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H&r Block Free State File

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H&r Block Free State File

H&r block free state file 13. H&r block free state file   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. H&r block free state file Wage limit. H&r block free state file Federal Income Tax WithholdingNew Form W-4 for 2014. H&r block free state file Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. H&r block free state file Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. H&r block free state file  The employee tax rate for social security is 6. H&r block free state file 2%. H&r block free state file Previously, the employee tax rate for social security was 4. H&r block free state file 2%. H&r block free state file The employer tax rate for social security remains unchanged at 6. H&r block free state file 2%. H&r block free state file The social security wage base limit is $113,700. H&r block free state file The Medicare tax rate is 1. H&r block free state file 45% each for the employee and employer, unchanged from 2012. H&r block free state file There is no wage base limit for Medicare tax. H&r block free state file Additional Medicare Tax. H&r block free state file  In addition to withholding Medicare tax at 1. H&r block free state file 45%, you must withhold a 0. H&r block free state file 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r block free state file You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. H&r block free state file Additional Medicare Tax is only imposed on the employee. H&r block free state file There is no employer share of Additional Medicare Tax. H&r block free state file All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. H&r block free state file For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. H&r block free state file For more information on Additional Medicare Tax, visit IRS. H&r block free state file gov and enter “Additional Medicare Tax” in the search box. H&r block free state file Leave-based donation programs to aid victims of Hurricane Sandy. H&r block free state file  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. H&r block free state file The donated leave will not be included in the income or wages of the employee. H&r block free state file The employer may deduct the cash payments as business expenses or charitable contributions. H&r block free state file For more information, see Notice 2012-69, 2012-51 I. H&r block free state file R. H&r block free state file B. H&r block free state file 712, available at www. H&r block free state file irs. H&r block free state file gov/irb/2012-51_IRB/ar09. H&r block free state file html. H&r block free state file Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. H&r block free state file  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. H&r block free state file Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. H&r block free state file Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. H&r block free state file For more information, visit IRS. H&r block free state file gov and enter “work opportunity credit” in the search box. H&r block free state file What's New for 2014 Social security and Medicare tax for 2014. H&r block free state file  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). H&r block free state file The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). H&r block free state file There is no limit on the amount of wages subject to Medicare tax. H&r block free state file Reminders Additional employment tax information for farmers. H&r block free state file  See Publication 51 (Circular A) for more detailed guidance on employment taxes. H&r block free state file For the latest information about employment tax developments impacting farmers, go to www. H&r block free state file irs. H&r block free state file gov/pub51. H&r block free state file Correcting a previously filed Form 943. H&r block free state file  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. H&r block free state file Form 943-X is filed separately from Form 943. H&r block free state file For more information on correcting Form 943, see the Instructions for Form 943-X. H&r block free state file Federal tax deposits must be made by electronic funds transfer. H&r block free state file  You must use electronic funds transfer to make all federal tax deposits. H&r block free state file Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). H&r block free state file If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. H&r block free state file Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r block free state file EFTPS is a free service provided by the Department of Treasury. H&r block free state file Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r block free state file For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r block free state file To get more information about EFTPS or to enroll in EFTPS, visit www. H&r block free state file eftps. H&r block free state file gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r block free state file Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. H&r block free state file Important Dates for 2014 You should take the action indicated by the dates listed. H&r block free state file See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. H&r block free state file Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. H&r block free state file For these dates, see Publication 509, Tax Calendars (For use in 2014). H&r block free state file Note. H&r block free state file  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. H&r block free state file A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. H&r block free state file For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. H&r block free state file S. H&r block free state file Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. H&r block free state file See Private delivery services in Publication 51 (Circular A). H&r block free state file Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. H&r block free state file Statewide holidays no longer apply. H&r block free state file For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). H&r block free state file Fiscal year taxpayers. H&r block free state file  The due dates listed below apply whether you use a calendar or a fiscal year. H&r block free state file By January 31. H&r block free state file   File Form 943 with the IRS. H&r block free state file If you deposited all Form 943 taxes when due, you have 10 additional days to file. H&r block free state file Furnish each employee with a completed Form W-2, Wage and Tax Statement. H&r block free state file Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). H&r block free state file File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. H&r block free state file If you deposited all the FUTA tax when due, you have 10 additional days to file. H&r block free state file File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. H&r block free state file If you deposited all Form 945 taxes when due, you have 10 additional days to file. H&r block free state file By February 15. H&r block free state file  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. H&r block free state file On February 16. H&r block free state file  Any Form W-4 claiming exemption from withholding for the previous year has now expired. H&r block free state file Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. H&r block free state file If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. H&r block free state file If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. H&r block free state file By February 28. H&r block free state file   File paper Forms 1099 and 1096. H&r block free state file File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. H&r block free state file S. H&r block free state file Information Returns, with the IRS. H&r block free state file For electronically filed returns, see By March 31 below. H&r block free state file File paper Forms W-2 and W-3. H&r block free state file File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). H&r block free state file For electronically filed returns, see By March 31 below. H&r block free state file By March 31. H&r block free state file   File electronic Forms W-2 and 1099. H&r block free state file File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. H&r block free state file For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. H&r block free state file socialsecurity. H&r block free state file gov/employer. H&r block free state file For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. H&r block free state file By April 30, July 31, October 31, and January 31. H&r block free state file   Deposit FUTA taxes. H&r block free state file Deposit FUTA tax due if it is more than $500. H&r block free state file Before December 1. H&r block free state file  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. H&r block free state file Introduction You are generally required to withhold federal income tax from the wages of your employees. H&r block free state file You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). H&r block free state file You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r block free state file This chapter includes information about these taxes. H&r block free state file You must also pay self-employment tax on your net earnings from farming. H&r block free state file See chapter 12 for information on self-employment tax. H&r block free state file Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. H&r block free state file Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. H&r block free state file Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. H&r block free state file Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. H&r block free state file Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. H&r block free state file Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). H&r block free state file Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). H&r block free state file Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. H&r block free state file For more information, see Publication 51 (Circular A). H&r block free state file Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. H&r block free state file This is so even when you give the employee freedom of action. H&r block free state file What matters is that you have the right to control the details of how the services are performed. H&r block free state file You are responsible for withholding and paying employment taxes for your employees. H&r block free state file You are also required to file employment tax returns. H&r block free state file These requirements do not apply to amounts that you pay to independent contractors. H&r block free state file See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. H&r block free state file If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. H&r block free state file Special rules apply to crew leaders. H&r block free state file See Crew Leaders , later. H&r block free state file Employer identification number (EIN). H&r block free state file   If you have employees, you must have an EIN. H&r block free state file If you do not have an EIN, you may apply for one online. H&r block free state file Go to IRS. H&r block free state file gov and click on the Apply for an EIN Online link under Tools. H&r block free state file You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). H&r block free state file The hours of operation for both numbers are Monday–Friday form 7:00 a. H&r block free state file m. H&r block free state file –7:00 p. H&r block free state file m. H&r block free state file local time (Alaska and Hawaii follow Pacific time). H&r block free state file You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. H&r block free state file Employee's social security number (SSN). H&r block free state file   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). H&r block free state file Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). H&r block free state file It is also available from the SSA's website at www. H&r block free state file socialsecurity. H&r block free state file gov. H&r block free state file   The employee must furnish evidence of age, identity, and U. H&r block free state file S. H&r block free state file citizenship or lawful immigration status permitting employment with the Form SS-5. H&r block free state file An employee who is age 18 or older must appear in person with this evidence at an SSA office. H&r block free state file Form I-9. H&r block free state file    You must verify that each new employee is legally eligible to work in the United States. H&r block free state file This includes completing the Form I-9, Employment Eligibility Verification. H&r block free state file Form I-9 is available from the U. H&r block free state file S. H&r block free state file Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. H&r block free state file Form I-9 is also available from the USCIS website at www. H&r block free state file uscis. H&r block free state file gov. H&r block free state file You can also contact the USCIS at 1-800-375-5283 for more information. H&r block free state file New hire reporting. H&r block free state file   You are required to report any new employee to a designated state new hire registry. H&r block free state file Many states accept a copy of Form W-4 with employer information added. H&r block free state file Visit the Office of Child Support Enforcement website at www. H&r block free state file acf. H&r block free state file hhs. H&r block free state file gov/programs/cse/newhire for more information. H&r block free state file Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. H&r block free state file However, certain exemptions may apply to wages paid to your child, spouse, or parent. H&r block free state file Exemptions for your child. H&r block free state file   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. H&r block free state file However, see Nonexempt services of a child or spouse , later. H&r block free state file Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. H&r block free state file Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. H&r block free state file Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. H&r block free state file Exemptions for your spouse. H&r block free state file   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. H&r block free state file   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. H&r block free state file Nonexempt services of a child or spouse. H&r block free state file   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. H&r block free state file A corporation, even if it is controlled by you. H&r block free state file A partnership, even if you are a partner. H&r block free state file This does not apply to wages paid to your child if each partner is a parent of the child. H&r block free state file An estate or trust, even if it is the estate of a deceased parent. H&r block free state file In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. H&r block free state file Exemptions for your parent. H&r block free state file   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. H&r block free state file Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. H&r block free state file You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. H&r block free state file You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. H&r block free state file   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. H&r block free state file Qualified joint venture. H&r block free state file   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. H&r block free state file For more information about qualified joint ventures, see chapter 12. H&r block free state file Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. H&r block free state file Social security and Medicare taxes. H&r block free state file   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. H&r block free state file The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. H&r block free state file The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. H&r block free state file Federal income tax withholding. H&r block free state file   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. H&r block free state file Federal unemployment (FUTA) tax. H&r block free state file   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. H&r block free state file The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. H&r block free state file Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. H&r block free state file   The farmer is the employer of workers furnished by a crew leader in all other situations. H&r block free state file In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. H&r block free state file For example, some farmers employ individuals to recruit farmworkers exclusively for them. H&r block free state file Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. H&r block free state file The farmer is the employer in these cases. H&r block free state file For information about common-law employees, see section 1 of Publication 15-A. H&r block free state file For information about crew leaders, see the Department of Labor website at www. H&r block free state file dol. H&r block free state file gov/whd/regs/compliance/whdfs49. H&r block free state file htm. H&r block free state file Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. H&r block free state file You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). H&r block free state file The $150 test applies separately to each farmworker that you employ. H&r block free state file If you employ a family of workers, each member is treated separately. H&r block free state file Do not count wages paid by other employers. H&r block free state file You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). H&r block free state file If the $2,500 test for the group is not met, the $150 test for an employee still applies. H&r block free state file Exceptions. H&r block free state file   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. H&r block free state file However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. H&r block free state file   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. H&r block free state file   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. H&r block free state file Religious exemption. H&r block free state file   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. H&r block free state file This exemption is available only if both the employee and the employer are members of the group or division. H&r block free state file   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. H&r block free state file Cash wages. H&r block free state file   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. H&r block free state file Cash wages include checks, money orders, and any kind of money or cash. H&r block free state file   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. H&r block free state file Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. H&r block free state file For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. H&r block free state file socialsecurity. H&r block free state file gov. H&r block free state file Noncash wages. H&r block free state file    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. H&r block free state file Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. H&r block free state file However, they are subject to these taxes if the substance of the transaction is a cash payment. H&r block free state file For information on lodging provided as a condition of employment, see Publication 15-B. H&r block free state file   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. H&r block free state file Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). H&r block free state file Tax rates and social security wage limit. H&r block free state file   For 2013, the employer and the employee will pay the following taxes. H&r block free state file The employer and employee each pay 6. H&r block free state file 2% of cash wages for social security tax (old-age, survivors, and disability insurance). H&r block free state file The employer and employee each pay 1. H&r block free state file 45% of cash wages for Medicare tax (hospital insurance). H&r block free state file The employee pays 0. H&r block free state file 9% of cash wages in excess of $200,000 for Additional Medicare Tax. H&r block free state file Wage limit. H&r block free state file   The limit on wages subject to the social security tax for 2013 is $113,700. H&r block free state file There is no limit on wages subject to the Medicare tax. H&r block free state file All covered wages are subject to the Medicare tax. H&r block free state file Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. H&r block free state file Paying employee's share. H&r block free state file   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. H&r block free state file It is additional income to the employee. H&r block free state file You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. H&r block free state file Example. H&r block free state file Jane operates a small family fruit farm. H&r block free state file She employs day laborers in the picking season to enable her to timely get her crop to market. H&r block free state file She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. H&r block free state file When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). H&r block free state file For 2013, Jane paid Mary $1,000 during the year. H&r block free state file Susan enters $1,076. H&r block free state file 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. H&r block free state file 50 social security and Medicare taxes paid for Mary). H&r block free state file She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. H&r block free state file Additional Medicare Tax. H&r block free state file   In addition to withholding Medicare tax at 1. H&r block free state file 45%, you must withhold a 0. H&r block free state file 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r block free state file You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. H&r block free state file Additional Medicare Tax is only imposed on the employee. H&r block free state file There is no employer share of Additional Medicare Tax. H&r block free state file All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. H&r block free state file   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). H&r block free state file For more information on Additional Medicare Tax, visit IRS. H&r block free state file gov and enter “Additional Medicare Tax” in the search box. H&r block free state file Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. H&r block free state file Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. H&r block free state file The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. H&r block free state file Form W-4. H&r block free state file   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. H&r block free state file In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. H&r block free state file An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. H&r block free state file   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. H&r block free state file   You should give each new employee a Form W-4 as soon as you hire the employee. H&r block free state file For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. H&r block free state file Have the employee complete and return the form to you before the first payday. H&r block free state file If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. H&r block free state file New Form W-4 for 2014. H&r block free state file   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. H&r block free state file Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. H&r block free state file You cannot accept substitute Forms W-4 developed by employees. H&r block free state file How to figure withholding. H&r block free state file   You can use one of several methods to determine the amount to withhold. H&r block free state file The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. H&r block free state file Publication 51 (Circular A) also contains additional information about federal income tax withholding. H&r block free state file Nonemployee compensation. H&r block free state file   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. H&r block free state file However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. H&r block free state file For more information, see the Instructions for Form 1099-MISC. H&r block free state file Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. H&r block free state file However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. H&r block free state file You meet the notification requirement by giving each employee any of the following. H&r block free state file Form W-2, which contains EIC notification on the back of Copy B. H&r block free state file A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. H&r block free state file Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). H&r block free state file Your own written statement with the exact wording of Notice 797. H&r block free state file For more information, see Publication 51 (Circular A). H&r block free state file Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. H&r block free state file You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. H&r block free state file If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. H&r block free state file You must also pay the employer's share of social security and Medicare taxes. H&r block free state file There is no employer share of Additional Medicare Tax. H&r block free state file Form 943. H&r block free state file   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. H&r block free state file Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). H&r block free state file Deposits. H&r block free state file   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. H&r block free state file However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. H&r block free state file   For more information on deposit rules, see Publication 51 (Circular A). H&r block free state file Electronic deposit requirement. H&r block free state file   You must use electronic funds transfer to make all federal tax deposits. H&r block free state file Generally, electronic funds transfers are made using EFTPS. H&r block free state file If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. H&r block free state file Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r block free state file EFTPS is a free service provided by the Department of Treasury. H&r block free state file Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r block free state file   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r block free state file To get more information about EFTPS or to enroll in EFTPS, visit www. H&r block free state file eftps. H&r block free state file gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r block free state file Additional information about EFTPS is also available in Publication 966. H&r block free state file Form W-2. H&r block free state file   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. H&r block free state file However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. H&r block free state file The date the employee requests the form. H&r block free state file The date you make your final payment of wages to the employee. H&r block free state file Compensation paid to H-2A visa holders. H&r block free state file   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. H&r block free state file Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. H&r block free state file   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. H&r block free state file In this case, the worker must give the employer a completed Form W-4. H&r block free state file Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. H&r block free state file   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. H&r block free state file For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. H&r block free state file Trust fund recovery penalty. H&r block free state file   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. H&r block free state file A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. H&r block free state file A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. H&r block free state file   Willfully means voluntarily, consciously, and intentionally. H&r block free state file Paying other expenses of the business instead of the taxes due is acting willfully. H&r block free state file Consequences of treating an employee as an independent contractor. H&r block free state file   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. H&r block free state file See Publication 15-A for more information. H&r block free state file Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. H&r block free state file You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. H&r block free state file You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. H&r block free state file These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. H&r block free state file See Family Employees , earlier. H&r block free state file Alien farmworkers. H&r block free state file   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. H&r block free state file However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. H&r block free state file Commodity wages. H&r block free state file   Payments in kind for farm labor are not cash wages. H&r block free state file Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. H&r block free state file Tax rate and credit. H&r block free state file   The gross FUTA tax rate is 6. H&r block free state file 0% of the first $7,000 cash wages you pay to each employee during the year. H&r block free state file However, you are given a credit of up to 5. H&r block free state file 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. H&r block free state file If your state tax rate (experience rate) is less than 5. H&r block free state file 4%, you may still be allowed the full 5. H&r block free state file 4% credit. H&r block free state file   If you do not pay the state tax, you cannot take the credit. H&r block free state file If you are exempt from state unemployment tax for any reason, the full 6. H&r block free state file 0% rate applies. H&r block free state file See the Instructions for Form 940 for additional information. H&r block free state file More information. H&r block free state file   For more information on FUTA tax, see Publication 51 (Circular A). H&r block free state file Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. H&r block free state file It must not be collected or deducted from the wages of your employees. H&r block free state file Form 940. H&r block free state file   Report FUTA tax on Form 940. H&r block free state file The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). H&r block free state file Deposits. H&r block free state file   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. H&r block free state file If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. H&r block free state file You can add it to the tax for the next quarter. H&r block free state file If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. H&r block free state file If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. H&r block free state file Electronic deposit requirement. H&r block free state file   You must use electronic funds transfer to make all federal tax deposits. H&r block free state file Generally, electronic funds transfers are made using EFTPS. H&r block free state file If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. H&r block free state file Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r block free state file EFTPS is a free service provided by the Department of Treasury. H&r block free state file Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r block free state file   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r block free state file To get more information about EFTPS or to enroll in EFTPS, visit www. H&r block free state file eftps. H&r block free state file gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r block free state file Additional information about EFTPS is also available in Publication 966. H&r block free state file Prev  Up  Next   Home   More Online Publications
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The H&r Block Free State File

H&r block free state file Publication 529 - Main Content Table of Contents Deductions Subject to the 2% LimitUnreimbursed Employee Expenses Tax Preparation Fees Other Expenses Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses How To ReportWho can use Form 2106-EZ. H&r block free state file Computer used in a home office. H&r block free state file Example How To Get Tax HelpLow Income Taxpayer Clinics Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). H&r block free state file You can claim the amount of expenses that is more than 2% of your adjusted gross income. H&r block free state file You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. H&r block free state file Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. H&r block free state file Generally, you apply the 2% limit after you apply any other deduction limit. H&r block free state file For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging ) before you apply the 2% limit. H&r block free state file Deductions subject to the 2% limit are discussed in the following three categories. H&r block free state file Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). H&r block free state file Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). H&r block free state file Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). H&r block free state file Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. H&r block free state file You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. H&r block free state file An expense is ordinary if it is common and accepted in your trade, business, or profession. H&r block free state file An expense is necessary if it is appropriate and helpful to your business. H&r block free state file An expense does not have to be required to be considered necessary. H&r block free state file You may be able to deduct the following items as unreimbursed employee expenses. H&r block free state file Business bad debt of an employee. H&r block free state file Business liability insurance premiums. H&r block free state file Damages paid to a former employer for breach of an employment contract. H&r block free state file Depreciation on a computer your employer requires you to use in your work. H&r block free state file Dues to a chamber of commerce if membership helps you do your job. H&r block free state file Dues to professional societies. H&r block free state file Educator expenses. H&r block free state file Home office or part of your home used regularly and exclusively in your work. H&r block free state file Job search expenses in your present occupation. H&r block free state file Laboratory breakage fees. H&r block free state file Legal fees related to your job. H&r block free state file Licenses and regulatory fees. H&r block free state file Malpractice insurance premiums. H&r block free state file Medical examinations required by an employer. H&r block free state file Occupational taxes. H&r block free state file Passport for a business trip. H&r block free state file Repayment of an income aid payment received under an employer's plan. H&r block free state file Research expenses of a college professor. H&r block free state file Rural mail carriers' vehicle expenses. H&r block free state file Subscriptions to professional journals and trade magazines related to your work. H&r block free state file Tools and supplies used in your work. H&r block free state file Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. H&r block free state file Union dues and expenses. H&r block free state file Work clothes and uniforms if required and not suitable for everyday use. H&r block free state file Work-related education. H&r block free state file Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. H&r block free state file Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. H&r block free state file A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. H&r block free state file Example. H&r block free state file You make a bona fide loan to the corporation you work for. H&r block free state file It fails to pay you back. H&r block free state file You had to make the loan in order to keep your job. H&r block free state file You have a business bad debt as an employee. H&r block free state file More information. H&r block free state file   For more information on business bad debts, see chapter 10 in Publication 535. H&r block free state file For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. H&r block free state file Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. H&r block free state file Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. H&r block free state file Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. H&r block free state file For the convenience of your employer. H&r block free state file   This means that your use of the computer is for a substantial business reason of your employer. H&r block free state file You must consider all facts in making this determination. H&r block free state file Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. H&r block free state file Required as a condition of your employment. H&r block free state file   This means that you cannot properly perform your duties without the computer. H&r block free state file Whether you can properly perform your duties without it depends on all the facts and circumstances. H&r block free state file It is not necessary that your employer explicitly requires you to use your computer. H&r block free state file But neither is it enough that your employer merely states that your use of the item is a condition of your employment. H&r block free state file Example. H&r block free state file You are an engineer with an engineering firm. H&r block free state file You occasionally take work home at night rather than work late at the office. H&r block free state file You own and use a computer that is similar to the one you use at the office to complete your work at home. H&r block free state file Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. H&r block free state file Which depreciation method to use. H&r block free state file   The depreciation method you use depends on whether you meet the more-than-50%-use test. H&r block free state file More-than-50%-use test met. H&r block free state file   You meet this test if you use the computer more than 50% in your work. H&r block free state file If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). H&r block free state file In addition, you may be able to take the section 179 deduction for the year you place the item in service. H&r block free state file More-than-50%-use test not met. H&r block free state file   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). H&r block free state file You also cannot claim the section 179 deduction. H&r block free state file (But if you use your computer in a home office, see the exception below. H&r block free state file ) Investment use. H&r block free state file   Your use of a computer in connection with investments (described later under Other Expenses ) does not count as use in your work. H&r block free state file However, you can combine your investment use with your work use in figuring your depreciation deduction. H&r block free state file Exception for computer used in a home office. H&r block free state file   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office . H&r block free state file You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. H&r block free state file You also may be able to take a section 179 deduction for the year you place the computer in service. H&r block free state file See Computer used in a home office under How To Report, later. H&r block free state file More information. H&r block free state file   For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. H&r block free state file Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. H&r block free state file Reporting your depreciation deduction. H&r block free state file    See How To Report, later, for information about reporting a deduction for depreciation. H&r block free state file You must keep records to prove your percentage of business and investment use. H&r block free state file Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. H&r block free state file Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. H&r block free state file Lobbying and political activities. H&r block free state file    You may not be able to deduct that part of your dues that is for certain lobbying and political activities. H&r block free state file See Lobbying Expenses under Nondeductible Expenses, later. H&r block free state file Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. H&r block free state file If you file Form 1040A, you can deduct these expenses on line 16. H&r block free state file If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. H&r block free state file However, neither spouse can deduct more than $250 of his or her qualified expenses. H&r block free state file Eligible educator. H&r block free state file   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. H&r block free state file Qualified expenses. H&r block free state file   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. H&r block free state file An ordinary expense is one that is common and accepted in your educational field. H&r block free state file A necessary expense is one that is helpful and appropriate for your profession as an educator. H&r block free state file An expense does not have to be required to be considered necessary. H&r block free state file   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. H&r block free state file You must reduce your qualified expenses by the following amounts. H&r block free state file Excludable U. H&r block free state file S. H&r block free state file series EE and I savings bond interest from Form 8815. H&r block free state file Nontaxable qualified state tuition program earnings. H&r block free state file Nontaxable earnings from Coverdell education savings accounts. H&r block free state file Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. H&r block free state file Educator expenses over limit. H&r block free state file   If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. H&r block free state file Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. H&r block free state file You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. H&r block free state file The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. H&r block free state file Principal place of business. H&r block free state file   If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. H&r block free state file   Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. H&r block free state file You should keep records that will give the information needed to figure the deduction according to these rules. H&r block free state file Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. H&r block free state file More information. H&r block free state file   See Publication 587 for more detailed information and a worksheet for figuring the deduction. H&r block free state file Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. H&r block free state file You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. H&r block free state file Employment and outplacement agency fees. H&r block free state file    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. H&r block free state file Employer pays you back. H&r block free state file   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. H&r block free state file See Recoveries in Publication 525. H&r block free state file Employer pays the employment agency. H&r block free state file   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. H&r block free state file Résumé. H&r block free state file   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. H&r block free state file Travel and transportation expenses. H&r block free state file   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. H&r block free state file You can deduct the travel expenses if the trip is primarily to look for a new job. H&r block free state file The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. H&r block free state file   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. H&r block free state file    You can choose to use the standard mileage rate to figure your car expenses. H&r block free state file The 2013 rate for business use of a vehicle is 56½ cents per mile. H&r block free state file See Publication 463 for more information on travel and car expenses. H&r block free state file Legal Fees You can deduct legal fees related to doing or keeping your job. H&r block free state file Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. H&r block free state file Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. H&r block free state file If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. H&r block free state file Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. H&r block free state file If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. H&r block free state file Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. H&r block free state file You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. H&r block free state file However, you cannot deduct the cost of travel as a form of education. H&r block free state file Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. H&r block free state file See chapter 4 of Publication 463 for more information. H&r block free state file Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. H&r block free state file You can depreciate the cost of tools that have a useful life substantially beyond the tax year. H&r block free state file For more information about depreciation, see Publication 946. H&r block free state file Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. H&r block free state file Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. H&r block free state file Travel expenses. H&r block free state file   Travel expenses are those incurred while traveling away from home for your employer. H&r block free state file You can deduct travel expenses paid or incurred in connection with a temporary work assignment. H&r block free state file Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. H&r block free state file   Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc. H&r block free state file ), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. H&r block free state file   Travel expenses are discussed more fully in chapter 1 of Publication 463. H&r block free state file Temporary work assignment. H&r block free state file    If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. H&r block free state file Indefinite work assignment. H&r block free state file   If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. H&r block free state file If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. H&r block free state file Federal crime investigation and prosecution. H&r block free state file   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. H&r block free state file This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. H&r block free state file   To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. H&r block free state file Armed Forces reservists traveling more than 100 miles from home. H&r block free state file   If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. H&r block free state file The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. H&r block free state file The balance, if any, is reported on Schedule A. H&r block free state file   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. H&r block free state file   For more information on travel expenses, see Publication 463. H&r block free state file Local transportation expenses. H&r block free state file   Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. H&r block free state file They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. H&r block free state file   You can choose to use the standard mileage rate to figure your car expenses. H&r block free state file The 2013 rate for business use of a vehicle is 56½ cents per mile. H&r block free state file    In general, the costs of commuting between your residence and your place of business are nondeductible. H&r block free state file Work at two places in a day. H&r block free state file   If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. H&r block free state file Temporary work location. H&r block free state file   You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. H&r block free state file The work location is outside the metropolitan area where you live and normally work. H&r block free state file You have at least one regular work location (other than your home) for the same trade or business. H&r block free state file (If this applies, the distance between your home and the temporary work location does not matter. H&r block free state file )   For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. H&r block free state file It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. H&r block free state file If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. H&r block free state file For more information, see chapter 1 of Publication 463. H&r block free state file Home office. H&r block free state file   You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. H&r block free state file (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter. H&r block free state file ) See Home Office , earlier, for a discussion on the use of your home as your principal place of business. H&r block free state file Meals and entertainment. H&r block free state file   Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. H&r block free state file However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. H&r block free state file   You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. H&r block free state file You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. H&r block free state file Meals when subject to “hours of service” limits. H&r block free state file   You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. H&r block free state file You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. H&r block free state file Gift expenses. H&r block free state file   You can generally deduct up to $25 of business gifts you give to any one individual during the year. H&r block free state file The following items do not count toward the $25 limit. H&r block free state file Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. H&r block free state file Signs, racks, and promotional materials to be displayed on the business premises of the recipient. H&r block free state file Local lodging. H&r block free state file   If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. H&r block free state file   If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. H&r block free state file Additional information. H&r block free state file    See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. H&r block free state file Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. H&r block free state file You can also deduct assessments for benefit payments to unemployed union members. H&r block free state file However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. H&r block free state file Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. H&r block free state file You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. H&r block free state file See Lobbying Expenses under Nondeductible Expenses, later. H&r block free state file Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. H&r block free state file You must wear them as a condition of your employment. H&r block free state file The clothes are not suitable for everyday wear. H&r block free state file It is not enough that you wear distinctive clothing. H&r block free state file The clothing must be specifically required by your employer. H&r block free state file Nor is it enough that you do not, in fact, wear your work clothes away from work. H&r block free state file The clothing must not be suitable for taking the place of your regular clothing. H&r block free state file Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. H&r block free state file ). H&r block free state file Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. H&r block free state file However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. H&r block free state file Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. H&r block free state file Protective clothing. H&r block free state file   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. H&r block free state file   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. H&r block free state file Military uniforms. H&r block free state file   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. H&r block free state file However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. H&r block free state file In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. H&r block free state file   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. H&r block free state file   If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. H&r block free state file However, you can deduct the cost of insignia, shoulder boards, and related items. H&r block free state file    You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. H&r block free state file Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. H&r block free state file It maintains or improves skills required in your present work. H&r block free state file It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. H&r block free state file You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. H&r block free state file If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. H&r block free state file If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. H&r block free state file Travel as education. H&r block free state file   You cannot deduct the cost of travel that in itself constitutes a form of education. H&r block free state file For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. H&r block free state file More information. H&r block free state file    See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. H&r block free state file Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. H&r block free state file Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. H&r block free state file Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. H&r block free state file Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. H&r block free state file These fees include the cost of tax preparation software programs and tax publications. H&r block free state file They also include any fee you paid for electronic filing of your return. H&r block free state file See Tax preparation fees under How To Report, later. H&r block free state file Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. H&r block free state file On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. H&r block free state file You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. H&r block free state file These other expenses include the following items. H&r block free state file Appraisal fees for a casualty loss or charitable contribution. H&r block free state file Casualty and theft losses from property used in performing services as an employee. H&r block free state file Clerical help and office rent in caring for investments. H&r block free state file Depreciation on home computers used for investments. H&r block free state file Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. H&r block free state file Fees to collect interest and dividends. H&r block free state file Hobby expenses, but generally not more than hobby income. H&r block free state file Indirect miscellaneous deductions from pass-through entities. H&r block free state file Investment fees and expenses. H&r block free state file Legal fees related to producing or collecting taxable income or getting tax advice. H&r block free state file Loss on deposits in an insolvent or bankrupt financial institution. H&r block free state file Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. H&r block free state file Repayments of income. H&r block free state file Repayments of social security benefits. H&r block free state file Safe deposit box rental, except for storing jewelry and other personal effects. H&r block free state file Service charges on dividend reinvestment plans. H&r block free state file Tax advice fees. H&r block free state file Trustee's fees for your IRA, if separately billed and paid. H&r block free state file If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses. H&r block free state file Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. H&r block free state file Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. H&r block free state file First report the loss in Section B of Form 4684, Casualties and Thefts. H&r block free state file You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. H&r block free state file To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. H&r block free state file For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. H&r block free state file Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. H&r block free state file Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. H&r block free state file The fees are deductible on the return for the year in which you paid them. H&r block free state file For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. H&r block free state file Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). H&r block free state file You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. H&r block free state file But if you work as an employee and also use the computer in that work, see Depreciation on Computers under Unreimbursed Employee Expenses, earlier. H&r block free state file For more information on depreciation, see Publication 946. H&r block free state file Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. H&r block free state file Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. H&r block free state file The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. H&r block free state file For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. H&r block free state file Fees To Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. H&r block free state file But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. H&r block free state file You must add the fee to the cost of the property. H&r block free state file You cannot deduct the fee you pay to a broker to sell securities. H&r block free state file You can use the fee only to figure gain or loss from the sale. H&r block free state file See the instructions for Schedule D (Form 1040) for information on how to report the fee. H&r block free state file Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. H&r block free state file A hobby is not a business because it is not carried on to make a profit. H&r block free state file See Not-for-Profit Activities in chapter 1 of Publication 535. H&r block free state file Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. H&r block free state file Deductions of pass-through entities are passed through to the partners or shareholders. H&r block free state file The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. H&r block free state file Example. H&r block free state file You are a member of an investment club that is formed solely to invest in securities. H&r block free state file The club is treated as a partnership. H&r block free state file The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. H&r block free state file In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. H&r block free state file However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. H&r block free state file Publicly offered mutual funds. H&r block free state file   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. H&r block free state file A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. H&r block free state file   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). H&r block free state file This net figure is the amount you report on your return as income. H&r block free state file You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. H&r block free state file Information returns. H&r block free state file   You should receive information returns from pass-through entities. H&r block free state file Partnerships and S corporations. H&r block free state file   These entities issue Schedule K-1, which lists the items and amounts you must report, and identifies the tax return schedules and lines to use. H&r block free state file Nonpublicly offered mutual funds. H&r block free state file   These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. H&r block free state file You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. H&r block free state file Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. H&r block free state file Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. H&r block free state file You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. H&r block free state file You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. H&r block free state file You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). H&r block free state file See Tax Preparation Fees, earlier. H&r block free state file Unlawful discrimination claims. H&r block free state file   You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U. H&r block free state file S. H&r block free state file Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. H&r block free state file However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. H&r block free state file See Publication 525 for more information. H&r block free state file Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. H&r block free state file If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. H&r block free state file If elected, the casualty loss is subject to certain deduction limitations. H&r block free state file The election is made on Form 4684. H&r block free state file Once you make this choice, you cannot change it without IRS approval. H&r block free state file If none of the deposit is federally insured, you can deduct the loss in either of the following ways. H&r block free state file As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). H&r block free state file Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. H&r block free state file This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. H&r block free state file As a casualty loss. H&r block free state file Report it on Form 4684 first and then on Schedule A (Form 1040). H&r block free state file See Publication 547 for details. H&r block free state file As a nonbusiness bad debt. H&r block free state file Report it on Schedule D (Form 1040). H&r block free state file If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. H&r block free state file Exception. H&r block free state file   You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. H&r block free state file For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. H&r block free state file Actual loss different from estimated loss. H&r block free state file   If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. H&r block free state file See Recoveries in Publication 525. H&r block free state file If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. H&r block free state file Choice not made. H&r block free state file   If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. H&r block free state file See Nonbusiness Bad Debts in chapter 4 of Publication 550. H&r block free state file Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. H&r block free state file For more information, see Publication 590, Individual Retirement Arrangements (IRAs). H&r block free state file Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. H&r block free state file If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. H&r block free state file If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. H&r block free state file Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. H&r block free state file The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. H&r block free state file The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. H&r block free state file It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). H&r block free state file If the deduction is more than $3,000, you will have to use a special computation to figure your tax. H&r block free state file See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional information. H&r block free state file Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. H&r block free state file You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. H&r block free state file Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. H&r block free state file These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. H&r block free state file Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. H&r block free state file Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. H&r block free state file They are not subject to the 2% limit. H&r block free state file Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. H&r block free state file List of Deductions Amortizable premium on taxable bonds. H&r block free state file Casualty and theft losses from income-producing property. H&r block free state file Federal estate tax on income in respect of a decedent. H&r block free state file Gambling losses up to the amount of gambling winnings. H&r block free state file Impairment-related work expenses of persons with disabilities. H&r block free state file Loss from other activities from Schedule K-1 (Form 1065-B), box 2. H&r block free state file Losses from Ponzi-type investment schemes. H&r block free state file Repayments of more than $3,000 under a claim of right. H&r block free state file Unrecovered investment in an annuity. H&r block free state file Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. H&r block free state file You can elect to amortize the premium on taxable bonds. H&r block free state file The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. H&r block free state file Pre-1998 election to amortize bond premium. H&r block free state file   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. H&r block free state file Bonds acquired after October 22, 1986, and before 1988. H&r block free state file   The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. H&r block free state file Bonds acquired before October 23, 1986. H&r block free state file   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. H&r block free state file Deduction for excess premium. H&r block free state file   On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. H&r block free state file If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. H&r block free state file However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. H&r block free state file If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. H&r block free state file    Pre-1998 choice to amortize bond premium. H&r block free state file If you made the choice to amortize the premium on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your interest income only for bonds acquired during 1998 and later years. H&r block free state file More information. H&r block free state file    For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. H&r block free state file Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). H&r block free state file First report the loss in Section B of Form 4684. H&r block free state file You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. H&r block free state file To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. H&r block free state file For more information on casualty and theft losses, see Publication 547. H&r block free state file Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. H&r block free state file Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. H&r block free state file See Publication 559 for information about figuring the amount of this deduction. H&r block free state file Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. H&r block free state file You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. H&r block free state file You cannot deduct gambling losses that are more than your winnings. H&r block free state file Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). H&r block free state file You cannot reduce your gambling winnings by your gambling losses and report the difference. H&r block free state file You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. H&r block free state file Therefore, your records should show your winnings separately from your losses. H&r block free state file Diary of winnings and losses. H&r block free state file You must keep an accurate diary or similar record of your losses and winnings. H&r block free state file Your diary should contain at least the following information. H&r block free state file The date and type of your specific wager or wagering activity. H&r block free state file The name and address or location of the gambling establishment. H&r block free state file The names of other persons present with you at the gambling establishment. H&r block free state file The amount(s) you won or lost. H&r block free state file Proof of winnings and losses. H&r block free state file   In addition to your diary, you should also have other documentation. H&r block free state file You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. H&r block free state file   For specific wagering transactions, you can use the following items to support your winnings and losses. H&r block free state file    These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. H&r block free state file They are not all-inclusive. H&r block free state file Your tax liability depends on your particular facts and circumstances. H&r block free state file Keno. H&r block free state file   Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. H&r block free state file Slot machines. H&r block free state file   A record of the machine number and all winnings by date and time the machine was played. H&r block free state file Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc. H&r block free state file ). H&r block free state file   The number of the table at which you were playing. H&r block free state file Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. H&r block free state file Bingo. H&r block free state file   A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. H&r block free state file Supplemental records include any receipts from the casino, parlor, etc. H&r block free state file Racing (horse, harness, dog, etc. H&r block free state file ). H&r block free state file   A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. H&r block free state file Supplemental records include unredeemed tickets and payment records from the racetrack. H&r block free state file Lotteries. H&r block free state file   A record of ticket purchases, dates, winnings, and losses. H&r block free state file Supplemental records include unredeemed tickets, payment slips, and winnings statements. H&r block free state file Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. H&r block free state file Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. H&r block free state file Example. H&r block free state file You are blind. H&r block free state file You must use a reader to do your work. H&r block free state file You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. H&r block free state file The reader's services are only for your work. H&r block free state file You can deduct your expenses for the reader as impairment-related work expenses. H&r block free state file Self-employed. H&r block free state file   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. H&r block free state file See Impairment-related work expenses. H&r block free state file , later under How To Report. H&r block free state file Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U. H&r block free state file S. H&r block free state file trade or business). H&r block free state file It is not subject to the passive activity limitations. H&r block free state file Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. H&r block free state file See Publication 463 for more information. H&r block free state file Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. H&r block free state file If you are an employee, complete Form 2106 or Form 2106-EZ. H&r block free state file See Publication 463 for more information. H&r block free state file Losses From Ponzi-type Investment Schemes These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. H&r block free state file You figure the deductible loss in Section B of Form 4684. H&r block free state file However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. H&r block free state file Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. H&r block free state file You do not need to complete Appendix A. H&r block free state file See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. H&r block free state file Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid, or take a credit against your tax. H&r block free state file See Repayments in Publication 525 for more information. H&r block free state file Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. H&r block free state file If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. H&r block free state file See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. H&r block free state file Nondeductible Expenses You cannot deduct the following expenses. H&r block free state file List of Nondeductible Expenses Adoption expenses. H&r block free state file Broker's commissions. H&r block free state file Burial or funeral expenses, including the cost of a cemetery lot. H&r block free state file Campaign expenses. H&r block free state file Capital expenses. H&r block free state file Check-writing fees. H&r block free state file Club dues. H&r block free state file Commuting expenses. H&r block free state file Fees and licenses, such as car licenses, marriage licenses, and dog tags. H&r block free state file Fines and penalties, such as parking tickets. H&r block free state file Health spa expenses. H&r block free state file Hobby losses—but see Hobby Expenses, earlier. H&r block free state file Home repairs, insurance, and rent. H&r block free state file Home security system. H&r block free state file Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535. H&r block free state file Investment-related seminars. H&r block free state file Life insurance premiums paid by the insured. H&r block free state file Lobbying expenses. H&r block free state file Losses from the sale of your home, furniture, personal car, etc. H&r block free state file Lost or misplaced cash or property. H&r block free state file Lunches with co-workers. H&r block free state file Meals while working late. H&r block free state file Medical expenses as business expenses other than medical examinations required by your employer. H&r block free state file Personal disability insurance premiums. H&r block free state file Personal legal expenses. H&r block free state file Personal, living, or family expenses. H&r block free state file Political contributions. H&r block free state file Professional accreditation fees. H&r block free state file Professional reputation, expenses to improve. H&r block free state file Relief fund contributions. H&r block free state file Residential telephone line. H&r block free state file Stockholders' meeting, expenses of attending. H&r block free state file Tax-exempt income, expenses of earning or collecting. H&r block free state file The value of wages never received or lost vacation time. H&r block free state file Travel expenses for another individual. H&r block free state file Voluntary unemployment benefit fund contributions. H&r block free state file Wristwatches. H&r block free state file Adoption Expenses You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. H&r block free state file For details, see Form 8839, Qualified Adoption Expenses. H&r block free state file Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. H&r block free state file Instead, these fees must be added to the taxpayer's cost of the securities. H&r block free state file Commissions paid on the sale are deductible as business expenses only by dealers. H&r block free state file Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. H&r block free state file These include qualification and registration fees for primary elections. H&r block free state file Legal fees. H&r block free state file   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. H&r block free state file Capital Expenses You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. H&r block free state file If you use such property in your work, you may be able to take a depreciation deduction. H&r block free state file See Publication 946. H&r block free state file If the property is a car used in your work, also see Publication 463. H&r block free state file Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. H&r block free state file Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. H&r block free state file This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. H&r block free state file You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. H&r block free state file Dues paid to airline, hotel, and luncheon clubs are not deductible. H&r block free state file Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). H&r block free state file If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items, such as the rent on a trailer to carry the items. H&r block free state file Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. H&r block free state file This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). H&r block free state file Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. H&r block free state file Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. H&r block free state file Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. H&r block free state file However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. H&r block free state file See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. H&r block free state file Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. H&r block free state file Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. H&r block free state file You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. H&r block free state file See Publication 504, Divorced or Separated Individuals, for information on alimony. H&r block free state file Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. H&r block free state file These include expenses to: Influence legislation, Participate, or intervene, in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. H&r block free state file Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. H&r block free state file Covered executive branch official. H&r block free state file   A covered executive branch official, for the purpose of (4) above, is any of the following officials. H&r block free state file The President. H&r block free state file The Vice President. H&r block free state file Any officer or employee of the White House Office of the Executive Office of the President, and the two most senior level officers of each of the other agencies in the Executive Office. H&r block free state file Any individual serving in a position in Level I of the Executive Schedule under section 5312 of Title 5, United States Code, any other individual designated by the President as having Cabinet-level status, and any immediate deputy of one of these individuals. H&r block free state file Dues used for lobbying. H&r block free state file   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. H&r block free state file Exceptions. H&r block free state file   You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business. H&r block free state file You can deduct expenses for attempting to influence the legislation of any local council or similar governing body (local legislation). H&r block free state file An Indian tribal government is considered a local council or similar governing body. H&r block free state file You can deduct in-house expenses for influencing legislation or communicating directly with a covered executive branch official if the expenses for the tax year are not more than $2,000 (not counting overhead expenses). H&r block free state file If you are a professional lobbyist, you can deduct the expenses you incur in the trade or business of lobbying on behalf of another person. H&r block free state file Payments by the other person to you for lobbying activities cannot be deducted. H&r block free state file Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. H&r block free state file However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. H&r block free state file See Publication 547. H&r block free state file Example. H&r block free state file A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. H&r block free state file The diamond falls from the ring and is never found. H&r block free state file The loss of the diamond is a casualty. H&r block free state file Lunches With Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. H&r block free state file See Publication 463 for information on deductible expenses while traveling away from home. H&r block free state file Meals While Working Late You cannot deduct the cost of meals while working late. H&r block free state file However, you may be able to claim a deduction if the cost of the meals is a deductible entertainment expense, or if you are traveling away from home. H&r block free state file See Publication 463 for information on deductible entertainment expenses and expenses while traveling away from home. H&r block free state file Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. H&r block free state file Custody of children. H&r block free state file Breach of promise to marry suit. H&r block free state file Civil or criminal charges resulting from a personal relationship. H&r block free state file Damages for personal injury (except certain whistleblower claims and unlawful discrimination claims). H&r block free state file For more information about unlawful discrimination claims, see Deductions Subject to the 2% Limit, earlier. H&r block free state file Preparation of a title (or defense or perfection of a title). H&r block free state file Preparation of a will. H&r block free state file Property claims or property settlement in a divorce. H&r block free state file You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. H&r block free state file Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. H&r block free state file Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. H&r block free state file Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. H&r block free state file Accounting certificate fees paid for the initial right to practice accounting. H&r block free state file Bar exam fees and incidental expenses in securing initial admission to the bar. H&r block free state file Medical and dental license fees paid to get initial licensing. H&r block free state file Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. H&r block free state file Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. H&r block free state file Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. H&r block free state file Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. H&r block free state file You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. H&r block free state file Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. H&r block free state file You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. H&r block free state file If you have expenses to p