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Tax Forms For Students

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Tax Forms For Students

Tax forms for students 3. Tax forms for students   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. Tax forms for students Form 4797. Tax forms for students Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. Tax forms for students Granting the right to remove deposits. Tax forms for students Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. Tax forms for students You must report the income from all the different sources on your tax return, unless it is excluded by law. Tax forms for students Where you report the income on your tax return depends on its source. Tax forms for students This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. Tax forms for students For information on where to report other income, see the Instructions for Form 1040, U. Tax forms for students S. Tax forms for students Individual Income Tax Return. Tax forms for students Accounting method. Tax forms for students   The rules discussed in this chapter assume you use the cash method of accounting. Tax forms for students Under the cash method, you generally include an item of income in gross income in the year you receive it. Tax forms for students See Cash Method in chapter 2. Tax forms for students   If you use an accrual method of accounting, different rules may apply to your situation. Tax forms for students See Accrual Method in chapter 2. Tax forms for students Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. Tax forms for students Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. Tax forms for students Use this schedule to figure the net profit or loss from regular farming operations. Tax forms for students Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Tax forms for students This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. Tax forms for students It also includes income from the sale of crop shares if you materially participate in producing the crop. Tax forms for students See Rents (Including Crop Shares) , later. Tax forms for students Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. Tax forms for students Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. Tax forms for students Land. Tax forms for students Depreciable farm equipment. Tax forms for students Buildings and structures. Tax forms for students Livestock held for draft, breeding, sport, or dairy purposes. Tax forms for students Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. Tax forms for students Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. Tax forms for students Sales of Farm Products Where to report. Tax forms for students    Table 3-1 shows where to report the sale of farm products on your tax return. Tax forms for students Schedule F. Tax forms for students   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. Tax forms for students This includes money and the fair market value of any property or services you receive. Tax forms for students When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). Tax forms for students See chapter 6 for information on the basis of assets. Tax forms for students You generally report these amounts on Schedule F for the year you receive payment. Tax forms for students Example. Tax forms for students In 2012, you bought 20 feeder calves for $11,000 for resale. Tax forms for students You sold them in 2013 for $21,000. Tax forms for students You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. Tax forms for students Form 4797. Tax forms for students   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. Tax forms for students In either case, you should always report these sales on Form 4797 instead of Schedule F. Tax forms for students See Livestock under Ordinary or Capital Gain or Loss in chapter 8. Tax forms for students Animals you do not hold primarily for sale are considered business assets of your farm. Tax forms for students Table 3-1. Tax forms for students Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. Tax forms for students   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. Tax forms for students This applies even if your agent pays you in a later year. Tax forms for students For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. Tax forms for students Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. Tax forms for students You must meet all the following conditions to qualify. Tax forms for students Your principal trade or business is farming. Tax forms for students You use the cash method of accounting. Tax forms for students You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. Tax forms for students The weather-related condition caused an area to be designated as eligible for assistance by the federal government. Tax forms for students Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. Tax forms for students The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. Tax forms for students A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. Tax forms for students See Other Involuntary Conversions in chapter 11. Tax forms for students Usual business practice. Tax forms for students   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. Tax forms for students Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. Tax forms for students If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. Tax forms for students Connection with affected area. Tax forms for students   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. Tax forms for students However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. Tax forms for students This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. Tax forms for students Classes of livestock. Tax forms for students   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. Tax forms for students Do not separate animals into classes based on age, sex, or breed. Tax forms for students Amount to be postponed. Tax forms for students   Follow these steps to figure the amount of gain to be postponed for each class of animals. Tax forms for students Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. Tax forms for students For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. Tax forms for students Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. Tax forms for students Example. Tax forms for students You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. Tax forms for students As a result of drought, you sold 135 head during 2012. Tax forms for students You realized $70,200 from the sale. Tax forms for students On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. Tax forms for students The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. Tax forms for students How to postpone gain. Tax forms for students   To postpone gain, attach a statement to your tax return for the year of the sale. Tax forms for students The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. Tax forms for students A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). Tax forms for students Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. Tax forms for students A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. Tax forms for students The number of animals sold in each of the 3 preceding years. Tax forms for students The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. Tax forms for students The total number of animals sold and the number sold because of weather-related conditions during the tax year. Tax forms for students A computation, as described above, of the income to be postponed for each class of livestock. Tax forms for students   Generally, you must file the statement and the return by the due date of the return, including extensions. Tax forms for students However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. Tax forms for students For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). Tax forms for students Attach the statement to the amended return and write “Filed pursuant to section 301. Tax forms for students 9100-2” at the top of the amended return. Tax forms for students File the amended return at the same address you filed the original return. Tax forms for students Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. Tax forms for students Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. Tax forms for students However, if you materially participate in farming operations on the land, the rent is farm income. Tax forms for students See Landlord Participation in Farming in chapter 12. Tax forms for students Pasture income and rental. Tax forms for students   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. Tax forms for students You must enter it as Other income on Schedule F. Tax forms for students If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Tax forms for students Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. Tax forms for students It does not matter whether you use the cash method of accounting or an accrual method of accounting. Tax forms for students If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. Tax forms for students See Landlord Participation in Farming in chapter 12. Tax forms for students Report the rental income on Schedule F. Tax forms for students If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). Tax forms for students The income is not included in self-employment income. Tax forms for students Crop shares you use to feed livestock. Tax forms for students   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. Tax forms for students You must include the fair market value of the crop shares in income at that time. Tax forms for students You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. Tax forms for students Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. Tax forms for students See  chapter 12. Tax forms for students Crop shares you give to others (gift). Tax forms for students   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. Tax forms for students You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. Tax forms for students Example. Tax forms for students A tenant farmed part of your land under a crop-share arrangement. Tax forms for students The tenant harvested and delivered the crop in your name to an elevator company. Tax forms for students Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. Tax forms for students They sell their crop shares in the following year and the elevator company makes payments directly to your children. Tax forms for students In this situation, you are considered to have received rental income and then made a gift of that income. Tax forms for students You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. Tax forms for students Crop share loss. Tax forms for students   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. Tax forms for students See Publication 925 for information on these rules. Tax forms for students Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. Tax forms for students However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. Tax forms for students See Cost-Sharing Exclusion (Improvements) , later. Tax forms for students Report the agricultural program payment on the appropriate line of Schedule F, Part I. Tax forms for students Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. Tax forms for students However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. Tax forms for students Claim the deduction on Schedule F for the year of repayment or reduction. Tax forms for students Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. Tax forms for students However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. Tax forms for students You do not need approval from the IRS to adopt this method of reporting CCC loans. Tax forms for students Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. Tax forms for students However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. Tax forms for students For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. Tax forms for students Revenue Procedure 2008-52, 2008-36 I. Tax forms for students R. Tax forms for students B. Tax forms for students 587, is available at  www. Tax forms for students irs. Tax forms for students gov/irb/2008-36_IRB/ar09. Tax forms for students html. Tax forms for students You can request income tax withholding from CCC loan payments you receive. Tax forms for students Use Form W-4V, Voluntary Withholding Request. Tax forms for students See chapter 16 for information about ordering the form. Tax forms for students To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. Tax forms for students Attach a statement to your return showing the details of the loan. Tax forms for students You must file the statement and the return by the due date of the return, including extensions. Tax forms for students If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Tax forms for students Attach the statement to the amended return and write “Filed pursuant to section 301. Tax forms for students 9100-2” at the top of the return. Tax forms for students File the amended return at the same address you filed the original return. Tax forms for students When you make this election, the amount you report as income becomes your basis in the commodity. Tax forms for students See chapter 6 for information on the basis of assets. Tax forms for students If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. Tax forms for students If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. Tax forms for students If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. Tax forms for students If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. Tax forms for students Form 1099-A. Tax forms for students   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. Tax forms for students “CCC” should be shown in box 6. Tax forms for students The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. Tax forms for students Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. Tax forms for students If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. Tax forms for students Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. Tax forms for students Market gain should be reported as follows. Tax forms for students If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. Tax forms for students However, adjust the basis of the commodity for the amount of the market gain. Tax forms for students If you did not include the CCC loan in income in the year received, include the market gain in your income. Tax forms for students The following examples show how to report market gain. Tax forms for students Example 1. Tax forms for students Mike Green is a cotton farmer. Tax forms for students He uses the cash method of accounting and files his tax return on a calendar year basis. Tax forms for students He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. Tax forms for students In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. Tax forms for students 00 per pound). Tax forms for students In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. Tax forms for students 50 per pound (lower than the loan amount). Tax forms for students Later in 2013, he sold the cotton for $2,500. Tax forms for students The market gain on the redemption was $. Tax forms for students 50 ($2. Tax forms for students 00 – $1. Tax forms for students 50) per pound. Tax forms for students Mike realized total market gain of $500 ($. Tax forms for students 50 x 1,000 pounds). Tax forms for students How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. Tax forms for students Included CCC loan. Tax forms for students   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. Tax forms for students The $500 market gain is not recognized on the redemption. Tax forms for students He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Tax forms for students   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. Tax forms for students His gain from the sale is $1,000 ($2,500 – $1,500). Tax forms for students He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. Tax forms for students Excluded CCC loan. Tax forms for students   Mike has income of $500 from market gain in 2013. Tax forms for students He reports it on Schedule F, lines 4a and 4b. Tax forms for students His basis in the cotton is zero, so his gain from its sale is $2,500. Tax forms for students He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. Tax forms for students Example 2. Tax forms for students The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. Tax forms for students Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. Tax forms for students In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. Tax forms for students How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. Tax forms for students Included CCC loan. Tax forms for students   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. Tax forms for students The $500 market gain is not recognized on the redemption. Tax forms for students Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Tax forms for students   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. Tax forms for students Mike has no gain or loss on its sale to the cotton buyer for that amount. Tax forms for students Excluded CCC loan. Tax forms for students   As in Example 1, Mike has income of $500 from market gain in 2013. Tax forms for students He reports it on Schedule F, lines 4a and 4b. Tax forms for students His basis in the cotton is zero, so his gain from its sale is $1,500. Tax forms for students He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. Tax forms for students Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. Tax forms for students You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. Tax forms for students Cost-share payments you receive may qualify for the cost-sharing exclusion. Tax forms for students See Cost-Sharing Exclusion (Improvements) , later. Tax forms for students CRP payments are reported to you on Form 1099-G. Tax forms for students Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Tax forms for students See the instructions for Schedule SE (Form 1040). Tax forms for students Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. Tax forms for students You generally include them in the year you receive them. Tax forms for students Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. Tax forms for students You can request income tax withholding from crop disaster payments you receive from the federal government. Tax forms for students Use Form W-4V, Voluntary Withholding Request. Tax forms for students See chapter 16 for information about ordering the form. Tax forms for students Election to postpone reporting until the following year. Tax forms for students   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. Tax forms for students You use the cash method of accounting. Tax forms for students You receive the crop insurance proceeds in the same tax year the crops are damaged. Tax forms for students You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. Tax forms for students   Deferral is not permitted for proceeds received from revenue insurance policies. Tax forms for students   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. Tax forms for students Check the box on line 8c and attach a statement to your tax return. Tax forms for students The statement must include your name and address and contain the following information. Tax forms for students A statement that you are making an election under IRC section 451(d) and Regulations section 1. Tax forms for students 451-6. Tax forms for students The specific crop or crops physically destroyed or damaged. Tax forms for students A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. Tax forms for students The cause of the physical destruction or damage and the date or dates it occurred. Tax forms for students The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. Tax forms for students The name of each insurance carrier from whom you received payments. Tax forms for students   One election covers all crops representing a single trade or business. Tax forms for students If you have more than one farming business, make a separate election for each one. Tax forms for students For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. Tax forms for students   An election is binding for the year unless the IRS approves your request to change it. Tax forms for students To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. Tax forms for students Ogden Submission Processing Center P. Tax forms for students O. Tax forms for students Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. Tax forms for students These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. Tax forms for students They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. Tax forms for students Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. Tax forms for students You must include these benefits in income in the year you receive them. Tax forms for students You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. Tax forms for students Report the benefits on Schedule F, Part I, as agricultural program payments. Tax forms for students You can usually take a current deduction for the same amount as a feed expense. Tax forms for students Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. Tax forms for students A payment is any economic benefit you get as a result of an improvement. Tax forms for students However, this exclusion applies only to that part of a payment that meets all three of the following tests. Tax forms for students It was for a capital expense. Tax forms for students You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. Tax forms for students You must include the payment for a deductible expense in income, and you can take any offsetting deduction. Tax forms for students See chapter 5 for information on deducting soil and water conservation expenses. Tax forms for students It does not substantially increase your annual income from the property for which it is made. Tax forms for students An increase in annual income is substantial if it is more than the greater of the following amounts. Tax forms for students 10% of the average annual income derived from the affected property before receiving the improvement. Tax forms for students $2. Tax forms for students 50 times the number of affected acres. Tax forms for students The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Tax forms for students Qualifying programs. Tax forms for students   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. Tax forms for students The rural clean water program authorized by the Federal Water Pollution Control Act. Tax forms for students The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. Tax forms for students The water bank program authorized by the Water Bank Act. Tax forms for students The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. Tax forms for students The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. Tax forms for students The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. Tax forms for students The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. Tax forms for students Certain small watershed programs, listed later. Tax forms for students Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Tax forms for students Several state programs have been approved. Tax forms for students For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). Tax forms for students Small watershed programs. Tax forms for students   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. Tax forms for students The programs under the Watershed Protection and Flood Prevention Act. Tax forms for students The flood prevention projects under the Flood Control Act of 1944. Tax forms for students The Emergency Watershed Protection Program under the Flood Control Act of 1950. Tax forms for students Certain programs under the Colorado River Basin Salinity Control Act. Tax forms for students The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. Tax forms for students The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Tax forms for students The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Tax forms for students The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Tax forms for students The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Tax forms for students The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. Tax forms for students The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. Tax forms for students The Conservation Security Program authorized by the Food Security Act of 1985. Tax forms for students The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. Tax forms for students Income realized. Tax forms for students   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). Tax forms for students Value of the improvement. Tax forms for students   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. Tax forms for students The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. Tax forms for students Any government payments under a program not listed earlier. Tax forms for students Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. Tax forms for students Any government payment to you for rent or for your services. Tax forms for students The denominator of the fraction is the total cost of the improvement. Tax forms for students Excludable portion. Tax forms for students   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. Tax forms for students 10% of the prior average annual income from the affected acreage. Tax forms for students The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. Tax forms for students $2. Tax forms for students 50 times the number of affected acres. Tax forms for students The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. Tax forms for students You may need to consult your tax advisor for assistance. Tax forms for students Example. Tax forms for students One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. Tax forms for students The total cost of the improvement was $500,000. Tax forms for students The USDA paid $490,000. Tax forms for students You paid $10,000. Tax forms for students The value of the cost-sharing improvement is $15,000. Tax forms for students The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. Tax forms for students The excludable portion is the greater amount, $1,550. Tax forms for students You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. Tax forms for students   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. Tax forms for students Any payment excluded from income is not part of your basis. Tax forms for students In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. Tax forms for students   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. Tax forms for students How to report the exclusion. Tax forms for students   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. Tax forms for students The statement must include the following information. Tax forms for students The dollar amount of the cost funded by the government payment. Tax forms for students The value of the improvement. Tax forms for students The amount you are excluding. Tax forms for students   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. Tax forms for students Recapture. Tax forms for students   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. Tax forms for students In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. Tax forms for students You must report the recapture on Form 4797. Tax forms for students See Section 1255 property under Other Gains in chapter 9. Tax forms for students Electing not to exclude payments. Tax forms for students   You can elect not to exclude all or part of any payments you receive under these programs. Tax forms for students If you make this election for all of these payments, none of the above restrictions and rules apply. Tax forms for students You must make this election by the due date, including extensions, for filing your return. Tax forms for students In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. Tax forms for students If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Tax forms for students Write “Filed pursuant to section 301. Tax forms for students 9100-2” at the top of the amended return and file it at the same address you filed the original return. Tax forms for students Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. Tax forms for students You must include these payments on Schedule F, lines 4a and 4b. Tax forms for students The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. Tax forms for students You must include these payments on Schedule F, lines 6a and 6b. Tax forms for students The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. Tax forms for students Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. Tax forms for students As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. Tax forms for students If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Tax forms for students If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Tax forms for students Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. Tax forms for students Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. Tax forms for students The gain or loss is capital or ordinary depending on how you used the quota. Tax forms for students See Capital or ordinary gain or loss , later. Tax forms for students Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. Tax forms for students Adjusted basis. Tax forms for students   The adjusted basis of your quota is determined differently depending on how you obtained the quota. Tax forms for students The basis of a quota derived from an original grant by the federal government is zero. Tax forms for students The basis of a purchased quota is the purchase price. Tax forms for students The basis of a quota received as a gift is generally the same as the donor's basis. Tax forms for students However, under certain circumstances, the basis is increased by the amount of gift taxes paid. Tax forms for students If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. Tax forms for students The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. Tax forms for students Reduction of basis. Tax forms for students   You are required to reduce the basis of your tobacco quota by the following amounts. Tax forms for students Deductions you took for amortization, depletion, or depreciation. Tax forms for students Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. Tax forms for students The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). Tax forms for students Amount treated as interest. Tax forms for students   You must reduce your tobacco quota buyout program payment by the amount treated as interest. Tax forms for students The interest is reportable as ordinary income. Tax forms for students If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. Tax forms for students   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. Tax forms for students You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. Tax forms for students For more information, see Notice 2005-57, 2005-32 I. Tax forms for students R. Tax forms for students B. Tax forms for students 267, available at www. Tax forms for students irs. Tax forms for students gov/irb/2005-32_IRB/ar13. Tax forms for students html. Tax forms for students Installment method. Tax forms for students   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. Tax forms for students Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. Tax forms for students See chapter 10 for more information. Tax forms for students Capital or ordinary gain or loss. Tax forms for students   Whether your gain or loss is ordinary or capital depends on how you used the quota. Tax forms for students Quota used in the trade or business of farming. Tax forms for students   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. Tax forms for students See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. Tax forms for students Quota held for investment. Tax forms for students   If you held the quota for investment purposes, any gain or loss is capital gain or loss. Tax forms for students The same result also applies if you held the quota for the production of income, though not connected with a trade or business. Tax forms for students Gain treated as ordinary income. Tax forms for students   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. Tax forms for students Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. Tax forms for students The cost of acquiring a quota. Tax forms for students Amounts for amortization, depletion, or depreciation. Tax forms for students Amounts to reflect a reduction in the quota pounds. Tax forms for students   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. Tax forms for students Self-employment income. Tax forms for students   The tobacco quota buyout payments are not self-employment income. Tax forms for students Income averaging for farmers. Tax forms for students   The gain or loss resulting from the quota payments does not qualify for income averaging. Tax forms for students A tobacco quota is considered an interest in land. Tax forms for students Income averaging is not available for gain or loss arising from the sale or other disposition of land. Tax forms for students Involuntary conversion. Tax forms for students   The buyout of the tobacco quota is not an involuntary conversion. Tax forms for students Form 1099-S. Tax forms for students   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. Tax forms for students The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. Tax forms for students Like-kind exchange of quota. Tax forms for students   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. Tax forms for students See Notice 2005-57 for more information. Tax forms for students Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. Tax forms for students Taxation of payments to tobacco growers. Tax forms for students   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. Tax forms for students Individuals will generally report the payments as an Agricultural program payment on Schedule F. Tax forms for students If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. Tax forms for students Self-employment income. Tax forms for students   Payments to growers generally represent self-employment income. Tax forms for students If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. Tax forms for students Income averaging for farmers. Tax forms for students   Payments to growers who are individuals qualify for farm income averaging. Tax forms for students Form 1099-G. Tax forms for students   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. Tax forms for students Other Payments You must include most other government program payments in income. Tax forms for students Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. Tax forms for students How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. Tax forms for students Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. Tax forms for students You must also capitalize the full cost of the improvement. Tax forms for students Since you have included the payments in income, they do not reduce your basis. Tax forms for students However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. Tax forms for students National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. Tax forms for students You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. Tax forms for students If you produce a tobacco crop, report the payments as income from farming on your Schedule F. Tax forms for students If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. Tax forms for students Payment to More Than One Person The USDA reports program payments to the IRS. Tax forms for students It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). Tax forms for students If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. Tax forms for students You should file Form 1099-G to report the identity of the actual recipient to the IRS. Tax forms for students You should also give this information to the recipient. Tax forms for students You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. Tax forms for students Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. Tax forms for students However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. Tax forms for students See chapter 16 for information about ordering Form 1099-G. Tax forms for students Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). Tax forms for students If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. Tax forms for students Form 1099-PATR. Tax forms for students   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. Tax forms for students Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. Tax forms for students For information on the alternative minimum tax, see the Instructions for Form 6251. Tax forms for students Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. Tax forms for students They include the following items. Tax forms for students Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). Tax forms for students The stated dollar value of qualified written notices of allocation. Tax forms for students The fair market value of other property. Tax forms for students Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. Tax forms for students You must reduce the cost or other basis of these items by the amount of such patronage dividends received. Tax forms for students Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. Tax forms for students If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. Tax forms for students Qualified written notice of allocation. Tax forms for students   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. Tax forms for students A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. Tax forms for students The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. Tax forms for students You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. Tax forms for students Signing and giving a written agreement to the cooperative. Tax forms for students Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. Tax forms for students The cooperative must notify you in writing of this bylaw and give you a copy. Tax forms for students Endorsing and cashing a qualified check paid as part of the same patronage dividend. Tax forms for students You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. Tax forms for students Qualified check. Tax forms for students   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. Tax forms for students It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. Tax forms for students It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. Tax forms for students Loss on redemption. Tax forms for students   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. Tax forms for students The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. Tax forms for students Nonqualified notice of allocation. Tax forms for students   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. Tax forms for students Your basis in the notice is zero. Tax forms for students You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. Tax forms for students Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. Tax forms for students However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. Tax forms for students   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. Tax forms for students For example, if it represents interest income, report it on your return as interest. Tax forms for students Buying or selling capital assets or depreciable property. Tax forms for students   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. Tax forms for students You must, however, reduce the basis of these assets by the dividends. Tax forms for students This reduction is taken into account as of the first day of the tax year in which the dividends are received. Tax forms for students If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. Tax forms for students   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. Tax forms for students Example. Tax forms for students On July 1, 2012, Mr. Tax forms for students Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. Tax forms for students The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). Tax forms for students Mr. Tax forms for students Brown files his return on a calendar year basis. Tax forms for students For 2012, he claimed a depreciation deduction of $311, using the 10. Tax forms for students 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). Tax forms for students On July 2, 2013, the cooperative association paid Mr. Tax forms for students Brown a $300 cash patronage dividend for buying the machine. Tax forms for students Mr. Tax forms for students Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. Tax forms for students Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. Tax forms for students 38% × 1. Tax forms for students 5 = 23. Tax forms for students 07% Depreciation deduction for 2013 ($2,289 × 23. Tax forms for students 07%) $528 Exceptions. Tax forms for students   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. Tax forms for students If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. Tax forms for students If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). Tax forms for students   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. Tax forms for students Personal purchases. Tax forms for students   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). Tax forms for students This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. Tax forms for students Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. Tax forms for students A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. Tax forms for students These allocations can be paid in money, other property, or qualified certificates. Tax forms for students Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. Tax forms for students Qualified certificates. Tax forms for students   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. Tax forms for students The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. Tax forms for students If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. Tax forms for students Nonqualified certificates. Tax forms for students   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. Tax forms for students Your basis in the certificate is zero. Tax forms for students You must include in income any amount you receive from its sale, redemption, or other disposition. Tax forms for students Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. Tax forms for students Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. Tax forms for students For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Tax forms for students General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. Tax forms for students Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. Tax forms for students It is excluded from taxable income (see Exclusions , later). Tax forms for students Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. Tax forms for students If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. Tax forms for students Election to defer income from discharge of indebtedness. Tax forms for students   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. Tax forms for students Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. Tax forms for students See IRC section 108(i) and Publication 4681 for details. Tax forms for students Form 1099-C. Tax forms for students   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Tax forms for students The amount of debt canceled is shown in box 2. Tax forms for students Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Tax forms for students These exceptions apply before the exclusions discussed below. Tax forms for students Price reduced after purchase. Tax forms for students   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. Tax forms for students Reduce your basis in the property by the amount of the reduction in the debt. Tax forms for students The rules that apply to bankruptcy and insolvency are explained below under Exclusions . Tax forms for students Deductible debt. Tax forms for students   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. Tax forms for students This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. Tax forms for students Example. Tax forms for students You get accounting services for your farm on credit. Tax forms for students Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. Tax forms for students Your accountant forgives part of the amount you owe for the accounting services. Tax forms for students How you treat the canceled debt depends on your method of accounting. Tax forms for students Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Tax forms for students Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Tax forms for students Exclusions Do not include canceled debt in income in the following situations. Tax forms for students The cancellation takes place in a bankruptcy case under title 11 of the U. Tax forms for students S. Tax forms for students Code. Tax forms for students The cancellation takes place when you are insolvent. Tax forms for students The canceled debt is a qualified farm debt. Tax forms for students The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). Tax forms for students See Publication 334, Tax Guide for Small Business, chapter 5. Tax forms for students The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. Tax forms for students The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. Tax forms for students If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. Tax forms for students If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. Tax forms for students See Form 982 , later, for information on how to claim an exclusion for a canceled debt. Tax forms for students Debt. Tax forms for students   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. Tax forms for students Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. Tax forms for students Bankruptcy. Tax forms for students   A bankruptcy case is a case under title 11 of the U. Tax forms for students S. Tax forms for students Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. Tax forms for students   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. Tax forms for students Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . Tax forms for students Insolvency. Tax forms for students   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. Tax forms for students   You can exclude canceled debt from gross income up to the amount by which you are insolvent. Tax forms for students If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. Tax forms for students Otherwise, you include the difference in gross income. Tax forms for students Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . Tax forms for students You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. Tax forms for students Example. Tax forms for students You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. Tax forms for students Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. Tax forms for students Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). Tax forms for students You can exclude this amount from income. Tax forms for students The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. Tax forms for students If not, you must include it in income. Tax forms for students Reduction of tax attributes. Tax forms for students   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. Tax forms for students Order of reduction. Tax forms for students   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. Tax forms for students Net operating loss (NOL). Tax forms for students Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. Tax forms for students Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. Tax forms for students General business credit carryover. Tax forms for students Reduce the credit carryover to or from the tax year of the debt cancellation. Tax forms for students Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. Tax forms for students Minimum tax credit. Tax forms for students Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. Tax forms for students Reduce the credit 331/3 cents for each dollar of excluded canceled debt. Tax forms for students Capital loss. Tax forms for students Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. Tax forms for students Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. Tax forms for students Basis. Tax forms for students Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. Tax forms for students Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. Tax forms for students Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. Tax forms for students Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. Tax forms for students Inventory and accounts and notes receivable. Tax forms for students Other property. Tax forms for students Reduce the basis one dollar for each dollar of excluded canceled debt. Tax forms for students However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. Tax forms for students For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. Tax forms for students 1017-1(b)(2). Tax forms for students Also see Electing to reduce the basis of depreciable property
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Most Popular Forms & Pubs

All forms and publications, including other formats, accessible products, and prior year revisions

Form 1040, U.S. Individual Income Tax Return
Annual income tax return filed by citizens or residents of the United States
Related: Instructions for Form 1040   Tax Tables

Additional forms and schedules for filing Form 1040

Form 1040-A, U.S. Individual Income Tax Return
Shorter version of Form 1040 allows you to report limited types of income and to claim certain adjustments. You cannot itemize deductions if you file Form 1040-A
Related: Instructions for Form 1040-A

Form 1040-ES, Estimated Tax for Individuals
Figure and pay your estimated tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.)
Related: Instructions for Form 1040-ES

Form 1040-EZ, Income Tax Return for Single and Joint Filers With No Dependents
Simplest individual income tax return form to fill out. If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).
Related: Inst 1040-EZ

Need help choosing the right 1040 for your situation? Use the Interactive Tax Assistant (ITA) or read Which Form - 1040, 1040A, or 1040EZ?

Form 2848, Power of Attorney and Declaration of Representative
Use Form 2848 to authorize an individual to represent you before the IRS.
Related: Instructions for Form 2848

Form 8821, Tax Information Authorization
Authorizes any individual, corporation, firm, organization, or partnership you designate to inspect and/or receive your confidential information for the type of tax and the years or periods listed on the form.

Form 8949, Sales and Other Dispositions of Capital Assets
Reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return.
Related: Instructions for Form 8949

Form 9465, Installment Agreement Request
Request monthly payments through an installment agreement if you're not financially able to pay your tax debt immediately. 
Related: Instructions for Form 9465  Online Payment Agreement Application

Form 990, Return of Organization Exempt From Income Tax
Used by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with the information required by section 6033.
Related: Instructions for Form 990  Schedules for Form 990

Form SS-4, Application for Employer Identification Number (EIN)
Apply for an Employer Identification Number. An EIN is a nine-digit number assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities for tax filing and reporting purposes.
Related: Instructions for Form SS-4  Apply for an EIN online

Form W-2, Wage and Tax Statement (Info copy only)
Employers must complete, file with the Social Security Administration, and furnish to their employees Form W-2 showing the wages paid and taxes withheld for the year for each employee.
Related: Instructions for Form W-2 and W-3  Order Employer Returns Online

Form W-4, Employee's Withholding Allowance Certificate
Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. Consider completing a new Form W-4 each year and when your personal or financial situation changes.
Related: Withholding Calculator

Form W-9, Request for Taxpayer Identification Number (TIN) and Certification
Provide your correct TIN to the person who is required to file an information return with the IRS to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA.
Related: Instructions for the Requestor of Form W-9

Publication 15 (Circular E), Employer's Tax Guide
Explains your tax responsibilities as an employer. It also includes tax tables that you need to figure the taxes to withhold from each employee.
Related: Read Pub 15 Online

Publication 17, Your Federal Income Tax
Explains the general rules for filing a federal income tax return. It supplements the information contained in your tax form instruction booklet. It explains the tax law to make sure you pay only the tax you owe and no more.
Related: Read Pub 17 Online

Publication 502, Medical and Dental Expenses
Explains the itemized deduction for medical and dental expenses that you claim on Schedule A (Form 1040).
Related: Read Pub 502 Online

Publication 590, Individual Retirement Arrangements (IRAs)
Explains individual retirement arrangements (IRAs). An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement.
Related: Read Pub 590 Online

All forms and publications, including other formats, accessible products, and prior year revisions

Page Last Reviewed or Updated: 29-Jan-2014

The Tax Forms For Students

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