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Military Tax Return

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Military Tax Return

Military tax return Publication 51 - Main Content Table of Contents 1. Military tax return Taxpayer Identification NumbersWhen you receive your EIN. Military tax return Registering for SSNVS. Military tax return 2. Military tax return Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. Military tax return Wages and Other Compensation 4. Military tax return Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. Military tax return Federal Income Tax WithholdingImplementation of lock-in letter. Military tax return Seasonal employees and employees not currently performing services. Military tax return Termination and re-hire of employees. Military tax return How To Figure Federal Income Tax Withholding 6. Military tax return Required Notice to Employees About Earned Income Credit (EIC) 7. Military tax return Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. Military tax return Form 943 9. Military tax return Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. Military tax return Federal Unemployment (FUTA) Tax 11. Military tax return Reconciling Wage Reporting Forms 13. Military tax return Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. Military tax return Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. Military tax return Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. Military tax return Employer identification number (EIN). Military tax return   An employer identification number (EIN) is a nine-digit number that the IRS issues. Military tax return The digits are arranged as follows: 00-0000000. Military tax return It is used to identify the tax accounts of employers and certain others who have no employees. Military tax return Use your EIN on all of the items that you send to the IRS and SSA. Military tax return   If you do not have an EIN, you may apply for one online. Military tax return Visit IRS. Military tax return gov and click on the Apply for an EIN Online link under Tools. Military tax return You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Military tax return Do not use a SSN in place of an EIN. Military tax return   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. Military tax return If you took over another employer's business, do not use that employer's EIN. Military tax return   You should have only one EIN. Military tax return If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Military tax return Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. Military tax return The IRS will tell you which EIN to use. Military tax return   For more information, see Publication 1635 or Publication 583. Military tax return When you receive your EIN. Military tax return   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). Military tax return You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Military tax return Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. Military tax return If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Military tax return Social security number (SSN). Military tax return   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. Military tax return You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. Military tax return Do not accept a social security card that says “Not valid for employment. Military tax return ” A social security number issued with this legend does not permit employment. Military tax return You may, but are not required to, photocopy the social security card if the employee provides it. Military tax return If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. Military tax return See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. Military tax return Applying for a social security card. Military tax return   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. Military tax return You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. Military tax return socialsecurity. Military tax return gov/online/ss-5. Military tax return html. Military tax return The employee must complete and sign Form SS-5; it cannot be filed by the employer. Military tax return You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Military tax return Applying for a social security number. Military tax return   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. Military tax return If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. Military tax return When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. Military tax return Furnish Copies B, C, and 2 of Form W-2c to the employee. Military tax return Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. Military tax return For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. Military tax return socialsecurity. Military tax return gov/employer. Military tax return Advise your employee to correct the SSN on his or her original Form W-2. Military tax return Correctly record the employee's name and SSN. Military tax return   Record the name and number of each employee as they are shown on the employee's social security card. Military tax return If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Military tax return Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. Military tax return   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. Military tax return It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Military tax return IRS individual taxpayer identification numbers (ITINs) for aliens. Military tax return   Do not accept an ITIN in place of an SSN for employee identification or for work. Military tax return An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. Military tax return S. Military tax return employment. Military tax return The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). Military tax return However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). Military tax return    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. Military tax return If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. Military tax return Do not use an ITIN in place of an SSN on Form W-2. Military tax return Verification of social security numbers. Military tax return   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. Military tax return Visit www. Military tax return socialsecurity. Military tax return gov/employer/ssnv. Military tax return htm for more information. Military tax return Registering for SSNVS. Military tax return   You must register online and receive authorization from your employer to use SSNVS. Military tax return To register, visit SSA's website at www. Military tax return socialsecurity. Military tax return gov/employer and click on the Business Services Online link. Military tax return Follow the registration instructions to obtain a user identification (ID) and password. Military tax return You will need to provide the following information about yourself and your company. Military tax return Name. Military tax return SSN. Military tax return Date of birth. Military tax return Type of employer. Military tax return EIN. Military tax return Company name, address, and telephone number. Military tax return Email address. Military tax return When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Military tax return You must enter the activation code online to use SSNVS. Military tax return 2. Military tax return Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. Military tax return See Publication 15-A for details on statutory employees and nonemployees. Military tax return Employee status under common law. Military tax return   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. Military tax return This is so even when you give the employee freedom of action. Military tax return What matters is that you have the right to control the details of how the services are performed. Military tax return See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Military tax return If an employer-employee relationship exists, it does not matter what it is called. Military tax return The employee may be called an agent or independent contractor. Military tax return It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Military tax return You are responsible for withholding and paying employment taxes for your employees. Military tax return You are also required to file employment tax returns. Military tax return These requirements do not apply to amounts that you pay to independent contractors. Military tax return The rules discussed in this publication apply only to workers who are your employees. Military tax return In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Military tax return For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Military tax return Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Military tax return The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. Military tax return Crew Leaders If you are a crew leader, you are an employer of farmworkers. Military tax return A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Military tax return If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Military tax return For FUTA tax rules, see section 10. Military tax return Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Military tax return See Publication 541, Partnerships, for more details. Military tax return The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Military tax return Exception—Qualified joint venture. Military tax return   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. Military tax return A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). Military tax return   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. Military tax return Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. Military tax return   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. Military tax return If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. Military tax return Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. Military tax return However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. Military tax return    Note. Military tax return If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. Military tax return   For more information on qualified joint ventures, visit IRS. Military tax return gov and enter “qualified joint venture” in the search box. Military tax return Exception—Community income. Military tax return   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Military tax return S. Military tax return possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. Military tax return You may still make an election to be taxed as a qualified joint venture instead of a partnership. Military tax return See Exception—Qualified joint venture , earlier in this section. Military tax return 3. Military tax return Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. Military tax return You may also be required to withhold, deposit, and report Additional Medicare Tax. Military tax return See section 4 for more information. Military tax return If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Military tax return You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. Military tax return FUTA tax is discussed in section 10. Military tax return Cash wages include checks, money orders, etc. Military tax return Do not count as cash wages the value of food, lodging, and other noncash items. Military tax return For more information on what payments are considered taxable wages, see Publication 15 (Circular E). Military tax return Commodity wages. Military tax return   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. Military tax return However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. Military tax return These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. Military tax return Other compensation. Military tax return   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. Military tax return Family members. Military tax return   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. Military tax return However, certain exemptions may apply for your child, spouse, or parent. Military tax return See the table, How Do Employment Taxes Apply to Farmwork , in section 12. Military tax return Household employees. Military tax return   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. Military tax return   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. Military tax return Nor do the taxes apply to housework done by your parent unless: 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, and 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. Military tax return   For more information, see Publication 926, Household Employer's Tax Guide. Military tax return    Wages for household work may not be a deductible farm expense. Military tax return See Publication 225, Farmer's Tax Guide. Military tax return Share farmers. Military tax return   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. Military tax return Compensation paid to H-2A visa holders. Military tax return   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 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. Military tax return On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. Military tax return   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Military tax return In that case, the worker must give the employer a completed Form W-4. Military tax return Federal income tax withheld should be reported in box 2 of Form W-2. Military tax return These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Military tax return For 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. Military tax return 4. Military tax return Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. Military tax return You may also be required to withhold Additional Medicare Tax. Military tax return For more information, see Additional Medicare Tax withholding , later. Military tax return The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. Military tax return You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). Military tax return The $150 test applies separately to each farmworker that you employ. Military tax return If you employ a family of workers, each member is treated separately. Military tax return Do not count wages paid by other employers. Military tax return The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. Military tax return Exceptions. Military tax return   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Military tax return   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Military tax return Social Security and Medicare Tax Withholding The social security tax rate is 6. Military tax return 2%, for both the employee and employer, on the first $117,000 paid to each employee. Military tax return You must withhold at this rate from each employee and pay a matching amount. Military tax return The Medicare tax rate is 1. Military tax return 45% each for the employee and employer on all wages. Military tax return You must withhold at this rate from each employee and pay a matching amount. Military tax return There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Military tax return Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Military tax return For details, see Publication 15-A. Military tax return Additional Medicare Tax withholding. Military tax return   In addition to withholding Medicare tax at 1. Military tax return 45%, you must withhold a 0. Military tax return 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Military tax return 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. Military tax return Additional Medicare Tax is only imposed on the employee. Military tax return There is no employer share of Additional Medicare Tax. Military tax return All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Military tax return   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). Military tax return For more information on Additional Medicare Tax, visit IRS. Military tax return gov and enter “Additional Medicare Tax” in the search box. Military tax return Employee share paid by employer. Military tax return   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. Military tax return If you do not withhold the taxes, however, you must still pay them. Military tax return Any employee social security and Medicare taxes that you pay is additional income to the employee. Military tax return Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. Military tax return Also, do not count the additional income as wages for FUTA tax purposes. Military tax return Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. Military tax return See section 7 of Publication 15-A. Military tax return Withholding social security and Medicare taxes on nonresident alien employees. Military tax return   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. Military tax return S. Military tax return citizen or resident alien. Military tax return However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. Military tax return Also see Compensation paid to H-2A visa holders in section 3. Military tax return Religious exemption. Military tax return    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. Military tax return This exemption is available only if both the employee and the employer are members of the sect. Military tax return   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Military tax return 5. Military tax return Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. Military tax return The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. Military tax return You may use one of several methods to determine the amount of federal income tax withholding. Military tax return They are discussed in section 13. Military tax return Form W-4. Military tax return   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. Military tax return Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. Military tax return Advise your employees to use the IRS Withholding Calculator on the IRS website at www. Military tax return irs. Military tax return gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. Military tax return   Ask each new employee to give you a signed Form W-4 when starting work. Military tax return Make the form effective with the first wage payment. Military tax return If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. Military tax return Forms in Spanish. Military tax return   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. Military tax return For more information, see Publicación 17(SP). Military tax return Effective date of Form W-4. Military tax return   A Form W-4 remains in effect until the employee gives you a new one. Military tax return When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. Military tax return Do not adjust withholding retroactively. Military tax return If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. Military tax return For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. Military tax return A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. Military tax return Completing Form W-4. Military tax return   The amount of federal income tax withholding is based on marital status and withholding allowances. Military tax return Your employees may not base their withholding amounts on a fixed dollar amount or percentage. Military tax return However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. Military tax return   Employees may claim fewer withholding allowances than they are entitled to claim. Military tax return They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. Military tax return   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. Military tax return Along with Form W-4, you may wish to order Publication 505 for use by your employees. Military tax return    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. Military tax return If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. Military tax return Exemption from federal income tax withholding. Military tax return   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. Military tax return See the Form W-4 instructions for more information. Military tax return However, the wages are still subject to social security and Medicare taxes. Military tax return   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. Military tax return To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. Military tax return If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. Military tax return If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Military tax return Withholding income taxes on the wages of nonresident alien employees. Military tax return   In general, you must withhold federal income taxes on the wages of nonresident alien employees. Military tax return However, see Publication 515 for exceptions to this general rule. Military tax return Also see Compensation paid to H-2A visa workers in section 3. Military tax return Withholding adjustment for nonresident alien employees. Military tax return   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. Military tax return This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. Military tax return See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). Military tax return Nonresident alien employee's Form W-4. Military tax return   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. Military tax return   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. Military tax return    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. Military tax return Form 8233. Military tax return   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. Military tax return See Publication 515 for details. Military tax return IRS review of requested Forms W-4. Military tax return   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. Military tax return You may also be directed to send certain Forms W-4 to the IRS. Military tax return You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Military tax return Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. Military tax return The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. Military tax return When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. Military tax return   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). Military tax return However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). Military tax return Initial lock-in letter. Military tax return   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. Military tax return In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. Military tax return You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. Military tax return If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. Military tax return You may follow any reasonable business practice to furnish the employee copy to the employee. Military tax return Implementation of lock-in letter. Military tax return   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. Military tax return You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. Military tax return The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. Military tax return Seasonal employees and employees not currently performing services. Military tax return   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. Military tax return You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. Military tax return You reasonably expect the employee to resume services within 12 months of the date of the notice. Military tax return The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. Military tax return Termination and re-hire of employees. Military tax return   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. Military tax return You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. Military tax return Modification notice. Military tax return   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. Military tax return The modification notice may change the marital status and/or the number of withholding allowances permitted. Military tax return You must withhold federal income tax based on the effective date specified in the modification notice. Military tax return New Form W-4 after IRS notice. Military tax return   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. Military tax return You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. Military tax return If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. Military tax return   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. Military tax return Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. Military tax return Substitute Forms W-4. Military tax return   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. Military tax return Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. Military tax return gov to obtain copies of Form W-4. Military tax return   You may use a substitute version of Form W-4 to meet your business needs. Military tax return However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. Military tax return At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. Military tax return   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. Military tax return However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. Military tax return Invalid Forms W-4. Military tax return   Any unauthorized change or addition to Form W-4 makes it invalid. Military tax return This includes taking out any language by which the employee certifies that the form is correct. Military tax return A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. Military tax return An employee who submits a false Form W-4 may be subject to a $500 penalty. Military tax return You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. Military tax return   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. Military tax return Tell the employee that it is invalid and ask for another one. Military tax return If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. Military tax return However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. Military tax return   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. Military tax return R. Military tax return B. Military tax return 455, available at www. Military tax return irs. Military tax return gov/irb/2007-35_IRB/ar10. Military tax return html. Military tax return Amounts exempt from levy on wages, salary, and other income. Military tax return   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. Military tax return Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. Military tax return If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. Military tax return How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. Military tax return Wage bracket tables. Military tax return See section 13 for directions on how to use the tables. Military tax return Percentage method. Military tax return See section 13 for directions on how to use the percentage method. Military tax return Alternative formula tables for percentage method withholding. Military tax return See Publication 15-A. Military tax return Wage bracket percentage method withholding tables. Military tax return See Publication 15-A. Military tax return Other alternative methods. Military tax return See Publication 15-A. Military tax return Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. Military tax return If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. Military tax return Supplemental wages. Military tax return   Supplemental wages are wage payments to an employee that are not regular wages. Military tax return They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Military tax return Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. Military tax return   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. Military tax return   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. Military tax return If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. Military tax return Withhold a flat 25% (no other percentage allowed). Military tax return If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. Military tax return If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Military tax return Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Military tax return Subtract the tax withheld from the regular wages. Military tax return Withhold the remaining tax from the supplemental wages. Military tax return If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. Military tax return If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. Military tax return This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. Military tax return    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. Military tax return See section 7 in Publication 15 (Circular E) for details. Military tax return   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. Military tax return 6. Military tax return Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Military tax return Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. Military tax return This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. Military tax return You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. Military tax return You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. Military tax return If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. Military tax return If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. Military tax return If Form W-2 is not required, you must notify the employee by February 7, 2014. Military tax return 7. Military tax return Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. Military tax return You must use electronic funds transfer to make all federal tax deposits. Military tax return See How To Deposit , later in this section. Military tax return The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. Military tax return For more information, see COBRA premium assistance credit under Introduction. Military tax return Payment with return. Military tax return   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. Military tax return You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. Military tax return However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. Military tax return You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. Military tax return This payment may be $2,500 or more. Military tax return Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. Military tax return Semiweekly schedule depositors must timely deposit the amount. Military tax return See Accuracy of Deposits Rule and How To Deposit, later in this section. Military tax return When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. Military tax return See Employers of Both Farm and Nonfarm Workers, later in this section. Military tax return The rules for determining when to deposit Form 943 taxes are discussed below. Military tax return See section 10 for the separate rules that apply to FUTA tax. Military tax return Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. Military tax return The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. Military tax return The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). Military tax return The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. Military tax return If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. Military tax return If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. Military tax return Lookback period. Military tax return   The lookback period is the second calendar year preceding the current calendar year. Military tax return For example, the lookback period for 2014 is 2012. Military tax return Example of deposit schedule based on lookback period. Military tax return Rose Co. Military tax return reported taxes on Form 943 as follows. Military tax return 2012 — $48,000 2013 — $60,000 Rose Co. Military tax return is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. Military tax return However, for 2015, Rose Co. Military tax return is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Military tax return Adjustments to lookback period taxes. Military tax return   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). Military tax return Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Military tax return Example of adjustments. Military tax return An employer originally reported total tax of $45,000 for the lookback period in 2012. Military tax return The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. Military tax return The total tax reported in the lookback period is still $45,000. Military tax return The $10,000 adjustment is also not treated as part of the 2014 taxes. Military tax return Deposit period. Military tax return   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Military tax return For monthly schedule depositors, the deposit period is a calendar month. Military tax return The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Military tax return Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Military tax return You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. Military tax return Monthly schedule example. Military tax return   Red Co. Military tax return is a seasonal employer and a monthly schedule depositor. Military tax return It pays wages each Friday. Military tax return It paid wages during August 2014, but did not pay any wages during September. Military tax return Red Co. Military tax return must deposit the combined tax liabilities for the August paydays by September 15. Military tax return Red Co. Military tax return does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. Military tax return New employers. Military tax return   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. Military tax return Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). Military tax return Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. Military tax return Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Military tax return Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Military tax return Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. Military tax return For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. Military tax return If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Military tax return Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. Military tax return Semiweekly Deposit Schedule IF the payday falls on a. Military tax return . Military tax return . Military tax return THEN deposit taxes by the following. Military tax return . Military tax return . Military tax return Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. Military tax return   Green, Inc. Military tax return , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Military tax return Green, Inc. Military tax return , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. Military tax return Green, Inc. Military tax return 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). Military tax return Semiweekly deposit period spanning two quarters. Military tax return   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Military tax return For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Military tax return Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Military tax return Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Military tax return A business day is any day other than a Saturday, Sunday, or legal holiday. Military tax return For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Military tax return Semiweekly schedule depositors   will always have 3 business days to make a deposit. Military tax return That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. Military tax return For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Military tax return Legal holiday. Military tax return   The term “legal holiday” means any legal holiday in the District of Columbia. Military tax return Legal holidays for 2014 are listed below. Military tax return January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. Military tax return February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Military tax return For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. Military tax return For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Military tax return Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Military tax return However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Military tax return For example, Fir Co. Military tax return is a semiweekly schedule depositor. Military tax return On Monday, Fir Co. Military tax return accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. Military tax return On Tuesday, Fir Co. Military tax return accumulates additional taxes of $30,000. Military tax return Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Military tax return does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Military tax return If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. Military tax return Example of the $100,000 next-day deposit rule. Military tax return   Elm, Inc. Military tax return , started its business on May 1, 2014. Military tax return Because Elm, Inc. Military tax return , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. Military tax return , is a monthly schedule depositor. Military tax return On May 8, Elm, Inc. Military tax return , paid wages for the first time and accumulated taxes of $50,000. Military tax return On May 9 (Friday), Elm, Inc. Military tax return , paid wages and accumulated taxes of $60,000, for a total of $110,000. Military tax return Because Elm, Inc. Military tax return , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. Military tax return Elm, Inc. Military tax return , became a semiweekly schedule depositor on May 10. Military tax return It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Military tax return Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Military tax return However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Military tax return Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. Military tax return The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Military tax return Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. Military tax return You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. Military tax return Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. Military tax return For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). Military tax return How To Deposit You must deposit employment taxes by electronic funds transfer. Military tax return See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Military tax return Electronic deposit requirement. Military tax return   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Military tax return Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Military tax return 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. Military tax return   EFTPS is a free service provided by the Department of Treasury. Military tax return To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). Military tax return You can also visit the EFTPS website at www. Military tax return eftps. Military tax return gov. Military tax return Additional information about EFTPS is also available in Publication 966. Military tax return New employers that have a federal tax obligation will be pre-enrolled in EFTPS. Military tax return Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. Military tax return See When you receive your EIN in section 1 for more information. Military tax return Deposit record. Military tax return   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Military tax return The number can be used as a receipt or to trace the payment. Military tax return Depositing on time. Military tax return   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Military tax return m. Military tax return Eastern time the day before the date a deposit is due. Military tax return If you use a third party to make a deposit on your behalf, they may have different cutoff times. Military tax return Same-day payment option. Military tax return   If you fail to initiate a deposit transaction on EFTPS by 8 p. Military tax return m. Military tax return Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Military tax return To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Military tax return Please check with your financial institution regarding availability, deadlines, and costs. Military tax return Your financial institution may charge you a fee for payments made this way. Military tax return To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. Military tax return eftps. Military tax return gov to download the Same-Day Payment Worksheet. Military tax return Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Military tax return The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Military tax return IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Military tax return For amounts not properly deposited or not deposited on time, the penalty rates are shown next. Military tax return Penalty Charged for. Military tax return . Military tax return . Military tax return 2% Deposits made 1 to 5 days late. Military tax return 5% Deposits made 6 to 15 days late. Military tax return 10% Deposits made 16 or more days late. Military tax return Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. Military tax return 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. Military tax return See Payment with return , earlier in this section, for exceptions. Military tax return 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Military tax return Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Military tax return Order in which deposits are applied. Military tax return   Deposits generally are applied to the most recent tax liability within the year. Military tax return If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Military tax return Follow the instructions on the penalty notice that you received. Military tax return For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. Military tax return You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Military tax return irs. Military tax return gov/pub/irs-irbs/irb01-50. Military tax return pdf. Military tax return Example. Military tax return Cedar, Inc. Military tax return , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Military tax return It does not make the deposit on July 15. Military tax return On August 15, Cedar, Inc. Military tax return , deposits $2,000. Military tax return Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Military tax return Accordingly, $500 of the July 15 liability remains undeposited. Military tax return The penalty on this underdeposit will apply as explained above. Military tax return Trust fund recovery penalty. Military tax return   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Military tax return The penalty is the full amount of the unpaid trust fund tax. Military tax return This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Military tax return   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Military tax return   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. Military tax return A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Military tax return    Willfully means voluntarily, consciously, and intentionally. Military tax return A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Military tax return “Average” failure-to-deposit penalty. Military tax return   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. Military tax return IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. Military tax return Completed Form 943, line 17, instead of Form 943-A. Military tax return Failed to attach a properly completed Form 943-A. Military tax return Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Military tax return   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. Military tax return Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Military tax return   You can avoid the penalty by reviewing your return before filing it. Military tax return Follow these steps before filing your Form 943. Military tax return If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. Military tax return If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. Military tax return Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. Military tax return Do not show negative amounts on Form 943, line 17, or Form 943-A. Military tax return For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. Military tax return Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). Military tax return Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. Military tax return If a deposit is due, deposi
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Audit Techniques Guides (ATGs)

These Audit Techniques Guides (ATGs) help IRS examiners during audits by providing insight into issues and accounting methods unique to specific industries. While ATGs are designed to provide guidance for IRS employees, they’re also useful to small business owners and tax professionals who prepare returns.

ATGs explain industry-specific examination techniques and include common, as well as, unique industry issues, business practices and terminology. Guidance is also provided on the examination of income, interview techniques and evaluation of evidence. So they may be helpful for business and tax planning purposes. To find out more about how these guides may be helpful to you, watch this short video.

Audit Techniques Guides are available here in Adobe PDF, or as Web pages, or both. The PDF versions must be viewed with the Acrobat Reader.

NOTE: These guides are current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of these documents, no guarantees are made concerning the technical accuracy after the publication date.


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


Aerospace Industry
Publication Date: 01/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating research credit in the aerospace industry. The guide focuses on the particular unique aspects of the industry and provides examiners tools and tests to utilize in evaluating and auditing research credit.


Air Transportation (PDF - 1.85MB)
Publication Date: 04/2008
Overview of excise tax paid for transportation of persons or property by air.


Architects and Landscape Architects (PDF - 378.27KB)
Publication Date:
08/2011
This audit technique guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations in the architect and landscape architect service industries.


Art Galleries - Audit Technique Guide (PDF - 461KB)
Publication Date: 01/2012
This Audit Technique Guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations of Art Galleries.


Attorneys Audit Technique Guide (PDF - 525.34KB)
Publication Date: 03/2011
The Attorneys Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is an attorney or an attorney firm and to provide tax related guidance to taxpayers and other professionals in this industry.


Business Consultants (PDF - 700KB)
Publication Date: 07/2011
The Business Consultants ATG now includes an income section that addresses the shifting or the assignment of income issue and the substance versus form issue an examiner may encounter when conducting an examination.


Capitalization v Repairs
Publication Date: 11/2010
The ATG provides techniques for reviewing and examining capitalization v repairs issues.


Cash Intensive Businesses
Publication Date: 04/2010
Businesses that have substantial cash transactions are included in the consolidated Cash Intensive Businesses Audit Techniques Guide. Some of these businesses include bail bonds, beauty shops, car washes, check cashing establishments, coin operated amusements, laundromats, scrap metal, some convenience stores and Taxicabs. Guidance is also provided on examination of income, interview techniques, and evaluation of evidence.


Child Care Provider (PDF - 220KB)
Publication Date: 3/30/2009
This Audit Techniques Guide will provide information on tax related issues pertaining to the child care providers industry. It provides guidance on accounting for income and deductions. Intended audiences are taxpayers, tax professionals and IRS examiners.


Coal Excise Tax (PDF - 471KB)
Publication Date: 05/2005
Provides excise tax agents with specific tools to examine issues relating to domestically produced coal.


Commercial Banking (PDF - 857KB)
Publication Date: 05/2001
Overview of the industry. Discusses potential issues and terminology unique to banking.


Conservation Easement (PDF - 926KB)
Publication Date: 11/2011
Audit Techniques Guide providing guidance on charitable contributions of conservation easements.


Construction Industry (PDF - 2.6MB)
Publication Date: 05/2009
Overview of the industry including a glossary. Discusses types of contracts; types of contractors; methods of accounting; and joint ventures. This updated guide includes the filing locations for Rev. Proc. 92-29 elections (Chpt 7); includes contractor square footage costs (Chpt. 11); and common errors in look-back interest filings (Chpt. 5). See also Examination and Closing Procedures Form 8697, Look-Back Interest, Publication Date: 05/2007, for general information regarding the application of Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts.


Continuation of Employee Healthcare Coverage (PDF - 360KB)
Publication Date: 03/2012
This audit techniques guide was developed to provide guidance to IRS employees and taxpayers concerning the Consolidated Omnibus Budget Reconciliation Act of 1985.


Cost Segregation
Publication Date: 01/14/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating cost segregation studies submitted by taxpayers in support of depreciation deductions. The guide is also beneficial for taxpayers and practitioners in preparing these studies.


Credit for Increasing Research Activities (i.e. Research Tax Credit) IRC § 41 (PDF -116KB)
Publication Date: 06/2005
This audit techniques guide sets forth the Research Credit Technical Advisors’ suggested guidelines for auditing research credit issues.


Excise Tax on Indoor Tanning Services (PDF - 469KB)
Publication Date: 12/2013

The Excise Tax on Indoor Tanning Services Audit Techniques Guide provides an overview of the indoor tanning tax and examination direction. Intended audiences are taxpayers, tax professionals and IRS examiners.


Executive Compensation - Fringe Benefits
Publication Date: 02/04/2005
Corporate executives often receive extraordinary fringe benefits that are not provided to other corporate employees. Any property or service that an executive receives in lieu of or in addition to regular taxable wages is a fringe benefit that may be subject to taxation.


Factoring of Receivables (PDF - 32KB)
Publication Date: 06/2006
This audit techniques guide focuses on a strategy in which multinational corporations use factoring of accounts receivable among related parties to avoid U.S. taxation by shifting income offshore and reducing U.S. income by deducting expenses related to the same income.


Farmers
Publication Date:
07/2006
The Farmers Audit Techniques Guide (ATG) focuses on developing highly trained examiners for the agricultural market segment. The Guide contain examination techniques, common and unique industry issues, business practices, industry terminology and other information to assist examiners in performing examinations. Some agricultural guides covered include cotton, raisin grapes, general livestock, livestock marketing/auction barns, grain, and tobacco.


Fishing Audit Technique Guide (PDF - 851KB)
Publication Date:
08/2011
This guide provides technical information and audit techniques for common issues in the fishing industry. The intended audience is fishermen, tax professionals and IRS examiners.


Foreign Insurance (PDF - 434KB)
Publication Date: 04/2008
This audit techniques guide was designed to assist the examiner in conducting audits where Excise Tax of Foreign Insurance transactions may be due.


Golden Parachute
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating parachute examinations. The parachute examination can occur during the examination of either the corporation's or the individual's return.


Hardwood Timber Industry (PDF - 480KB)
Publication Date:
12/2012
This Industry Guide is intended for examiners conducting audits in the hardwood timber industry and as information for taxpayers and practitioners associated with the hardwood timber industry.


IC-DISC Audit Guide
Publication Date: 03/2012
This IC-DISC Audit Guide is intended to provide guidance to examiners who are auditing a Form 1120 IC-DISC and/or its related shareholder(s).


Inland Waterways (PDF - 607KB)
Publication Date: 12/2008
This audit techniques guide is intended to provide assistance to the examiner who is auditing a taxpayer for which the use of the Inland Waterways is an issue.


IRC 162(m) Salary Deduction Limitation
Publication Date: 02/04/2005
Every publicly held corporation maintains its executive compensation records differently. Likewise, every publicly held corporation maintains different methods for compensating its executives. As the examining agent, you must first learn the identity of the individual(s) within the corporation who are most familiar with how the executive compensation records are maintained.


IRC § 183: Activities Not Engaged in For Profit (PDF - 723KB)
Publication Date: 06/19/2009
This audit techniques guide (ATG) has been developed to provide guidance to Revenue Agents and Tax Compliance Officers in pursuing the application of IRC § 183, Activities Not Engaged in for Profit (sometimes referred to as the "hobby loss rule").


Lawsuits, Awards, and Settlements (PDF - 568 KB)
Publication Date: 05/2011
This guide focuses on taxability of lawsuits, awards and settlements.


Low-Income Housing Credit - Guide for Completing Form 8823 (PDF - 841 KB)
Publication Date: 01/2011
IRC 42, The Low-Income Housing Credit (LIHC) Program, is co-administered by the IRS and state housing credit agencies. As part of their administrative responsibilities, the agencies monitor the housing project for compliance with IRC 42 requirements and report any observed noncompliance to the IRS using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition. This ATG provides state agencies with guidelines for evaluating taxpayer compliance and reporting noncompliance to the IRS.


Ministers (PDF - 243KB)
Publication Date: 04/23/2009
The Ministers Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is a minister and to provide tax related guidance to taxpayers and other professionals in this industry.


New Markets Tax Credit (PDF - 208KB)
Publication Date: 05/2010
The New Markets Tax Credit (NMTC) Program, enacted by Congress as part of the Community Renewal Tax Relief Act of 2000, is incorporated as section 45D of the Internal Revenue Code. This Code section permits individual and corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified community development entities (CDEs).


New Vehicle Dealership (PDF - 1.99 MB)
Publication Date: 1/2005
This guide will give you the key to a quick and competent closure of any new vehicle dealership examination which hinges on narrowing the scope of the examination to items that may prove productive.


Non-Qualified Deferred Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating non-qualified deferred compensation. A nonqualified deferred compensation (NQDC) plan is any elective or nonelective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee compensation some time in the future.


Obligations Not in Registered Form (PDF - 275KB)
Publication Date: 6/2006
Obligations Not in Registered Form


Obligations Not in Registered Form D (PDF - 84KB)
Publication Date: 06/2006
Obligations Not in Registered Form D


Oil and Gas Industry (PDF - 494KB)
Publication Date: 5/1996
Provides information on basic operations and common terminology. Includes reference to royalty owners and an introduction to financial products.


Ozone Depleting Chemicals (PDF - 412KB)
Publication Date: 9/2007
This is the audit techniques guide for Ozone Depleting Chemicals (ODC).


Partnerships
Publication Date: See Table of Contents for Publication/Revision Date of the Individual Chapters
The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership.


Passive Activity Losses (PDF - 3437 KB)
Publication Date: 02/2005
Provides examiners with specific guidance on potential audit issues, issue identification and lead sheets and other job aids.


Placer Mining (PDF - 181KB)
Publication Date: 7/1999
Provides guidelines for the examination of taxpayers in this industry. Focuses on small mining operations represented as sole proprietorships on Schedule C, but can be adapted for partnership and corporate returns.


The Port Project (PDF - 282KB)
Publication Date: 8/1995
Provides examiners assistance in auditing industries related to coastal and inland waterways.


Reforestation Industry (PDF - 120KB)
Publication Date: 8/1995
Overview of the industry. Discusses some issues that may be encountered - including employment taxes; poor accounting records; etc.


Rehabilitation Tax Credit (PDF - 353KB)
Publication Date: 12/2002
Provides examiners with audit aids (i.e. issue checksheet, pro forma Information Document Request, and standardized audit reports, etc.) which assist in identifying and addressing common rehab tax credit issues.


Research Credit Claims: Credit for Increasing Research Activities § 41
Publication Date: See table of contents for publication/revision date for the individual chapters, exhibits, and letters & forms. This guide provides guidance on the handling and evaluation of research credit claims.


Retail Industry (PDF 785KB)
Publication Date: 2/2009
Overview of the Retail Industry.


Sections 48A and 48B - Advanced Coal and Gasification Project Credits
Publication Date: 5/2009
Section 46 provides that the amount of investment credit for purposes of § 38 for any taxable year is the sum of the credits listed in § 46. Section 1307(a) of the Energy Tax Incentives Act of 2005, Pub. L. 109-58, 119 Stat. 594 (August 8, 2005), amended § 46 to add two new credits to that list: The qualifying advanced coal project credit, (section 48A) and the qualifying gasification project credit, (section 48B).


Split Dollar Life Insurance
Publication Date: 03/07/2005
Split-dollar life insurance arrangements can be a key feature of executive compensation packages. Over the years, the Service has provided limited guidance regarding the taxation of these arrangements. Beginning in 2001, transitional guidance on the valuation of split-dollar life insurance arrangements was provided in the form of notices and proposed regulations in anticipation of final regulations.


Stock Based Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating stock-based compensation. Stock-based compensation generally consists of either the transferring of stock or the issuance of stock options to an employee or independent contractor.


Structured Settlement Factoring (PDF - 282KB)
Publication Date: 11/2006
Structured Settlement Factoring


Timber Casualty Loss (PDF - 611KB)
Publication Date: 04/2011
The purpose of this Audit Technique Guide is to provide guidance on conducting income tax examinations with a Timber Casualty Loss.


Veterinary Medicine (PDF - 495KB)
Publication Date: 4/2005
Overview of industry includes discussion of types of business entities (especially personal service corporation); cash vs. accrual method of accounting; and inventory vs. supplies.


Wine Industry ATG (PDF - 354KB)
Publication Date: 05/2011
The Wine Industry Audit Technique Guide is designed to assist examiners in their compliance reviews of both winery and vineyard operations.


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The Military Tax Return

Military tax return 28. Military tax return   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. Military tax return  The 2013 rate for business use of a vehicle is 56½ cents per mile. Military tax return Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Military tax return You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Military tax return This chapter covers the following topics. Military tax return Deductions subject to the 2% limit. Military tax return Deductions not subject to the 2% limit. Military tax return Expenses you cannot deduct. Military tax return You must keep records to verify your deductions. Military tax return You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Military tax return For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Military tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). Military tax return You can claim the amount of expenses that is more than 2% of your adjusted gross income. Military tax return You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Military tax return Your adjusted gross income is the amount on Form 1040, line 38. Military tax return Generally, you apply the 2% limit after you apply any other deduction limit. Military tax return For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. Military tax return Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Military tax return Unreimbursed employee expenses (line 21). Military tax return Tax preparation fees (line 22). Military tax return Other expenses (line 23). Military tax return Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Military tax return An expense is ordinary if it is common and accepted in your trade, business, or profession. Military tax return An expense is necessary if it is appropriate and helpful to your business. Military tax return An expense does not have to be required to be considered necessary. Military tax return Examples of unreimbursed employee expenses are listed next. Military tax return The list is followed by discussions of additional unreimbursed employee expenses. Military tax return Business bad debt of an employee. Military tax return Education that is work related. Military tax return (See chapter 27. Military tax return ) Legal fees related to your job. Military tax return Licenses and regulatory fees. Military tax return Malpractice insurance premiums. Military tax return Medical examinations required by an employer. Military tax return Occupational taxes. Military tax return Passport for a business trip. Military tax return Subscriptions to professional journals and trade magazines related to your work. Military tax return Travel, transportation, entertainment, and gifts related to your work. Military tax return (See chapter 26. Military tax return ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Military tax return Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. Military tax return 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. Military tax return For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Military tax return 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. Military tax return Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Military tax return Lobbying and political activities. Military tax return   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Military tax return See Dues used for lobbying under Nondeductible Expenses, later. Military tax return 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. Military tax return If you file Form 1040A, you can deduct these expenses on line 16. Military tax return If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Military tax return However, neither spouse can deduct more than $250 of his or her qualified expenses. Military tax return 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. Military tax return 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. Military tax return The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Military tax return See Publication 587 for more detailed information and a worksheet. Military tax return 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. Military tax return 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. Military tax return Employment and outplacement agency fees. Military tax return   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Military tax return Employer pays you back. Military tax return   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. Military tax return (See Recoveries in chapter 12. Military tax return ) Employer pays the employment agency. Military tax return   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. Military tax return Résumé. Military tax return   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. Military tax return Travel and transportation expenses. Military tax return   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. Military tax return You can deduct the travel expenses if the trip is primarily to look for a new job. Military tax return 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. Military tax return   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. Military tax return   You can choose to use the standard mileage rate to figure your car expenses. Military tax return The 2013 rate for business use of a vehicle is 56½ cents per mile. Military tax return See chapter 26 for more information. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Military tax return 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. Military tax return However, you cannot deduct the cost of travel as a form of education. Military tax return 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. Military tax return You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Military tax return For more information about depreciation, see Publication 946. Military tax return Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Military tax return You can also deduct assessments for benefit payments to unemployed union members. Military tax return However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Military tax return Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Military tax return You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Military tax return See Lobbying Expenses under Nondeductible Expenses, later. Military tax return Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Military tax return You must wear them as a condition of your employment. Military tax return The clothes are not suitable for everyday wear. Military tax return It is not enough that you wear distinctive clothing. Military tax return The clothing must be specifically required by your employer. Military tax return Nor is it enough that you do not, in fact, wear your work clothes away from work. Military tax return The clothing must not be suitable for taking the place of your regular clothing. Military tax return 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. Military tax return ). Military tax return Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Military tax return 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. Military tax return Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Military tax return Protective clothing. Military tax return   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. Military tax return   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. Military tax return Military uniforms. Military tax return   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Military tax return 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. Military tax return In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Military tax return   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. Military tax return   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Military tax return Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Military tax return Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Military tax return These fees include the cost of tax preparation software programs and tax publications. Military tax return They also include any fee you paid for electronic filing of your return. Military tax return Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Military tax return On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Military tax return You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. Military tax return Some of these other expenses are explained in the following discussions. Military tax return If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Military tax return Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Military tax return 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. Military tax return First report the loss in Section B of Form 4684, Casualties and Thefts. Military tax return You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Military tax return 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. Military tax return For other casualty and theft losses, see chapter 25. Military tax return 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. Military tax return 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. Military tax return The fees are deductible in the year paid. Military tax return 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). Military tax return You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Military tax return But if you work as an employee and also use the computer in that work, see Publication 946. Military tax return 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. Military tax return Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Military tax return 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. Military tax return For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Military tax return 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. Military tax return But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Military tax return You must add the fee to the cost of the property. Military tax return You cannot deduct the fee you pay to a broker to sell securities. Military tax return You can use the fee only to figure gain or loss from the sale. Military tax return See the Instructions for Form 8949 for information on how to report the fee. Military tax return Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Military tax return A hobby is not a business because it is not carried on to make a profit. Military tax return See Activity not for profit in chapter 12 under Other Income. Military tax return Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Military tax return Deductions of pass-through entities are passed through to the partners or shareholders. Military tax return The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Military tax return Example. Military tax return You are a member of an investment club that is formed solely to invest in securities. Military tax return The club is treated as a partnership. Military tax return The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Military tax return In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Military tax return 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. Military tax return Publicly offered mutual funds. Military tax return   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Military tax return 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. Military tax return   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). Military tax return This net figure is the amount you report on your return as income. Military tax return You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Military tax return Information returns. Military tax return   You should receive information returns from pass-through entities. Military tax return Partnerships and S corporations. Military tax return   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. Military tax return Nonpublicly offered mutual funds. Military tax return   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. Military tax return You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Military tax return See Tax Preparation Fees , earlier. Military tax return Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. Military tax return 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. Military tax return If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Military tax return If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Military tax return Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. Military tax return 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. Military tax return You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Military tax return Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Military tax return 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. Military tax return Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Military tax return For more information about IRAs, see chapter 17. Military tax return Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Military tax return They are not subject to the 2% limit. Military tax return Report these items on Schedule A (Form 1040), line 28. Military tax return List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Military tax return Amortizable premium on taxable bonds. Military tax return Casualty and theft losses from income- producing property. Military tax return Federal estate tax on income in respect of a decedent. Military tax return Gambling losses up to the amount of gambling winnings. Military tax return Impairment-related work expenses of persons with disabilities. Military tax return Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Military tax return Losses from Ponzi-type investment schemes. Military tax return See Losses from Ponzi-type investment schemes under Theft in chapter 25. Military tax return Repayments of more than $3,000 under a claim of right. Military tax return Unrecovered investment in an annuity. Military tax return 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. Military tax return You can elect to amortize the premium on taxable bonds. Military tax return The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Military tax return Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Military tax return For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. Military tax return 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). Military tax return First, report the loss in Form 4684, Section B. Military tax return You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Military tax return 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. Military tax return For more information on casualty and theft losses, see chapter 25. Military tax return 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. Military tax return 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. Military tax return See Publication 559 for more information. Military tax return 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. Military tax return You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Military tax return You cannot deduct gambling losses that are more than your winnings. Military tax return You cannot reduce your gambling winnings by your gambling losses and report the difference. Military tax return 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. Military tax return Therefore, your records should show your winnings separately from your losses. Military tax return Diary of winnings and losses. Military tax return You must keep an accurate diary or similar record of your losses and winnings. Military tax return Your diary should contain at least the following information. Military tax return The date and type of your specific wager or wagering activity. Military tax return The name and address or location of the gambling establishment. Military tax return The names of other persons present with you at the gambling establishment. Military tax return The amount(s) you won or lost. Military tax return See Publication 529 for more information. Military tax return 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. Military tax return Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. Military tax return Self-employed. Military tax return   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. Military tax return 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. Military tax return It is not subject to the passive activity limitations. Military tax return 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. Military tax return See Repayments in chapter 12 for more information. Military tax return 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. Military tax return 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. Military tax return See chapter 10 for more information about the tax treatment of pensions and annuities. Military tax return Nondeductible Expenses Examples of nondeductible expenses are listed next. Military tax return The list is followed by discussions of additional nondeductible expenses. Military tax return List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Military tax return Burial or funeral expenses, including the cost of a cemetery lot. Military tax return Capital expenses. Military tax return Fees and licenses, such as car licenses, marriage licenses, and dog tags. Military tax return Hobby losses, but see Hobby Expenses , earlier. Military tax return Home repairs, insurance, and rent. Military tax return Illegal bribes and kickbacks. Military tax return See Bribes and kickbacks in chapter 11 of Publication 535. Military tax return Losses from the sale of your home, furniture, personal car, etc. Military tax return Personal disability insurance premiums. Military tax return Personal, living, or family expenses. Military tax return The value of wages never received or lost vacation time. Military tax return Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Military tax return See chapter 37. Military tax return Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Military tax return These include qualification and registration fees for primary elections. Military tax return Legal fees. Military tax return   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Military tax return 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. Military tax return Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Military tax return This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Military tax return 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. Military tax return Dues paid to airline, hotel, and luncheon clubs are not deductible. Military tax return Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Military tax return 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. Military tax return Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Military tax return This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Military tax return Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Military tax return 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. Military tax return Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Military tax return However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Military tax return See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Military tax return Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Military tax return Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Military tax return You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Military tax return See chapter 18 for information on alimony. Military tax return Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Military tax return 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. Military tax return Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Military tax return Dues used for lobbying. Military tax return   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. Military tax return See Lobbying Expenses in Publication 529 for information on exceptions. Military tax return Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Military tax return 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. Military tax return See chapter 25. Military tax return Example. Military tax return A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Military tax return The diamond falls from the ring and is never found. Military tax return The loss of the diamond is a casualty. Military tax return Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Military tax return See chapter 26 for information on deductible expenses while traveling away from home. Military tax return Meals While Working Late You cannot deduct the cost of meals while working late. Military tax return However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. Military tax return See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Military tax return Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Military tax return Custody of children. Military tax return Breach of promise to marry suit. Military tax return Civil or criminal charges resulting from a personal relationship. Military tax return Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Military tax return Preparation of a title (or defense or perfection of a title). Military tax return Preparation of a will. Military tax return Property claims or property settlement in a divorce. Military tax return You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Military tax return Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Military tax return Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Military tax return Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Military tax return Accounting certificate fees paid for the initial right to practice accounting. Military tax return Bar exam fees and incidental expenses in securing initial admission to the bar. Military tax return Medical and dental license fees paid to get initial licensing. Military tax return Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Military tax return 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. Military tax return 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. Military tax return 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. Military tax return You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Military tax return Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Military tax return You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Military tax return If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. Military tax return Example. Military tax return During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Military tax return In earning this income, you had total expenses of $500 during the year. Military tax return You cannot identify the amount of each expense item that is for each income item. Military tax return Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. Military tax return You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Military tax return Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. Military tax return See chapter 26 for more information on deductible travel expenses. Military tax return Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Military tax return However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. Military tax return Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. Military tax return Prev  Up  Next   Home   More Online Publications