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Income Tax For Unemployed

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Income Tax For Unemployed

Income tax for unemployed 5. Income tax for unemployed   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. Income tax for unemployed A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. Income tax for unemployed Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. Income tax for unemployed Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. Income tax for unemployed  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. Income tax for unemployed Tax-exempt entities. Income tax for unemployed   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). Income tax for unemployed Religious or apostolic associations or corporations described in section 501(d). Income tax for unemployed Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). Income tax for unemployed Indian tribal governments within the meaning of section 7701(a)(40). Income tax for unemployed Entity manager. Income tax for unemployed    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. Income tax for unemployed Prohibited tax shelter transaction. Income tax for unemployed   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. Income tax for unemployed A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. Income tax for unemployed 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. Income tax for unemployed 6011-4(b)(4). Income tax for unemployed See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. Income tax for unemployed Subsequently listed transaction. Income tax for unemployed   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. Income tax for unemployed Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). Income tax for unemployed The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. Income tax for unemployed The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. Income tax for unemployed To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. Income tax for unemployed For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. Income tax for unemployed Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. Income tax for unemployed The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. Income tax for unemployed To report this tax, file Form 4720. Income tax for unemployed Excess Benefit Transactions Excise tax on excess benefit transactions. Income tax for unemployed   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. Income tax for unemployed A manager of the organization may also have to pay an excise tax under section 4958. Income tax for unemployed These taxes are reported on Form 4720. Income tax for unemployed   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. Income tax for unemployed   There are three taxes under section 4958. Income tax for unemployed Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. Income tax for unemployed    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. Income tax for unemployed Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. Income tax for unemployed The disqualified person who benefited from the transaction is liable for the tax. Income tax for unemployed See definition of Disqualified person, later at Disqualified person. Income tax for unemployed Additional tax on the disqualified person. Income tax for unemployed   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. Income tax for unemployed   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. Income tax for unemployed If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. Income tax for unemployed   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. Income tax for unemployed The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. Income tax for unemployed Taxable period. Income tax for unemployed   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. Income tax for unemployed Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. Income tax for unemployed This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. Income tax for unemployed There is also joint and several liability for this tax. Income tax for unemployed A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. Income tax for unemployed Organization Manager. Income tax for unemployed   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. Income tax for unemployed An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. Income tax for unemployed For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. Income tax for unemployed A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. Income tax for unemployed Knowing does not mean having reason to know. Income tax for unemployed The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. Income tax for unemployed Participation by an organization manager is willful if it is voluntary, conscious, and intentional. Income tax for unemployed An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. Income tax for unemployed Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. Income tax for unemployed The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. Income tax for unemployed To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. Income tax for unemployed For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. Income tax for unemployed Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. Income tax for unemployed Donor advised fund transactions occurring after August 17, 2006. Income tax for unemployed   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. Income tax for unemployed   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. Income tax for unemployed For additional information, see the Instructions for Form 4720. Income tax for unemployed Supporting organization transactions occurring after July 25, 2006. Income tax for unemployed   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. Income tax for unemployed   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). Income tax for unemployed   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. Income tax for unemployed For additional information, see the Instructions for Form 4720. Income tax for unemployed   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. Income tax for unemployed Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. Income tax for unemployed However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. Income tax for unemployed In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. Income tax for unemployed In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. Income tax for unemployed Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. Income tax for unemployed Correcting the excess benefit. Income tax for unemployed   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. Income tax for unemployed   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. Income tax for unemployed The correction amount equals the excess benefit plus the interest on the excess benefit. Income tax for unemployed The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. Income tax for unemployed   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. Income tax for unemployed In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. Income tax for unemployed   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. Income tax for unemployed   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. Income tax for unemployed Exception. Income tax for unemployed   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. Income tax for unemployed Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. Income tax for unemployed An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. Income tax for unemployed An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. Income tax for unemployed Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. Income tax for unemployed For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. Income tax for unemployed   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. Income tax for unemployed Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. Income tax for unemployed For certain supporting organization transactions occurring after July 25, 2006. Income tax for unemployed   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. Income tax for unemployed Investment advisor. Income tax for unemployed   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. Income tax for unemployed Substantial contributor. Income tax for unemployed   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. Income tax for unemployed A substantial contributor includes the grantor of a trust. Income tax for unemployed Family members. Income tax for unemployed   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). Income tax for unemployed 35% controlled entity. Income tax for unemployed   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. Income tax for unemployed   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. Income tax for unemployed Persons having substantial influence. Income tax for unemployed   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. Income tax for unemployed Treasurers and chief financial officers. Income tax for unemployed Persons with a material financial interest in a provider-sponsored organization. Income tax for unemployed Persons not considered to have substantial influence. Income tax for unemployed   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. Income tax for unemployed Facts and circumstances. Income tax for unemployed   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. Income tax for unemployed Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. Income tax for unemployed The person founded the organization. Income tax for unemployed The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. Income tax for unemployed The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. Income tax for unemployed The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. Income tax for unemployed The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Income tax for unemployed The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. Income tax for unemployed The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. Income tax for unemployed   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. Income tax for unemployed The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. Income tax for unemployed The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. Income tax for unemployed Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. Income tax for unemployed The direct supervisor of the person is not a disqualified person. Income tax for unemployed The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Income tax for unemployed   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. Income tax for unemployed A person may be a disqualified person with respect to transactions with more than one organization. Income tax for unemployed Reasonable Compensation. Income tax for unemployed    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. Income tax for unemployed The section 162 standard will apply in determining the reasonableness of compensation. Income tax for unemployed The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. Income tax for unemployed   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). Income tax for unemployed Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. Income tax for unemployed    Intent to treat benefits as compensation. Income tax for unemployed An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. Income tax for unemployed   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Income tax for unemployed Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. Income tax for unemployed Exception. Income tax for unemployed   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. Income tax for unemployed Rebuttable presumption that a transaction is not an excess benefit transaction. Income tax for unemployed   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. Income tax for unemployed The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. Income tax for unemployed Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. Income tax for unemployed (There is a special safe harbor for small organizations. Income tax for unemployed If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. Income tax for unemployed ) The authorized body adequately documents the basis for its determination concurrently with making that determination. Income tax for unemployed The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. Income tax for unemployed Disregarded benefits. Income tax for unemployed   The following economic benefits are disregarded for section 4958 purposes. Income tax for unemployed Nontaxable fringe benefits that are excluded from income under section 132. Income tax for unemployed Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. Income tax for unemployed Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. Income tax for unemployed Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. Income tax for unemployed A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. Income tax for unemployed Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. Income tax for unemployed   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. Income tax for unemployed   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). Income tax for unemployed   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. Income tax for unemployed   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. Income tax for unemployed Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. Income tax for unemployed More information. Income tax for unemployed   For more information, see the Instructions to Forms 990 and 4720. Income tax for unemployed Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. Income tax for unemployed They may be subject to an excise tax on the amount of any excess business holdings. Income tax for unemployed For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. Income tax for unemployed Donor advised fund. Income tax for unemployed   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. Income tax for unemployed Supporting organizations. Income tax for unemployed   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. Income tax for unemployed These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. Income tax for unemployed Taxes. Income tax for unemployed   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. Income tax for unemployed The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. Income tax for unemployed The excess holdings are determined on the day during the tax year when they were the largest. Income tax for unemployed   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. Income tax for unemployed   For more information on the tax on excess business holdings, see the Instructions for Form 4720. Income tax for unemployed Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. Income tax for unemployed An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. Income tax for unemployed Taxable distribution. Income tax for unemployed   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). Income tax for unemployed    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. Income tax for unemployed The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. Income tax for unemployed Sponsoring organization. Income tax for unemployed   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. Income tax for unemployed Donor advised fund. Income tax for unemployed    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. Income tax for unemployed Exception. Income tax for unemployed A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. Income tax for unemployed The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). Income tax for unemployed Disqualified supporting organization. Income tax for unemployed   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. Income tax for unemployed Tax on sponsoring organization. Income tax for unemployed   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. Income tax for unemployed Tax on fund manager. Income tax for unemployed   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. Income tax for unemployed Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Income tax for unemployed The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Income tax for unemployed If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Income tax for unemployed   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. Income tax for unemployed Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. Income tax for unemployed   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. Income tax for unemployed The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. Income tax for unemployed Donor advisor. Income tax for unemployed   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. Income tax for unemployed Related party. Income tax for unemployed   A related party includes any family member or 35% controlled entity. Income tax for unemployed See the definition of those terms under Disqualified Person , earlier. Income tax for unemployed Tax on donor, donor advisor, or related person. Income tax for unemployed    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). Income tax for unemployed The advisor and the party who received the benefit are jointly and severally liable for the tax. Income tax for unemployed Tax on fund managers. Income tax for unemployed   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. Income tax for unemployed Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Income tax for unemployed The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Income tax for unemployed If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Income tax for unemployed Exception. Income tax for unemployed   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. Income tax for unemployed   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. Income tax for unemployed Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. Income tax for unemployed Capital gains from appreciation are included in the tax base on private foundation net investment income. Income tax for unemployed This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. Income tax for unemployed Form 990-W is used to calculate the estimated tax. Income tax for unemployed In addition, there are several other rules that apply to excise taxes on private foundations. Income tax for unemployed These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. Income tax for unemployed Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. Income tax for unemployed For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. Income tax for unemployed Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. Income tax for unemployed If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. Income tax for unemployed Both of these excise taxes are reported on Schedule A (Form 990-BL). Income tax for unemployed See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. Income tax for unemployed Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. Income tax for unemployed These entities must meet section 501(r)(3) requirements at all times during their tax year. Income tax for unemployed Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). Income tax for unemployed See Schedule H, Hospitals (Form 990), for details. Income tax for unemployed Prev  Up  Next   Home   More Online Publications
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The Income Tax For Unemployed

Income tax for unemployed 4. Income tax for unemployed   Deductions Table of Contents Standard DeductionStandard Deduction for Dependents Itemized DeductionsMedical and Dental Expenses Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. Income tax for unemployed You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. Income tax for unemployed If you have a choice, you should use the method that gives you the lower tax. Income tax for unemployed Standard Deduction The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. Income tax for unemployed Generally, the standard deduction amounts are adjusted each year for inflation. Income tax for unemployed In most cases, you can use Worksheet 4-1 to figure your standard deduction amount. Income tax for unemployed Persons not eligible for the standard deduction. Income tax for unemployed   Your standard deduction is zero and you should itemize any deductions you have if: You are married and filing a separate return, and your spouse itemizes deductions, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. Income tax for unemployed You are considered a dual-status alien if you were both a nonresident alien and a resident alien during the year. Income tax for unemployed   If you are a nonresident alien who is married to a U. Income tax for unemployed S. Income tax for unemployed citizen or resident alien at the end of the year, you can choose to be treated as a U. Income tax for unemployed S. Income tax for unemployed resident. Income tax for unemployed See Publication 519, U. Income tax for unemployed S. Income tax for unemployed Tax Guide for Aliens. Income tax for unemployed If you make this choice, you can take the standard deduction. Income tax for unemployed Decedent's final return. Income tax for unemployed   The amount of the standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. Income tax for unemployed However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. Income tax for unemployed Higher standard deduction for age (65 or older). Income tax for unemployed   If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. Income tax for unemployed You are considered age 65 on the day before your 65th birthday. Income tax for unemployed Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. Income tax for unemployed Higher standard deduction for blindness. Income tax for unemployed   If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. Income tax for unemployed You qualify for this benefit if you are totally or partly blind. Income tax for unemployed Not totally blind. Income tax for unemployed   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is not more than 20 degrees. Income tax for unemployed   If your eye condition will never improve beyond these limits, the statement should include this fact. Income tax for unemployed You must keep the statement in your records. Income tax for unemployed   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. Income tax for unemployed Spouse 65 or older or blind. Income tax for unemployed   You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and an exemption for your spouse could not be claimed by another taxpayer. Income tax for unemployed    You cannot claim the higher standard deduction for an individual other than yourself and your spouse. Income tax for unemployed Example. Income tax for unemployed This example illustrates how to determine your standard deduction using Worksheet 4-1. Income tax for unemployed Bill and Lisa are filing a joint return for 2013. Income tax for unemployed Both are over age 65. Income tax for unemployed Neither is blind, and neither can be claimed as a dependent. Income tax for unemployed They do not itemize deductions, so they use Worksheet 4-1. Income tax for unemployed Because they are married filing jointly, they enter $12,200 on line 1. Income tax for unemployed They check the “No” box on line 2, so they also enter $12,200 on line 4. Income tax for unemployed Because they are both over age 65, they enter $2,400 ($1,200 × 2) on line 5. Income tax for unemployed They enter $14,600 ($12,200 + $2,400) on line 6, so their standard deduction is $14,600. Income tax for unemployed Standard Deduction for Dependents The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). Income tax for unemployed However, the standard deduction may be higher if the individual is 65 or older or blind. Income tax for unemployed If an exemption for you (or your spouse if you are filing jointly) can be claimed on someone else's return, use Worksheet 4-1, if applicable, to determine your standard deduction. Income tax for unemployed Worksheet 4-1. Income tax for unemployed 2013 Standard Deduction Worksheet Caution. Income tax for unemployed If you are married filing separately and your spouse itemizes deductions, or if you are a dual-status alien, do not complete this worksheet. Income tax for unemployed If you were born before January 2, 1949, and/or blind, check the correct number of boxes below. Income tax for unemployed Put the total number of boxes checked in box c and go to line 1. Income tax for unemployed a. Income tax for unemployed You   Born before  January 2, 1949     Blind b. Income tax for unemployed Your spouse, if claiming  spouse's exemption   Born before January 2, 1949     Blind c. Income tax for unemployed Total boxes checked             1. Income tax for unemployed Enter the amount shown below for your filing status. Income tax for unemployed               Single or married filing separately — $6,100 Married filing jointly or Qualifying widow(er) — $12,200 Head of household — $8,950   1. Income tax for unemployed           2. Income tax for unemployed Can you (or your spouse if filing jointly) be claimed as a dependent on someone else's return?  No. Income tax for unemployed Skip line 3; enter the amount from line 1 on line 4. Income tax for unemployed   Yes. Income tax for unemployed Go to line 3. Income tax for unemployed         3. Income tax for unemployed Is your earned income* more than $650?               Yes. Income tax for unemployed Add $350 to your earned income. Income tax for unemployed Enter the total   3. Income tax for unemployed         No. Income tax for unemployed Enter $1,000 4. Income tax for unemployed Enter the smaller of line 1 or line 3 4. Income tax for unemployed   5. Income tax for unemployed If born before January 2, 1949, or blind, multiply the number in box c by $1,200 ($1,500 if single or head of household). Income tax for unemployed Enter the result here. Income tax for unemployed Otherwise, enter -0- 5. Income tax for unemployed   6. Income tax for unemployed Add lines 4 and 5. Income tax for unemployed This is your standard deduction for 2013. Income tax for unemployed 6. Income tax for unemployed   * Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Income tax for unemployed It also includes any amount received as a scholarship that you must include in your income. Income tax for unemployed Generally, your earned income is the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the amount you reported on Form 1040A, line 7). Income tax for unemployed Itemized Deductions Some individuals should itemize their deductions because it will save them money. Income tax for unemployed Others should itemize because they do not qualify for the standard deduction. Income tax for unemployed See the discussion under Standard Deduction , earlier, to decide if it would be to your advantage to itemize deductions. Income tax for unemployed You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than $150,000. Income tax for unemployed For more information, see Overall limitation, later. Income tax for unemployed Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, casualty and theft losses, and certain other miscellaneous expenses may be itemized as deductions on Schedule A (Form 1040). Income tax for unemployed You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Cannot take the standard deduction, Had uninsured medical or dental expenses that are more than 10% of your adjusted gross income (or more than 7. Income tax for unemployed 5% of your adjusted gross income if either you or your spouse is age 65 or older), Paid interest on your home, Paid real estate or personal property taxes, Paid mortgage insurance premiums, Paid state and local income or general sales taxes, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities (see Publication 526, Charitable Contributions), or Have total itemized deductions that are more than the standard deduction that applies to you. Income tax for unemployed See the Schedule A (Form 1040) instructions for more information. Income tax for unemployed Overall limitation. Income tax for unemployed   You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000, if married filing separately, $250,000, if single, $275,000, if head of household, or $300,000, if married filing jointly or qualifying widow(er). Income tax for unemployed  If your adjusted gross income exceeds the applicable amount, you will use the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040) to figure your total itemized deductions. Income tax for unemployed Medical and Dental Expenses You can deduct certain medical and dental expenses you paid for yourself, your spouse, and your dependent(s) if you itemize your deductions on Schedule A (Form 1040). Income tax for unemployed Table 4-1 shows some common items that you can or cannot include in figuring your medical expense deduction. Income tax for unemployed For more information, see the following discussions of selected items, which are presented in alphabetical order. Income tax for unemployed A more extensive list of items and further details can be found in Publication 502, Medical and Dental Expenses. Income tax for unemployed Table 4-1. Income tax for unemployed Medical and Dental Expenses Checklist You can include: You cannot include: Bandages Capital expenses for equipment or improvements to your home needed for medical care (see Publication 502) Certain weight-loss expenses for obesity Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Income tax for unemployed ) Lead-based paint removal (see Publication 502) Long-term care contracts, qualified (see Publication 502) Meals and lodging provided by a hospital during medical treatment Medical and hospital insurance premiums Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Publication 502) Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchair, etc. Income tax for unemployed ) Special education for mentally or physically disabled persons (see Publication 502) Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services (see Publication 502) Contributions to Archer MSAs (see Publication 969) Bottled water Diaper service Expenses for your general health (even if following your doctor's advice) such as: —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pretax basis) (see Publication 502) Funeral, burial, or cremation expenses Health savings account payments for medical expenses (see Publication 502) Illegal operation or treatment Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Income tax for unemployed Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases (see Publication 502) Surgery for purely cosmetic reasons (see Publication 502) Toothpaste, toiletries, cosmetics, etc. Income tax for unemployed Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease You can deduct only the amount of your medical and dental expenses that is more than 10% of your adjusted gross income (or that is more than 7. Income tax for unemployed 5% of your adjusted gross income if you or your spouse is age 65 or older). Income tax for unemployed What to include. Income tax for unemployed   Generally, you can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Income tax for unemployed If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Income tax for unemployed If you use a pay-by-phone or online account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Income tax for unemployed You can include medical expenses you charge to your credit card in the year the charge is made. Income tax for unemployed It does not matter when you actually pay the amount charged. Income tax for unemployed Home Improvements You can include in medical expenses amounts you pay for home improvements if their main purpose is medical care for you, your spouse, or your dependent. Income tax for unemployed Only reasonable costs to accommodate a home to your disabled condition (or that of your spouse or your dependent(s) who live with you) are considered medical care. Income tax for unemployed Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Income tax for unemployed Publication 502 contains additional information and examples, including a capital expense worksheet, to assist you in figuring the amount of the capital expense that you can include in your medical expenses. Income tax for unemployed Also, see Publication 502 for information about deductible operating and upkeep expenses related to such capital expense items, and for information about improvements, for medical reasons, to property rented by a person with disabilities. Income tax for unemployed Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Income tax for unemployed This is a personal expense that is not deductible. Income tax for unemployed However, you may be able to include certain expenses paid to a person providing nursing-type services. Income tax for unemployed For more information, see Nursing Services , later. Income tax for unemployed Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Income tax for unemployed For more information, see Qualified long-term care services under Long-Term Care, later. Income tax for unemployed Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Income tax for unemployed This includes amounts paid for meals and lodging. Income tax for unemployed Also, see Meals and Lodging , later. Income tax for unemployed Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Income tax for unemployed Qualified long-term care services. Income tax for unemployed   Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided under a plan of care prescribed by a licensed health care practitioner. Income tax for unemployed Chronically ill individual. Income tax for unemployed    An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Income tax for unemployed He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Income tax for unemployed Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Income tax for unemployed He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Income tax for unemployed Maintenance and personal care services. Income tax for unemployed    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Income tax for unemployed Qualified long-term care insurance contracts. Income tax for unemployed   A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Income tax for unemployed The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Income tax for unemployed   The amount of qualified long-term care premiums you can include is limited. Income tax for unemployed You can include the following as medical expenses on Schedule A (Form 1040). Income tax for unemployed Qualified long-term care premiums up to the following amounts. Income tax for unemployed Age 40 or under – $360. Income tax for unemployed Age 41 to 50 – $680. Income tax for unemployed Age 51 to 60 – $1,360. Income tax for unemployed Age 61 to 70 – $3,640. Income tax for unemployed Age 71 or over – $4,550. Income tax for unemployed Unreimbursed expenses for qualified long-term care services. Income tax for unemployed Note. Income tax for unemployed The limit on premiums is for each person. Income tax for unemployed Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if your main reason for being there is to receive medical care. Income tax for unemployed You may be able to include in medical expenses the cost of lodging (but not meals) not provided in a hospital or similar institution. Income tax for unemployed You can include the cost of such lodging while away from home if all of the following requirements are met. Income tax for unemployed The lodging is primarily for, and essential to, medical care. Income tax for unemployed The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Income tax for unemployed The lodging is not lavish or extravagant under the circumstances. Income tax for unemployed There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Income tax for unemployed The amount you include in medical expenses for lodging cannot be more than $50 per night for each person. Income tax for unemployed You can include lodging for a person traveling with the person receiving the medical care. Income tax for unemployed For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Income tax for unemployed (Meals are not included. Income tax for unemployed ) Nursing home. Income tax for unemployed   You can include in medical expenses the cost of medical care in a nursing home or a home for the aged for yourself, your spouse, or your dependent(s). Income tax for unemployed This includes the cost of meals and lodging in the home if a main reason for being there is to get medical care. Income tax for unemployed   Do not include the cost of meals and lodging if the reason for being in the home is personal. Income tax for unemployed However, you can include in medical expenses the part of the cost that is for medical or nursing care. Income tax for unemployed Medical Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Income tax for unemployed Policies can provide payment for: Hospitalization, surgical fees, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Qualified long-term care insurance contracts (subject to the additional limits included in the discussion on qualified long-term care insurance contracts under Long-Term Care , earlier). Income tax for unemployed If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Income tax for unemployed The cost of the medical portion must be separately stated in the insurance contract or given to you in a separate statement. Income tax for unemployed Medicare Part A. Income tax for unemployed   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare Part A. Income tax for unemployed The payroll tax paid for Medicare Part A is not a medical expense. Income tax for unemployed If you are not covered under social security (or were not a government employee who paid Medicare tax), you can enroll voluntarily in Medicare Part A. Income tax for unemployed In this situation you can include the premiums you paid for Medicare Part A as a medical expense. Income tax for unemployed Medicare Part B. Income tax for unemployed   Medicare Part B is a supplemental medical insurance. Income tax for unemployed Premiums you pay for Medicare Part B are a medical expense. Income tax for unemployed If you applied for it at age 65 or after you became disabled, you can include in medical expenses the monthly premiums you paid. Income tax for unemployed If you were over age 65 or disabled when you first enrolled, check with your local Social Security Administration office, or go to their website at www. Income tax for unemployed SSA. Income tax for unemployed gov, to find out your premium. Income tax for unemployed Medicare Part D. Income tax for unemployed   Medicare Part D is a voluntary prescription drug insurance program for persons with Medicare Part A or Part B. Income tax for unemployed You can include as a medical expense premiums you pay for Medicare Part D. Income tax for unemployed Prepaid insurance premiums. Income tax for unemployed   Insurance premiums you pay before you are age 65 for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Income tax for unemployed Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Income tax for unemployed A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Income tax for unemployed You can also include amounts you pay for insulin. Income tax for unemployed Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Income tax for unemployed Imported medicines and drugs. Income tax for unemployed   If you import medicines or drugs from other countries, see Medicines and Drugs From Other Countries, under What Expenses Are Not Includible, in Publication 502. Income tax for unemployed Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Income tax for unemployed The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Income tax for unemployed This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Income tax for unemployed These services can be provided in your home or another care facility. Income tax for unemployed Generally, only the amount spent for nursing services is a medical expense. Income tax for unemployed If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Income tax for unemployed However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Income tax for unemployed See Maintenance and personal care services under Qualified long-term care services, earlier. Income tax for unemployed Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Income tax for unemployed See Child and Dependent Care Credit , later, and Publication 503, Child and Dependent Care Expenses. Income tax for unemployed You can also include in medical expenses part of the amount you pay for that attendant's meals. Income tax for unemployed Divide the food expense among the household members to find the cost of the attendant's food. Income tax for unemployed Then divide that cost in the same manner as in the preceding paragraph. Income tax for unemployed If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Income tax for unemployed This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Income tax for unemployed Employment taxes. Income tax for unemployed   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for a nurse, attendant, or other person who provides medical care. Income tax for unemployed If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier under Nursing Services. Income tax for unemployed For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Income tax for unemployed Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Income tax for unemployed Car expenses. Income tax for unemployed    You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Income tax for unemployed You cannot include depreciation, insurance, general repair, or maintenance expenses. Income tax for unemployed   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Income tax for unemployed   You can also include parking fees and tolls. Income tax for unemployed You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Income tax for unemployed You can also include:    Bus, taxi, train, or plane fares or ambulance service, and Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone. Income tax for unemployed Do not include transportation expenses if, for purely personal reasons, you choose to travel to another city for an operation or other medical care prescribed by your doctor. 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