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Turbo Tax Ez

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Turbo Tax Ez

Turbo tax ez Index A Actividades Pasivas , Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos Adopción, hijo de, Hijo adoptivo. Turbo tax ez Anexos C, Empleado estatutario. Turbo tax ez , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Turbo tax ez C-EZ, Empleado estatutario. Turbo tax ez , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Turbo tax ez EIC, Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Turbo tax ez , Anexo EIC SE, Miembro del clero. Turbo tax ez , Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Turbo tax ez Anualidades, Cálculo del ingreso del trabajo. Turbo tax ez Asignación básica para el sustento (BAS), Paga militar no tributable. Turbo tax ez Asignación básica para la vivienda (BAH), Paga militar no tributable. Turbo tax ez Asistente EITC , ¿Hay Ayuda Disponible en Internet? Ayuda tributaria (see Impuestos, ayuda con) B Beneficios a los veteranos, Ingresos que no se Consideran Ingresos del Trabajo Beneficios de bienestar social, Ingresos que no se Consideran Ingresos del Trabajo Beneficios de la jubilación ferroviaria, Ingresos que no se Consideran Ingresos del Trabajo Beneficios del Seguro Social, Ingresos que no se Consideran Ingresos del Trabajo Beneficios por desempleo, Ingresos que no se Consideran Ingresos del Trabajo Beneficios por Incapacidad, Beneficios por Incapacidad Beneficios sindicales por huelga, Beneficios sindicales por huelga. Turbo tax ez Bienes gananciales, Bienes gananciales. Turbo tax ez , Bienes gananciales. Turbo tax ez C Casado que presenta una declaración conjunta, Requisito 1 —Límites del ingreso bruto ajustado (AGI, por sus siglas en inglés), Requisito de Declaración Conjunta Casado, hijo, Hijo casado. Turbo tax ez Clero, Miembro del clero. Turbo tax ez Cómo calcular usted mismo el EIC , Cómo Calcular Usted Mismo el EIC Compensación del Seguro Social, Ingresos que no se Consideran Ingresos del Trabajo Crianza, hijo de, Hijo de crianza. Turbo tax ez D Denegación del EIC , Capítulo 5 —Denegación del EIC Divorciados, requisito especial para padres, Requisito especial para padres divorciados o separados (o que viven aparte). Turbo tax ez E Ejemplos detallados, Capítulo 6 —Ejemplos Detallados El IRS le calculará el Crédito (EIC), El IRS le Calculará el Crédito (EIC) Empleado de una iglesia, Empleados de una iglesia. Turbo tax ez Empleado estatutario, Empleado estatutario. Turbo tax ez , Empleados estatutarios. Turbo tax ez Escuela, Definición de escuela. Turbo tax ez Estado civil Cabeza de familia, Requisito 3 —Su estado civil para efectos de la declaración no puede ser casado que presenta la declaración por separado Casado que presenta la declaración por separado, Requisito 3 —Su estado civil para efectos de la declaración no puede ser casado que presenta la declaración por separado Estados Unidos, Estados Unidos. Turbo tax ez , Estados Unidos. Turbo tax ez Estudiante, Definición de estudiante. Turbo tax ez Extranjero no residente, Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año F Formularios 1040, ¿Necesito esta Publicación?, Ingreso bruto ajustado (AGI). Turbo tax ez , Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Turbo tax ez , Beneficios por Incapacidad 1040A, Ingreso bruto ajustado (AGI). Turbo tax ez , Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Requisito 4 —Tiene que ser ciudadano de los Estados Unidos o extranjero residente durante todo el año, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Turbo tax ez , Beneficios por Incapacidad 1040EZ, Ingreso bruto ajustado (AGI). Turbo tax ez , Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos, Salarios, sueldos y propinas. Turbo tax ez 1040X, Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Turbo tax ez 2555, Requisito 5 —No puede presentar el Formulario 2555 ni el Formulario 2555-EZ 2555–EZ, Requisito 5 —No puede presentar el Formulario 2555 ni el Formulario 2555-EZ 4029, Formulario 4361 ó 4029 Aprobado 4361, Formulario 4361 ó 4029 Aprobado 4797, ¿Necesito esta Publicación? 4868, Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Turbo tax ez 4868(SP), Si no tiene un número de Seguro Social (SSN). Turbo tax ez , Se acerca el plazo para la presentación de la declaración y aún no tiene un número de Seguro Social. Turbo tax ez 8332, Requisito especial para padres divorciados o separados (o que viven aparte). Turbo tax ez 8814, ¿Necesito esta Publicación?, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos 8862(SP), Capítulo 5 —Denegación del EIC , Formulario 8862(SP) Fraude, Excepción 2. Turbo tax ez , ¿Se le ha Prohibido Reclamar el Crédito por Ingreso del Trabajo por Cierto Número de Años? Fuerzas Armadas, Opción de incluir la paga no tributable por combate. Turbo tax ez , Paga militar no tributable. Turbo tax ez , Servicio activo prolongado. Turbo tax ez H Hijo Hijo adoptivo, Hijo adoptivo. Turbo tax ez Hijo casado, Hijo casado. Turbo tax ez Hijo de crianza, Hijo de crianza. Turbo tax ez Hijo secuestrado, Hijo secuestrado. Turbo tax ez Nacimiento o fallecimiento de, Nacimiento o fallecimiento de un hijo. Turbo tax ez Hijo calificado, ¿Hay que Tener un Hijo para Tener Derecho al Crédito por Ingreso del Trabajo (EIC)?, Requisito 1 —Límites del ingreso bruto ajustado (AGI, por sus siglas en inglés), Capítulo 2 —Requisitos que Tiene que Cumplir si Tiene un Hijo Calificado, Requisito 8 —Su hijo tiene que cumplir los requisitos de parentesco, edad, residencia y declaración conjunta Estados Unidos, Requisito de Residencia Hogar, Requisito de Residencia Requisito de Declaración Conjunta, Declaraciones conjuntas. Turbo tax ez Requisito de Edad, Requisito de Edad Requisito de Parentesco, Requisito de Parentesco Requisito de Residencia, Requisito de Residencia Total y permanentemente incapacitado, Total y permanentemente incapacitado. Turbo tax ez Hogar Albergues para personas sin hogar, Albergues para personas sin hogar. Turbo tax ez Estados Unidos, Estados Unidos. Turbo tax ez Militar, Personal militar destacado fuera de los Estados Unidos. Turbo tax ez , Personal militar destacado fuera de los Estados Unidos. Turbo tax ez Hoja de Trabajo 2, Hoja de Trabajo 2: Hoja de Trabajo para la Línea 4 de la Hoja de Trabajo 1 I Impuestos, ayuda con, Cómo Obtener Ayuda con los Impuestos Información TTY/TDD , Teléfono. Turbo tax ez Ingreso del trabajo, Ingresos del Trabajo Empleado estatutario, Ingreso del Trabajo, Empleado estatutario. Turbo tax ez Trabajo por cuenta propia, Ingreso del Trabajo Ingresos de dividendos, Ingresos que no se Consideran Ingresos del Trabajo Ingresos de inversiones, Qué Hay de Nuevo para el año 2013, Requisito 6 —Tiene que tener ingresos de inversiones de $3,300 o menos Ingresos netos del trabajo por cuenta propia, Ingresos netos del trabajo por cuenta propia. Turbo tax ez , Ingresos netos del trabajo por cuenta propia de $400 o más. Turbo tax ez Ingresos que no se Consideran Ingresos de Trabajo, Ingresos que no se Consideran Ingresos del Trabajo Intereses, Ingresos que no se Consideran Ingresos del Trabajo Internet, ayuda por Asistente EITC , ¿Hay Ayuda Disponible en Internet? M Miembro del clero, Miembro del clero. Turbo tax ez Militar Fuera de los Estados Unidos, Personal militar destacado fuera de los Estados Unidos. Turbo tax ez , Personal militar destacado fuera de los Estados Unidos. Turbo tax ez Paga no tributable, Paga militar no tributable. Turbo tax ez Paga no tributable por combate, Opción de incluir la paga no tributable por combate. Turbo tax ez , Paga no tributable por combate. Turbo tax ez Paga por combate, Opción de incluir la paga no tributable por combate. Turbo tax ez , Paga militar no tributable. Turbo tax ez Ministro, Vivienda de un ministro de una orden religiosa. Turbo tax ez N Número de identificación del contribuyente en proceso de adopción (ATIN), Hijo casado. Turbo tax ez Número de identificación del contribuyente individual (ITIN), Otro número de identificación del contribuyente. Turbo tax ez , Hijo casado. Turbo tax ez Número de Seguro Social (SSN), Requisito 2 —Tiene que tener un número de Seguro Social (SSN) válido, Hijo casado. Turbo tax ez P Padres, divorciados o separados, Requisito especial para padres divorciados o separados (o que viven aparte). Turbo tax ez Pagos de bienestar socia a cambio de actividades laborales, Pagos de bienestar social a cambio de actividades laborales. Turbo tax ez Pareja doméstica, Pareja o sociedad doméstica en Nevada, Washington y California. Turbo tax ez Pensión alimenticia, Ingresos que no se Consideran Ingresos del Trabajo Pensiones, Cálculo del ingreso del trabajo. Turbo tax ez Personas que trabajan por cuenta propia, Hoja de Trabajo B del Crédito por Ingreso del Trabajo. Turbo tax ez Propinas, sueldos y salarios, Salarios, sueldos y propinas. Turbo tax ez Publicaciones (see Impuestos, ayuda con) R Recluso, Ingresos recibidos como recluso en una institución penal. Turbo tax ez , Cálculo del ingreso del trabajo. Turbo tax ez Recordatorios, Recordatorios Reglas del desempate, Reglas del desempate. Turbo tax ez , Cómo aplicar el Requisito 9 a padres divorciados o separados (o que viven aparte). Turbo tax ez Requisito de Declaración Conjunta (see Hijo calificado) Requisito de Edad (see Hijo calificado) Requisito de Parentesco (see Hijo calificado) Requisito de Residencia (see Hijo calificado) Requisito especial para padres divorciados o separados, Requisito especial para padres divorciados o separados (o que viven aparte). Turbo tax ez S Salarios, sueldos y propinas, Salarios, sueldos y propinas. Turbo tax ez Secuestro, hijo, Hijo secuestrado. Turbo tax ez Separados, requisito especial para padres, Requisito especial para padres divorciados o separados (o que viven aparte). Turbo tax ez Servicio activo prolongado, Servicio activo prolongado. Turbo tax ez Servicio del Defensor del Contribuyente, El Servicio del Defensor del Contribuyente está aquí para ayudarlo a usted. Turbo tax ez Servicios gratis de impuestos, Ayuda gratuita con la preparación de su declaración de impuestos. Turbo tax ez Sin Hogar, albergues para personas, Albergues para personas sin hogar. Turbo tax ez T Tabla del Crédito por Ingreso del Trabajo (EIC) , EIC Table Total y permanentemente incapacitado, Total y permanentemente incapacitado. Turbo tax ez V Veteranos, beneficios, Ingresos que no se Consideran Ingresos del Trabajo Prev  Up     Home   More Online Publications
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Turbo tax ez 11. Turbo tax ez   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. Turbo tax ez Kickbacks. Turbo tax ez Form 1099-MISC. Turbo tax ez Exception. Turbo tax ez Tax preparation fees. Turbo tax ez Covered executive branch official. Turbo tax ez Exceptions to denial of deduction. Turbo tax ez Indirect political contributions. Turbo tax ez Type of deduction. Turbo tax ez Repayment—$3,000 or less. Turbo tax ez Repayment—over $3,000. Turbo tax ez Method 1. Turbo tax ez Method 2. Turbo tax ez Repayment does not apply. Turbo tax ez Year of deduction (or credit). Turbo tax ez Telephone. Turbo tax ez What's New Standard mileage rate. Turbo tax ez  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. Turbo tax ez 5 cents per mile. Turbo tax ez For more information, see Car and truck expenses under Miscellaneous Expenses. Turbo tax ez Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. Turbo tax ez Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. Turbo tax ez Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. Turbo tax ez If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. Turbo tax ez To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Turbo tax ez Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. Turbo tax ez For more information on travel, meals, and entertainment, including deductibility, see Publication 463. Turbo tax ez Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. Turbo tax ez If the expenses are substantiated, you can deduct the allowable amount on your tax return. Turbo tax ez Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. Turbo tax ez For example, you can deduct 100% of the cost of meals on your business books and records. Turbo tax ez However, only 50% of these costs are allowed by law as a tax deduction. Turbo tax ez How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. Turbo tax ez If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. Turbo tax ez If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. Turbo tax ez If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. Turbo tax ez See Table 11-1 , Reporting Reimbursements. Turbo tax ez Accountable Plans An accountable plan requires your employees to meet all of the following requirements. Turbo tax ez Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. Turbo tax ez An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. Turbo tax ez The advance is reasonably calculated not to exceed the amount of anticipated expenses. Turbo tax ez You make the advance within a reasonable period of time of your employee paying or incurring the expense. Turbo tax ez If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. Turbo tax ez Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. Turbo tax ez Adequate accounting. Turbo tax ez   Your employees must adequately account to you for their travel, meals, and entertainment expenses. Turbo tax ez They must give you documentary evidence of their travel, mileage, and other employee business expenses. Turbo tax ez This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. Turbo tax ez Excess reimbursement or allowance. Turbo tax ez   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. Turbo tax ez The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. Turbo tax ez Reasonable period of time. Turbo tax ez   A reasonable period of time depends on the facts and circumstances. Turbo tax ez Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Turbo tax ez You give an advance within 30 days of the time the employee pays or incurs the expense. Turbo tax ez Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. Turbo tax ez Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. Turbo tax ez You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. Turbo tax ez How to deduct. Turbo tax ez   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. Turbo tax ez Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. Turbo tax ez If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). Turbo tax ez   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. Turbo tax ez S. Turbo tax ez Corporation Income Tax Return. Turbo tax ez If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. Turbo tax ez Table 11-1. Turbo tax ez Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. Turbo tax ez Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Turbo tax ez Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. Turbo tax ez Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Turbo tax ez The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Turbo tax ez Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. Turbo tax ez The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Turbo tax ez A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. Turbo tax ez No reimbursement plan The entire amount as wages in box 1. Turbo tax ez Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. Turbo tax ez In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Turbo tax ez Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. Turbo tax ez Federal rate. Turbo tax ez   The federal rate can be figured using any one of the following methods. Turbo tax ez For car expenses: The standard mileage rate. Turbo tax ez A fixed and variable rate (FAVR). Turbo tax ez For per diem amounts: The regular federal per diem rate. Turbo tax ez The standard meal allowance. Turbo tax ez The high-low rate. Turbo tax ez Car allowance. Turbo tax ez   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. Turbo tax ez Beginning in 2013, the standard business mileage rate is 56. Turbo tax ez 5 cents per mile. Turbo tax ez   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. Turbo tax ez This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. Turbo tax ez ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. Turbo tax ez ). Turbo tax ez For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. Turbo tax ez irs. Turbo tax ez gov/irb/2010-51_IRB/ar14. Turbo tax ez html and Notice 2012-72, available at www. Turbo tax ez irs. Turbo tax ez gov/irb/2012-50_IRB/ar10. Turbo tax ez html. Turbo tax ez Per diem allowance. Turbo tax ez   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. Turbo tax ez Regular federal per diem rate. Turbo tax ez   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. Turbo tax ez It has two components: Lodging expense, and Meal and incidental expense (M&IE). Turbo tax ez The rates are different for different locations. Turbo tax ez Publication 1542 lists the rates in the continental United States. Turbo tax ez Standard meal allowance. Turbo tax ez   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. Turbo tax ez You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). Turbo tax ez Internet access. Turbo tax ez    Per diem rates are available on the Internet. Turbo tax ez You can access per diem rates at www. Turbo tax ez gsa. Turbo tax ez gov/perdiemrates. Turbo tax ez High-low method. Turbo tax ez   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Turbo tax ez It eliminates the need to keep a current list of the per diem rate for each city. Turbo tax ez   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. Turbo tax ez All other areas have a per diem amount of $163 ($52 for M&IE). Turbo tax ez The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. Turbo tax ez   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). Turbo tax ez The rate for all other locations increased to $170 ($52 for M&IE). Turbo tax ez For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. Turbo tax ez However, you must use the same rate for all employees reimbursed under the high-low method. Turbo tax ez   For more information about the high-low method, see Notice 2013-65, available at www. Turbo tax ez irs. Turbo tax ez gov/irb/2013-44_IRB/ar13. Turbo tax ez html. Turbo tax ez See Publication 1542 (available on the Internet at IRS. Turbo tax ez gov) for the current per diem rates for all locations. Turbo tax ez Reporting per diem and car allowances. Turbo tax ez   The following discussion explains how to report per diem and car allowances. Turbo tax ez The manner in which you report them depends on how the allowance compares to the federal rate. Turbo tax ez See Table 11-1. Turbo tax ez Allowance less than or equal to the federal rate. Turbo tax ez   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. Turbo tax ez Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). Turbo tax ez See How to deduct under Accountable Plans, earlier. Turbo tax ez Allowance more than the federal rate. Turbo tax ez   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. Turbo tax ez   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. Turbo tax ez Deduct it as travel expenses (as explained above). Turbo tax ez This part of the allowance is treated as reimbursed under an accountable plan. Turbo tax ez   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. Turbo tax ez Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Turbo tax ez This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. Turbo tax ez Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. Turbo tax ez The deduction limit applies even if you reimburse them for 100% of the expenses. Turbo tax ez Application of the 50% limit. Turbo tax ez   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. Turbo tax ez It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. Turbo tax ez The deduction limit may also apply to meals you furnish on your premises to your employees. Turbo tax ez Related expenses. Turbo tax ez   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. Turbo tax ez Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. Turbo tax ez However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. Turbo tax ez Amount subject to 50% limit. Turbo tax ez   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. Turbo tax ez The per diem allowance. Turbo tax ez The federal rate for M&IE. Turbo tax ez   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. Turbo tax ez If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. Turbo tax ez Meal expenses when subject to “hours of service” limits. Turbo tax ez   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. Turbo tax ez   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. Turbo tax ez De minimis (minimal) fringe benefit. Turbo tax ez   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. Turbo tax ez See Publication 15-B for additional information on de minimis fringe benefits. Turbo tax ez Company cafeteria or executive dining room. Turbo tax ez   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. Turbo tax ez This includes the cost of maintaining the facilities for providing the food and beverages. Turbo tax ez These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). Turbo tax ez Employee activities. Turbo tax ez   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. Turbo tax ez The benefit must be primarily for your employees who are not highly compensated. Turbo tax ez   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. Turbo tax ez Owned a 10% or more interest in the business during the year or the preceding year. Turbo tax ez An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Turbo tax ez Received more than $115,000 in pay for the preceding year. Turbo tax ez You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. Turbo tax ez   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. Turbo tax ez Meals or entertainment treated as compensation. Turbo tax ez   The 50% limit does not apply to either of the following. Turbo tax ez Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. Turbo tax ez Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. Turbo tax ez Sales of meals or entertainment. Turbo tax ez   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. Turbo tax ez For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. Turbo tax ez The 50% limit does not apply to this expense. Turbo tax ez Providing meals or entertainment to general public to promote goodwill. Turbo tax ez   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Turbo tax ez The 50% limit does not apply to this expense. Turbo tax ez Director, stockholder, or employee meetings. Turbo tax ez   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. Turbo tax ez You can provide some minor social activities, but the main purpose of the meeting must be your company's business. Turbo tax ez These expenses are subject to the 50% limit. Turbo tax ez Trade association meetings. Turbo tax ez   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. Turbo tax ez These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. Turbo tax ez Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. Turbo tax ez All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. Turbo tax ez The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Turbo tax ez You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. Turbo tax ez Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. Turbo tax ez Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. Turbo tax ez Advertising expenses. Turbo tax ez   You generally can deduct reasonable advertising expenses that are directly related to your business activities. Turbo tax ez Generally, you cannot deduct amounts paid to influence legislation (i. Turbo tax ez e. Turbo tax ez , lobbying). Turbo tax ez See Lobbying expenses , later. Turbo tax ez   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. Turbo tax ez For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. Turbo tax ez S. Turbo tax ez Savings Bonds, or to participate in similar causes is usually deductible. Turbo tax ez Anticipated liabilities. Turbo tax ez   Anticipated liabilities or reserves for anticipated liabilities are not deductible. Turbo tax ez For example, assume you sold 1-year TV service contracts this year totaling $50,000. Turbo tax ez From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. Turbo tax ez You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. Turbo tax ez You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. Turbo tax ez Bribes and kickbacks. Turbo tax ez   Engaging in the payment of bribes or kickbacks is a serious criminal matter. Turbo tax ez Such activity could result in criminal prosecution. Turbo tax ez Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. Turbo tax ez   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. Turbo tax ez Meaning of “generally enforced. Turbo tax ez ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. Turbo tax ez For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. Turbo tax ez Kickbacks. Turbo tax ez   A kickback is a payment for referring a client, patient, or customer. Turbo tax ez The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. Turbo tax ez In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. Turbo tax ez   For example, the Yard Corporation is in the business of repairing ships. Turbo tax ez It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. Turbo tax ez Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. Turbo tax ez These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. Turbo tax ez Form 1099-MISC. Turbo tax ez   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. Turbo tax ez See Form 1099-MISC for more information. Turbo tax ez Car and truck expenses. Turbo tax ez   The costs of operating a car, truck, or other vehicle in your business are deductible. Turbo tax ez For more information on how to figure your deduction, see Publication 463. Turbo tax ez Charitable contributions. Turbo tax ez   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Turbo tax ez If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. Turbo tax ez However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. Turbo tax ez See the Instructions for Form 1120 for more information. Turbo tax ez Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Turbo tax ez Example. Turbo tax ez You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. Turbo tax ez The purpose of the ad was to encourage readers to buy your products. Turbo tax ez Your payment is not a charitable contribution. Turbo tax ez You can deduct it as an advertising expense. Turbo tax ez Example. Turbo tax ez You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. Turbo tax ez Your payment is not a charitable contribution. Turbo tax ez You can deduct it as a business expense. Turbo tax ez See Publication 526 for a discussion of donated inventory, including capital gain property. Turbo tax ez Club dues and membership fees. Turbo tax ez   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. Turbo tax ez This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Turbo tax ez Exception. Turbo tax ez   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Turbo tax ez Boards of trade. Turbo tax ez Business leagues. Turbo tax ez Chambers of commerce. Turbo tax ez Civic or public service organizations. Turbo tax ez Professional organizations such as bar associations and medical associations. Turbo tax ez Real estate boards. Turbo tax ez Trade associations. Turbo tax ez Credit card convenience fees. Turbo tax ez   Credit card companies charge a fee to businesses who accept their cards. Turbo tax ez This fee when paid or incurred by the business can be deducted as a business expense. Turbo tax ez Damages recovered. Turbo tax ez   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. Turbo tax ez You must include this compensation in your income. Turbo tax ez However, you may be able to take a special deduction. Turbo tax ez The deduction applies only to amounts recovered for actual economic injury, not any additional amount. Turbo tax ez The deduction is the smaller of the following. Turbo tax ez The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. Turbo tax ez Your losses from the injury you have not deducted. Turbo tax ez Demolition expenses or losses. Turbo tax ez   Amounts paid or incurred to demolish a structure are not deductible. Turbo tax ez These amounts are added to the basis of the land where the demolished structure was located. Turbo tax ez Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. Turbo tax ez Education expenses. Turbo tax ez   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Turbo tax ez See Education Expenses in chapter 2. Turbo tax ez   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. Turbo tax ez You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. Turbo tax ez For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. Turbo tax ez   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. Turbo tax ez This is true even if the education maintains or improves skills presently required in your business. Turbo tax ez For more information on education expenses, see Publication 970. Turbo tax ez Franchise, trademark, trade name. Turbo tax ez   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). Turbo tax ez   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. Turbo tax ez   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. Turbo tax ez Impairment-related expenses. Turbo tax ez   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. Turbo tax ez   You are disabled if you have either of the following. Turbo tax ez A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. Turbo tax ez A physical or mental impairment that substantially limits one or more of your major life activities. Turbo tax ez   The expense qualifies as a business expense if all the following apply. Turbo tax ez Your work clearly requires the expense for you to satisfactorily perform that work. Turbo tax ez The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. Turbo tax ez Their treatment is not specifically provided for under other tax law provisions. Turbo tax ez Example. Turbo tax ez You are blind. Turbo tax ez You must use a reader to do your work, both at and away from your place of work. Turbo tax ez The reader's services are only for your work. Turbo tax ez You can deduct your expenses for the reader as a business expense. Turbo tax ez Internet-related expenses. Turbo tax ez   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. Turbo tax ez If you are starting a business you may have to amortize these expenses as start-up costs. Turbo tax ez For more information about amortizing start-up and organizational costs, see chapter 8. Turbo tax ez Interview expense allowances. Turbo tax ez   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. Turbo tax ez You can deduct the reimbursements as a business expense. Turbo tax ez However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. Turbo tax ez Legal and professional fees. Turbo tax ez   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. Turbo tax ez However, usually legal fees you pay to acquire business assets are not deductible. Turbo tax ez These costs are added to the basis of the property. Turbo tax ez   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. Turbo tax ez If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. Turbo tax ez The result is the portion of the invoice attributable to business expenses. Turbo tax ez The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). Turbo tax ez   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. Turbo tax ez However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. Turbo tax ez See Publication 529, Miscellaneous Deductions. Turbo tax ez Tax preparation fees. Turbo tax ez   The cost of hiring a tax professional, such as a C. Turbo tax ez P. Turbo tax ez A. Turbo tax ez , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. Turbo tax ez Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. Turbo tax ez   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. Turbo tax ez Licenses and regulatory fees. Turbo tax ez   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. Turbo tax ez Some licenses and fees may have to be amortized. Turbo tax ez See chapter 8 for more information. Turbo tax ez Lobbying expenses. Turbo tax ez   Generally, lobbying expenses are not deductible. Turbo tax ez Lobbying expenses include amounts paid or incurred for any of the following activities. Turbo tax ez Influencing legislation. Turbo tax ez Participating in or intervening in any political campaign for, or against, any candidate for public office. Turbo tax ez Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. Turbo tax ez Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. Turbo tax ez Researching, preparing, planning, or coordinating any of the preceding activities. Turbo tax ez   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. Turbo tax ez For information on making this allocation, see section 1. Turbo tax ez 162-28 of the regulations. Turbo tax ez   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. Turbo tax ez The organization conducts lobbying activities on matters of direct financial interest to your business. Turbo tax ez A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. Turbo tax ez   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. Turbo tax ez Covered executive branch official. Turbo tax ez   For purposes of this discussion, a covered executive branch official is any of the following. Turbo tax ez The President. Turbo tax ez The Vice President. Turbo tax ez 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. Turbo tax ez Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). Turbo tax ez Exceptions to denial of deduction. Turbo tax ez   The general denial of the deduction does not apply to the following. Turbo tax ez Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. Turbo tax ez An Indian tribal government is treated as a local council or similar governing body. Turbo tax ez Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). Turbo tax ez Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). Turbo tax ez Moving machinery. Turbo tax ez   Generally, the cost of moving machinery from one city to another is a deductible expense. Turbo tax ez So is the cost of moving machinery from one plant to another, or from one part of your plant to another. Turbo tax ez You can deduct the cost of installing the machinery in the new location. Turbo tax ez However, you must capitalize the costs of installing or moving newly purchased machinery. Turbo tax ez Outplacement services. Turbo tax ez   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. Turbo tax ez are deductible. Turbo tax ez   The costs of outplacement services may cover more than one deduction category. Turbo tax ez For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. Turbo tax ez   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. Turbo tax ez Penalties and fines. Turbo tax ez   Penalties paid for late performance or nonperformance of a contract are generally deductible. Turbo tax ez For instance, you own and operate a construction company. Turbo tax ez Under a contract, you are to finish construction of a building by a certain date. Turbo tax ez Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. Turbo tax ez You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. Turbo tax ez These additional costs are deductible business expenses. Turbo tax ez   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. Turbo tax ez These fines or penalties include the following amounts. Turbo tax ez Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. Turbo tax ez Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. Turbo tax ez Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. Turbo tax ez Forfeited as collateral posted for a proceeding that could result in a fine or penalty. Turbo tax ez   Examples of nondeductible penalties and fines include the following. Turbo tax ez Fines for violating city housing codes. Turbo tax ez Fines paid by truckers for violating state maximum highway weight laws. Turbo tax ez Fines for violating air quality laws. Turbo tax ez Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. Turbo tax ez   A fine or penalty does not include any of the following. Turbo tax ez Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. Turbo tax ez Court costs or stenographic and printing charges. Turbo tax ez Compensatory damages paid to a government. Turbo tax ez Political contributions. Turbo tax ez   Contributions or gifts paid to political parties or candidates are not deductible. Turbo tax ez In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. Turbo tax ez Indirect political contributions. Turbo tax ez   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. Turbo tax ez Examples of nondeductible expenses include the following. Turbo tax ez Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. Turbo tax ez Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. Turbo tax ez Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. Turbo tax ez Repairs. Turbo tax ez   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. Turbo tax ez Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. Turbo tax ez Otherwise, the cost must be capitalized and depreciated. Turbo tax ez See Form 4562 and its instructions for how to compute and claim the depreciation deduction. Turbo tax ez   The cost of repairs includes the costs of labor, supplies, and certain other items. Turbo tax ez The value of your own labor is not deductible. Turbo tax ez Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). Turbo tax ez Repayments. Turbo tax ez   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. Turbo tax ez Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Turbo tax ez Type of deduction. Turbo tax ez   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Turbo tax ez For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. Turbo tax ez If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Turbo tax ez   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. Turbo tax ez However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. Turbo tax ez Repayment—$3,000 or less. Turbo tax ez   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Turbo tax ez Repayment—over $3,000. Turbo tax ez   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. Turbo tax ez However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. Turbo tax ez ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. Turbo tax ez If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. Turbo tax ez Method 1. Turbo tax ez   Figure your tax for 2013 claiming a deduction for the repaid amount. Turbo tax ez Method 2. Turbo tax ez   Figure your tax for 2013 claiming a credit for the repaid amount. Turbo tax ez Follow these steps. Turbo tax ez Figure your tax for 2013 without deducting the repaid amount. Turbo tax ez Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Turbo tax ez Subtract the tax in (2) from the tax shown on your return for the earlier year. Turbo tax ez This is the amount of your credit. Turbo tax ez Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). Turbo tax ez   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. Turbo tax ez   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. Turbo tax ez R. Turbo tax ez C. Turbo tax ez 1341” next to line 71. Turbo tax ez Example. Turbo tax ez For 2012, you filed a return and reported your income on the cash method. Turbo tax ez In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. Turbo tax ez Your filing status in 2013 and 2012 is single. Turbo tax ez Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. Turbo tax ez Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. Turbo tax ez Repayment does not apply. Turbo tax ez   This discussion does not apply to the following. Turbo tax ez Deductions for bad debts. Turbo tax ez Deductions from sales to customers, such as returns and allowances, and similar items. Turbo tax ez Deductions for legal and other expenses of contesting the repayment. Turbo tax ez Year of deduction (or credit). Turbo tax ez   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. Turbo tax ez If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. Turbo tax ez For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. Turbo tax ez Subscriptions. Turbo tax ez   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. Turbo tax ez Supplies and materials. Turbo tax ez   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. Turbo tax ez   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. Turbo tax ez You do not keep a record of when they are used. Turbo tax ez You do not take an inventory of the amount on hand at the beginning and end of the tax year. Turbo tax ez This method does not distort your income. Turbo tax ez   You can also deduct the cost of books, professional instruments, equipment, etc. Turbo tax ez , if you normally use them within a year. Turbo tax ez However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. Turbo tax ez For more information regarding depreciation see Publication 946, How To Depreciate Property. Turbo tax ez Utilities. Turbo tax ez   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. Turbo tax ez However, any part due to personal use is not deductible. Turbo tax ez Telephone. Turbo tax ez   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Turbo tax ez However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Turbo tax ez Prev  Up  Next   Home   More Online Publications