax You receive only items whose value is not substantial as described under Token items , earlier. Free tax You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Free tax Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Free tax You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Free tax You can deduct up to $50 a month for each full calendar month the student lives with you. Free tax Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Free tax Qualified organization. Free tax   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Free tax For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Free tax But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Free tax Relative. Free tax   The term “relative” means any of the following persons. Free tax Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Free tax A legally adopted child is considered your child. Free tax Your brother, sister, half brother, half sister, stepbrother, or stepsister. Free tax Your father, mother, grandparent, or other direct ancestor. Free tax Your stepfather or stepmother. Free tax A son or daughter of your brother or sister. Free tax A brother or sister of your father or mother. Free tax Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Free tax Dependent. Free tax   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Free tax    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Free tax S. Free tax residents and cannot be claimed as dependents. Free tax Qualifying expenses. Free tax   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Free tax Expenses that do not qualify. Free tax   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Free tax Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Free tax Reimbursed expenses. Free tax   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Free tax However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Free tax Mutual exchange program. Free tax   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Free tax Reporting expenses. Free tax   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Free tax Out-of-Pocket Expenses in Giving Services Table 2. Free tax Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Free tax All of the rules explained in this publication also apply. Free tax See, in particular, Out-of-Pocket Expenses in Giving Services . Free tax Question Answer I volunteer 6 hours a week in the office of a qualified organization. Free tax The receptionist is paid $10 an hour for the same work. Free tax Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Free tax  The office is 30 miles from my home. Free tax Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Free tax If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Free tax I volunteer as a Red Cross nurse's aide at a hospital. Free tax Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Free tax I pay a babysitter to watch my children while I volunteer for a qualified organization. Free tax Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Free tax (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Free tax ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Free tax The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Free tax Table 2 contains questions and answers that apply to some individuals who volunteer their services. Free tax Underprivileged youths selected by charity. Free tax   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Free tax The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Free tax Your own similar expenses in accompanying the youths are not deductible. Free tax Conventions. Free tax   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Free tax However, see Travel , later. Free tax   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Free tax You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Free tax   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Free tax You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Free tax Uniforms. Free tax   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Free tax Foster parents. Free tax   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Free tax A qualified organization must select the individuals you take into your home for foster care. Free tax   You can deduct expenses that meet both of the following requirements. Free tax They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Free tax They are incurred primarily to benefit the qualified organization. Free tax   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Free tax For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Free tax Example. Free tax You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Free tax Your unreimbursed expenses are not deductible as charitable contributions. Free tax Church deacon. Free tax   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Free tax These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Free tax Car expenses. Free tax   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Free tax You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Free tax   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Free tax   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Free tax   You must keep reliable written records of your car expenses. Free tax For more information, see Car expenses under Records To Keep, later. Free tax Travel. Free tax   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Free tax This applies whether you pay the expenses directly or indirectly. Free tax You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Free tax   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Free tax Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Free tax However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Free tax Example 1. Free tax You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Free tax You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Free tax You participate in the activities of the group and enjoy your time with them. Free tax You oversee the breaking of camp and you transport the group home. Free tax You can deduct your travel expenses. Free tax Example 2. Free tax You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Free tax The project is sponsored by a charitable organization. Free tax In most circumstances, you cannot deduct your expenses. Free tax Example 3. Free tax You work for several hours each morning on an archeological dig sponsored by a charitable organization. Free tax The rest of the day is free for recreation and sightseeing. Free tax You cannot take a charitable contribution deduction even though you work very hard during those few hours. Free tax Example 4. Free tax You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Free tax In the evening you go to the theater. Free tax You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Free tax Daily allowance (per diem). Free tax   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Free tax You may be able to deduct any necessary travel expenses that are more than the allowance. Free tax Deductible travel expenses. Free tax   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Free tax Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Free tax For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Free tax Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Free tax The deduction is limited to $10,000 a year. Free tax To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Free tax Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Free tax Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Free tax You must keep records showing the time, place, date, amount, and nature of the expenses. Free tax For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Free tax irs. Free tax gov/pub/irs-irbs/irb06-47. Free tax pdf. Free tax Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Free tax You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Free tax Detailed discussions of these items follow. Free tax Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Free tax Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Free tax Contributions to individuals who are needy or worthy. Free tax You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Free tax But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Free tax Example. Free tax You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Free tax However, you cannot deduct contributions earmarked for relief of a particular individual or family. Free tax Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Free tax Expenses you paid for another person who provided services to a qualified organization. Free tax Example. Free tax Your son does missionary work. Free tax You pay his expenses. Free tax You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Free tax Payments to a hospital that are for a specific patient's care or for services for a specific patient. Free tax You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Free tax Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Free tax Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Free tax Chambers of commerce and other business leagues or organizations. Free tax Civic leagues and associations. Free tax Communist organizations. Free tax Country clubs and other social clubs. Free tax Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Free tax (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Free tax ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Free tax However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Free tax For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Free tax The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Free tax Homeowners' associations. Free tax Labor unions. Free tax But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Free tax See Publication 529, Miscellaneous Deductions. Free tax Political organizations and candidates. Free tax Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Free tax See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Free tax These contributions include the following. Free tax Contributions for lobbying. Free tax This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Free tax Contributions to a retirement home for room, board, maintenance, or admittance. Free tax Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Free tax Costs of raffles, bingo, lottery, etc. Free tax You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Free tax For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Free tax Dues to fraternal orders and similar groups. Free tax However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Free tax Tuition, or amounts you pay instead of tuition. Free tax You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Free tax You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Free tax ” Contributions connected with split-dollar insurance arrangements. Free tax You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Free tax Example. Free tax You donate money to a charitable organization. Free tax The charity uses the money to purchase a cash value life insurance policy. Free tax The beneficiaries under the insurance policy include members of your family. Free tax Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Free tax Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Free tax You must have been at least age 70½ when the distribution was made. Free tax Your total QCDs for the year cannot be more than $100,000. Free tax If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Free tax See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Free tax Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Free tax Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Free tax The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Free tax Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Free tax However, you may be able to claim a tax credit for these expenses. Free tax Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Free tax See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Free tax You also may be able to claim an exemption for the child. Free tax See Exemptions for Dependents in Publication 501 for more information. Free tax Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Free tax But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Free tax See Deductions Subject to the 2% Limit in Publication 529 for more information. Free tax Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Free tax There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Free tax Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Free tax For details, see Internal Revenue Code section 170(f)(18). Free tax Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Free tax For details, see Partial Interest in Property under Contributions of Property, later. Free tax Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Free tax However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Free tax See Giving Property That Has Increased in Value , later. Free tax For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Free tax Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Free tax These special rules are described next. Free tax Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Free tax Exception. Free tax   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Free tax Household items. Free tax   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Free tax   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Free tax Fair market value. Free tax   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Free tax Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Free tax A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Free tax Deduction more than $500. Free tax   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Free tax If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Free tax Form 1098-C. Free tax   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Free tax The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Free tax   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Free tax S. Free tax Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Free tax   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Free tax    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Free tax But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Free tax Filing deadline approaching and still no Form 1098-C. Free tax   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Free tax Request an automatic 6-month extension of time to file your return. Free tax You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Free tax S. Free tax Individual Income Tax Return. Free tax For more information, see the instructions for Form 4868. Free tax File the return on time without claiming the deduction for the qualified vehicle. Free tax After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Free tax S. Free tax Individual Income Tax Return, claiming the deduction. Free tax Attach Copy B of Form 1098-C (or other statement) to the amended return. Free tax Exceptions. Free tax   There are two exceptions to the rules just described for deductions of more than $500. Free tax Exception 1—vehicle used or improved by organization. Free tax   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Free tax But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free tax The Form 1098-C (or other statement) will show whether this exception applies. Free tax    Exception 2—vehicle given or sold to needy individual. Free tax   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Free tax But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free tax The Form 1098-C (or other statement) will show whether this exception applies. Free tax   This exception does not apply if the organization sells the vehicle at auction. Free tax In that case, you cannot deduct the vehicle's fair market value. Free tax Example. Free tax Anita donates a used car to a qualified organization. Free tax She bought it 3 years ago for $9,000. Free tax A used car guide shows the fair market value for this type of car is $6,000. Free tax However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Free tax Neither exception 1 nor exception 2 applies. Free tax If Anita itemizes her deductions, she can deduct $2,900 for her donation. Free tax She must attach Form 1098-C and Form 8283 to her return. Free tax Deduction $500 or less. Free tax   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Free tax But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Free tax   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Free tax The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Free tax Fair market value. Free tax   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Free tax Donations of inventory. Free tax   The vehicle donation rules just described do not apply to donations of inventory. Free tax For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Free tax See Inventory , later. Free tax Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Free tax This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Free tax Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Free tax Your basis does not include transportation or travel costs. Free tax It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Free tax In addition, it does not include the value of your time. Free tax Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Free tax Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Free tax This prevents you from deducting the same amount as both investment interest and a charitable contribution. Free tax If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Free tax The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Free tax For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Free tax Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Free tax Right to use property. Free tax   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Free tax Example 1. Free tax You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Free tax Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Free tax Example 2. Free tax Mandy White owns a vacation home at the beach that she sometimes rents to others. Free tax For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Free tax At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Free tax Mandy cannot claim a deduction because of the partial interest rule. Free tax Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Free tax See Contributions From Which You Benefit , earlier. Free tax Exceptions. Free tax   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Free tax A remainder interest in your personal home or farm. Free tax A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Free tax Example. Free tax You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Free tax You can deduct the value of the remainder interest. Free tax An undivided part of your entire interest. Free tax This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Free tax But see Fractional Interest in Tangible Personal Property , later. Free tax Example. Free tax You contribute voting stock to a qualified organization but keep the right to vote the stock. Free tax The right to vote is a substantial right in the stock. Free tax You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Free tax A partial interest that would be deductible if transferred to certain types of trusts. Free tax A qualified conservation contribution (defined later). Free tax For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Free tax Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Free tax If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Free tax Tangible personal property is defined later under Future Interest in Tangible Personal Property . Free tax A fractional interest in property is an undivided portion of your entire interest in the property. Free tax Example. Free tax An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Free tax Recapture of deduction. Free tax   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Free tax You contributed a fractional interest in tangible personal property after August 17, 2006. Free tax You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Free tax   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Free tax Additional tax. Free tax   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Free tax Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Free tax Qualified organization. Free tax   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Free tax The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Free tax   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Free tax Qualified real property interest. Free tax   This is any of the following interests in real property. Free tax Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Free tax A remainder interest. Free tax A restriction (granted in perpetuity) on the use that may be made of the real property. Free tax Conservation purposes. Free tax   Your contribution must be made only for one of the following conservation purposes. Free tax Preserving land areas for outdoor recreation by, or for the education of, the general public. Free tax Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Free tax Preserving open space, including farmland and forest land, if it yields a significant public benefit. Free tax The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Free tax Preserving a historically important land area or a certified historic structure. Free tax Building in registered historic district. Free tax   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Free tax The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Free tax You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Free tax You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Free tax   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Free tax For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Free tax   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Free tax See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Free tax You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Free tax See Deductions Subject to the 2% Limit in Publication 529 for more information. Free tax More information. Free tax   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Free tax For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Free tax For more information about qualified conservation contributions, see Regulations section 1. Free tax 170A-14. Free tax Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Free tax But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Free tax Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Free tax Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Free tax Tangible personal property. Free tax   This is any property, other than land or buildings, that can be seen or touched. Free tax It includes furniture, books, jewelry, paintings, and cars. Free tax Future interest. Free tax   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Free tax Example. Free tax You own an antique car that you contribute to a museum. Free tax You give up ownership, but retain the right to keep the car in your garage with your personal collection. Free tax Because you keep an interest in the property, you cannot deduct the contribution. Free tax If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Free tax Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Free tax The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Free tax You must remove the amount of your charitable contribution deduction from your opening inventory. Free tax It is not part of the cost of goods sold. Free tax If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Free tax Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Free tax For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Free tax A special rule applies to certain donations of food inventory. Free tax See Food Inventory, later. Free tax Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Free tax Intellectual property means any of the following: Patents. Free tax Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Free tax Trademarks. Free tax Trade names. Free tax Trade secrets. Free tax Know-how. Free tax Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Free tax Other similar property or applications or registrations of such property. Free tax Additional deduction based on income. Free tax   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Free tax   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Free tax In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Free tax However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Free tax   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Free tax The additional deductions cannot be taken for intellectual property donated to certain private foundations. Free tax Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Free tax   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Free tax   The organization is required to file an information return showing the income from the property, with a copy to you. Free tax This is done on Form 8899, Notice of Income From Donated Intellectual Property. Free tax Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Free tax Publication 561 contains a more complete discussion. Free tax Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Free tax Used clothing. Free tax   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Free tax There are no fixed formulas or methods for finding the value of items of clothing. Free tax   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Free tax      Also see Clothing and Household Items , earlier. Free tax Example. Free tax    Kristin donated a coat to a thrift store operated by her church. Free tax She paid $300 for the coat 3 years ago. Free tax Similar coats in the thrift store sell for $50. Free tax The fair market value of the coat is $50. Free tax Kristin's donation is limited to $50. Free tax Household items. Free tax   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Free tax These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Free tax For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Free tax   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Free tax Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Free tax Do not include any of this evidence with your tax return. Free tax   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Free tax   Also see Clothing and Household Items , earlier. Free tax Cars, boats, and airplanes. Free tax   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Free tax Boats. Free tax   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Free tax Cars. Free tax   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Free tax The guides may be published monthly or seasonally, and for different regions of the country. Free tax These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Free tax The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Free tax But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Free tax   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Free tax You can also find used car pricing information on the Internet. Free tax   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Free tax However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Free tax The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. Free tax Example. Free tax You donate a used car in poor condition to a local high school for use by students studying car repair. Free tax A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Free tax However, the guide shows the price for a private party sale of the car is only $750. Free tax The fair market value of the car is considered to be $750. Free tax Large quantities. Free tax   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Free tax Example. Free tax You purchase 500 bibles for $1,000. Free tax The person who sells them to you says the retail value of these bibles is $3,000. Free tax If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Free tax Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
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President Barack Obama

Barack Obama is the winner of the 2012 presidential election.


2013 Inauguration

Tickets for President Obama's inaugural swearing-in ceremonies will be distributed in January 2013 by your U.S. senators and representatives.

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Inauguration at the U.S. Capitol

Presidential inaugural ceremonies are perhaps the most widely known of the many ceremonies held at the U.S. Capitol.

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Every four years, following the election of president of the united states, the U. S. Capitol hosts the inauguration of the president. Andrew Jackson was the first president to be inaugurated outdoors at the capitol, taking the oath from chief justice John Marshall.  This ceremony on the East Front Portico began a tradition observed by most presidents until 1981 when inaugurations were moved to the west front.

The Architect of the Capitol supports the inauguration in a number of ways; perhaps the most visible is the building of the platform upon which the incoming president receives his oath of office from the chief justice and conducts his inaugural speech.  The inaugural platform is constructed entirely from scratch in a period slightly more than three months for each inaugural ceremony.  The platform for the 2009 inauguration was more than 10,000 square feet, the same size as the platform used for the 2005 inaugural which was the largest platform ever built for an inauguration.  On inauguration day it held more than 1,600 people.  In addition, bleachers built above the platform on the upper west terrace will hold another 1,000 people including choirs and guests.

It is built entirely of lumber to protect the surfaces of the Capitol, and the platform is fully ADA compliant.  It is a stadium design which maximizes the sight lines for the guests on the platform.  It is also designed to blend architecturally with the U. S. Capitol.  In keeping with the sustainability efforts of the Architect of the Capitol, the entire structure is deconstructed, meaning each piece is carefully taken apart and then the lumber is donated to local charities to assist in housing projects.  The Architect of the Capitol is honored to play this behind the scene role in one of America's most revered events

The Free Tax

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