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2011 1040a Tax Form

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2011 1040a Tax Form

2011 1040a tax form Index A Addition to property, Additions and Improvements Adjusted basis, Adjusted Basis Alternative Depreciation System (ADS) Recovery periods, Recovery Periods Under ADS Required use, Required use of ADS. 2011 1040a tax form Amended return, Filing an Amended Return Apartment Cooperative, Cooperative apartments. 2011 1040a tax form Rental, Which Property Class Applies Under GDS? Automobile (see Passenger automobile) B Basis Adjustments, Basis adjustment for depreciation allowed or allowable. 2011 1040a tax form , Adjustment of partner's basis in partnership. 2011 1040a tax form , Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. 2011 1040a tax form , Basis adjustment due to casualty loss. 2011 1040a tax form Basis for depreciation, What Is the Basis for Depreciation? Casualty loss, Basis adjustment due to casualty loss. 2011 1040a tax form Change in use, Property changed from personal use. 2011 1040a tax form Cost, Cost as Basis Depreciable basis, Depreciable basis. 2011 1040a tax form Other than cost, Other Basis Recapture of clean-fuel vehicle deduction or credit, Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. 2011 1040a tax form Term interest, Basis adjustments. 2011 1040a tax form Unadjusted, Figuring the Unadjusted Basis of Your Property Business use of property, partial, Partial business or investment use. 2011 1040a tax form Business-use limit, recapture of Section 179 deduction, When Must You Recapture the Deduction? Business-use requirement, listed property, What Is the Business-Use Requirement? C Car (see Passenger automobile) Carryover of section 179 deduction, Carryover of disallowed deduction. 2011 1040a tax form Casualty loss, effect of, Basis adjustment due to casualty loss. 2011 1040a tax form Changing accounting method, Changing Your Accounting Method Communication equipment (see Listed property) Commuting, Commuting use. 2011 1040a tax form Computer (see Listed property) Computer software, Computer software. 2011 1040a tax form , Off-the-shelf computer software. 2011 1040a tax form Containers, Containers. 2011 1040a tax form Conventions, Which Convention Applies? Cooperative apartment, Cooperative apartments. 2011 1040a tax form Copyright, Patents and copyrights. 2011 1040a tax form (see also Section 197 intangibles) Correcting depreciation deductions, How Do You Correct Depreciation Deductions? Cost basis, Cost as Basis D Declining balance Method, Declining Balance Method Rates, Declining balance rate. 2011 1040a tax form Deduction limit Automobile, Do the Passenger Automobile Limits Apply? Section 179, How Much Can You Deduct? Depreciation Deduction Employee, Can Employees Claim a Deduction? Listed property, Can Employees Claim a Deduction? Determinable useful life, Property Having a Determinable Useful Life Excepted property, Excepted Property Incorrect amount deducted, How Do You Correct Depreciation Deductions? Methods, Which Depreciation Method Applies? Property lasting more than one year, Property Lasting More Than One Year Property owned, Property You Own Property used in business, Property Used in Your Business or Income-Producing Activity Recapture, Revoking an election. 2011 1040a tax form , Recapture of Excess Depreciation Depreciation allowable, Basis adjustment for depreciation allowed or allowable. 2011 1040a tax form Depreciation allowed, Basis adjustment for depreciation allowed or allowable. 2011 1040a tax form Depreciation deduction Listed property, What Is the Business-Use Requirement? Determinable useful life, Property Having a Determinable Useful Life Disposition Before recovery period ends, Sale or Other Disposition Before the Recovery Period Ends General asset account property, Disposing of GAA Property Section 179 deduction, When Must You Recapture the Deduction? E Election ADS, Electing ADS. 2011 1040a tax form , Election of ADS. 2011 1040a tax form Declining balance (150% DB) method, 150% election. 2011 1040a tax form Exclusion from MACRS, Election To Exclude Property From MACRS General asset account, Electing To Use a GAA Not to claim special depreciation allowance, How Can You Elect Not To Claim an Allowance? Section 179 deduction, How Do You Elect the Deduction? Straight line method, Straight line election. 2011 1040a tax form Electric vehicle, Electric Vehicles Employee Depreciation deduction, Can Employees Claim a Deduction? How to claim depreciation, Employee. 2011 1040a tax form Employee deduction, listed property, Can Employees Claim a Deduction? Energy property, Energy property. 2011 1040a tax form Exchange of MACRS property, Property Acquired in a Like-kind Exchange or Involuntary Conversion F Farm Property, Depreciation Methods for Farm Property Figuring MACRS Using percentage tables, How Is the Depreciation Deduction Figured? Without using percentage tables, Figuring the Deduction Without Using the Tables Films, Films, video tapes, and recordings. 2011 1040a tax form Free tax services, Free help with your tax return. 2011 1040a tax form G General asset account Abusive transaction, Abusive transactions. 2011 1040a tax form Disposing of property, Disposing of GAA Property Grouping property in, Grouping Property Nonrecognition transaction, Nonrecognition transactions. 2011 1040a tax form General Depreciation System (GDS), recovery periods, Recovery Periods Under GDS Gift (see Basis, other than cost) H Help (see Tax help) I Idle property, Idle Property Improvements, How Do You Treat Repairs and Improvements?, Additions and Improvements Income forecast method, Income Forecast Method Incorrect depreciation deductions, How Do You Correct Depreciation Deductions? Indian reservation Defined, Indian reservation. 2011 1040a tax form Qualified infrastructure property, Qualified infrastructure property. 2011 1040a tax form Qualified property, Qualified property. 2011 1040a tax form Recovery periods for qualified property, Indian Reservation Property Related person, Related person. 2011 1040a tax form Inheritance (see Basis, other than cost) Intangible property Depreciation method, Intangible Property, Income Forecast Method Income forecast method, Income Forecast Method Straight line method, Intangible Property Inventory, Inventory. 2011 1040a tax form Investment use of property, partial, Partial business or investment use. 2011 1040a tax form Involuntary conversion of MACRS property, Property Acquired in a Like-kind Exchange or Involuntary Conversion L Land Not depreciable, Land Preparation costs, Land Leased property, Leased property. 2011 1040a tax form Leasehold improvement property, defined, Qualified leasehold improvement property. 2011 1040a tax form , Qualified leasehold improvement property. 2011 1040a tax form Life tenant, Life tenant. 2011 1040a tax form (see also Term interests) Limit on deduction Automobile, Do the Passenger Automobile Limits Apply? Section 179, How Much Can You Deduct? Listed property 5% owner, 5% owner. 2011 1040a tax form Computer, Computers and Related Peripheral Equipment Condition of employment, Condition of employment. 2011 1040a tax form Defined, What Is Listed Property? Employee deduction, Can Employees Claim a Deduction? Employer convenience, Employer's convenience. 2011 1040a tax form Improvements to, Improvements to listed property. 2011 1040a tax form Leased, Lessee's Inclusion Amount Passenger automobile, Passenger Automobiles Qualified business use, Qualified Business Use Recordkeeping, Adequate Records Related person, Related persons. 2011 1040a tax form Reporting on Form 4562, How Is Listed Property Information Reported? Lodging, Property used for lodging. 2011 1040a tax form M Maximum deduction Electric vehicles, Electric Vehicles Passenger automobiles, Maximum Depreciation Deduction Trucks, Trucks and Vans Vans, Trucks and Vans Mobile home (see Residential rental property) Modified ACRS (MACRS) Addition or improvement, Additions and Improvements Alternative Depreciation System (ADS), Which Depreciation System (GDS or ADS) Applies? Conventions, Which Convention Applies? Declining balance method, Declining Balance Method Depreciation methods, Which Depreciation Method Applies? Farm property, Depreciation Methods for Farm Property Figuring, short tax year, Property Placed in Service in a Short Tax Year General Depreciation System (GDS), Which Depreciation System (GDS or ADS) Applies? Percentage tables, Using the MACRS Percentage Tables Property classes, Which Property Class Applies Under GDS? Recovery periods, Which Recovery Period Applies? Short tax year, Figuring the Deduction for a Short Tax Year Straight line method, Straight Line Method N Nonresidential real property, Which Property Class Applies Under GDS? Nontaxable transfer of MACRS property, Property Acquired in a Nontaxable Transfer O Office in the home, Office in the home. 2011 1040a tax form , Office in the home. 2011 1040a tax form Ownership, incidents of, Incidents of ownership. 2011 1040a tax form P Partial business use, Partial business use. 2011 1040a tax form Passenger automobile Defined, Passenger Automobiles Electric vehicles, Electric Vehicles Limit on, Do the Passenger Automobile Limits Apply? Maximum depreciation deduction, Maximum Depreciation Deduction Trucks, Trucks and Vans Vans, Trucks and Vans Patent, Patents and copyrights. 2011 1040a tax form (see also Section 197 intangibles) Personal property, Personal property. 2011 1040a tax form Phonographic equipment (see Listed property) Photographic equipment (see Listed property) Placed in service Before 1987, Property You Placed in Service Before 1987 Date, What Is the Placed in Service Date? Rule, Placed in Service Property Classes, Which Property Class Applies Under GDS? Depreciable, What Property Can Be Depreciated? Idle, Idle Property Improvements, How Do You Treat Repairs and Improvements? Leased, Leased property. 2011 1040a tax form , Leased property. 2011 1040a tax form Listed, What Is Listed Property? Personal, Personal property. 2011 1040a tax form Real, Real property. 2011 1040a tax form Retired from service, Retired From Service Tangible personal, Tangible personal property. 2011 1040a tax form Term interest, Certain term interests in property. 2011 1040a tax form Q Qualified leasehold improvement property, defined, Qualified leasehold improvement property. 2011 1040a tax form , Qualified leasehold improvement property. 2011 1040a tax form Qualified property, special depreciation allowance, What Is Qualified Property? R Real property, Real property. 2011 1040a tax form Recapture Clean-fuel vehicle deduction or credit, Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. 2011 1040a tax form General asset account, abusive transaction, Abusive transactions. 2011 1040a tax form Listed property, Recapture of Excess Depreciation MACRS depreciation, Revoking an election. 2011 1040a tax form Section 179 deduction, When Must You Recapture the Deduction? Special depreciation allowance, When Must You Recapture an Allowance? Recordkeeping Listed property, Adequate Records Section 179, How Do You Elect the Deduction? Recovery periods ADS, Recovery Periods Under ADS GDS, Recovery Periods Under GDS Related persons, Related persons. 2011 1040a tax form , Related persons. 2011 1040a tax form , Related persons. 2011 1040a tax form , Related persons. 2011 1040a tax form , Related person. 2011 1040a tax form , Related persons. 2011 1040a tax form Rent-to-own property, defined, Qualified rent-to-own property. 2011 1040a tax form Rental home (see Residential rental property) Rented property, improvements, Improvements to rented property. 2011 1040a tax form Repairs, How Do You Treat Repairs and Improvements? Residential rental property, Which Property Class Applies Under GDS? Retail motor fuels outlet, Retail motor fuels outlet. 2011 1040a tax form Revoking ADS election, Electing ADS. 2011 1040a tax form General asset account election, Revoking an election. 2011 1040a tax form Section 179 election, Revoking an election. 2011 1040a tax form S Sale of property, Sale or Other Disposition Before the Recovery Period Ends Section 179 deduction Business use required, Partial business use. 2011 1040a tax form Carryover, Carryover of disallowed deduction. 2011 1040a tax form Dispositions, When Must You Recapture the Deduction? Electing, How Do You Elect the Deduction? Limits Business (taxable) income, Business Income Limit Business-use, recapture, When Must You Recapture the Deduction? Dollar, Dollar Limits Enterprise zone business, Enterprise Zone Businesses Partial business use, Partial business use. 2011 1040a tax form Married filing separate returns, Married Individuals Partnership rules, Partnerships and Partners Property Eligible, Eligible Property Excepted, Excepted Property Purchase required, Property Acquired by Purchase Recapture, When Must You Recapture the Deduction? Recordkeeping, How Do You Elect the Deduction? S corporation rules, S Corporations Settlement fees, Settlement costs. 2011 1040a tax form Short tax year Figuring depreciation, Property Placed in Service in a Short Tax Year Figuring placed-in-service date, Using the Applicable Convention in a Short Tax Year Software, computer, Computer software. 2011 1040a tax form , Off-the-shelf computer software. 2011 1040a tax form Sound recording, Films, video tapes, and recordings. 2011 1040a tax form Special depreciation allowance Election not to claim, How Can You Elect Not To Claim an Allowance? Qualified property, What Is Qualified Property? Recapture, When Must You Recapture an Allowance? Stock, constructive ownership of, Constructive ownership of stock or partnership interest. 2011 1040a tax form Straight line method, Intangible Property, Straight Line Method Created intangibles, Certain created intangibles. 2011 1040a tax form T Tangible personal property, Tangible personal property. 2011 1040a tax form Term interest, Certain term interests in property. 2011 1040a tax form Trade-in of property, Trade-in of other property. 2011 1040a tax form Trucks, Trucks and Vans U Unadjusted basis, Figuring the Unadjusted Basis of Your Property Useful life, Property Having a Determinable Useful Life V Vans, Trucks and Vans Video tape, Films, video tapes, and recordings. 2011 1040a tax form Video-recording equipment (see Listed property) W When to use ADS, Which Depreciation System (GDS or ADS) Applies? Worksheet Leased listed property, Inclusion amount worksheet. 2011 1040a tax form MACRS, MACRS Worksheet Prev  Up     Home   More Online Publications
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IRS Combats Identity Theft and Refund Fraud on Many Fronts

IRS YouTube Videos
ID Theft: IRS Efforts on Identity Theft

FS-2014-1, January 2014

Stopping identity theft and refund fraud is a top priority for the Internal Revenue Service (IRS). The agency’s work on identity theft and refund fraud continues to grow, touching nearly every part of the organization. For the 2014 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

The IRS assigned more than 3,000 IRS employees to work on identity theft-related issues. IRS employees are working to prevent refund fraud, investigate identity theft-related crimes and help taxpayers who have been victimized by identity thieves. In addition, the IRS provides training to more than 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

Refund Fraud Detection and Prevention

The IRS continues to increase its efforts against refund fraud, which includes identity theft. As a result of these aggressive efforts to combat identity theft from 2011 through November 2013, the IRS has stopped 14.6 million suspicious returns, and protected over $50 billion in fraudulent refunds.

For 2014, the IRS will continue to increase both the number and efficiency of the identity theft filters that are used to identify potentially fraudulent returns due to identity theft prior to the processing of the return and release of any refund. 

In Fiscal Year 2013, the IRS initiated 1,492 identity theft related criminal investigations, an increase of 66 percent over investigations initiated in FY 2012. Indictments and sentencing doubled in FY 2013 and the average prison term was more than three years (38 months) – the longest sentenced being 26 years.   

Increasing Efforts to Help Victims

The IRS understands that identity theft is a frustrating, complex process for victims. While identity thieves steal information from sources outside the tax system, the IRS is often the first to inform a victim that identity theft has occurred. The IRS is working hard to resolve identity theft cases as quickly as possible.  We are also developing programs and information to protect the taxpayer from future misuse of their personal information impacting their tax administration and minimize the impact outside of IRS.

While the IRS has made considerable progress in this area, more work remains. Fighting identity theft is an ongoing battle as identity thieves continue to create new ways of stealing personal information and using it for their gain. Identity theft cases are among the most complex handled by the IRS. The IRS is continually reviewing processes and policies to minimize the incidence of identity theft and to help those who find themselves victimized. Among the steps underway to help victims:

  • IP PIN expansion. The IRS Identity Protection PIN (IP PIN) is a unique six digit number that is assigned annually to victims of identity theft for use when filing their federal tax return that shows that a particular taxpayer is the rightful filer of the return. For the upcoming tax year 2013 filing season, the IRS expects to provide more than 1.2 million taxpayers with an IP PIN. For the second tax season in a row, the number of IP PINs has nearly doubled from the year before. The IP PIN will allow these individuals to avoid delays in filing returns and receiving refunds.
  • IP PIN Changes:
    • If an IP PIN is assigned to a taxpayer for their 2013 return, the IP PIN must be used on any delinquent 2011 and 2012 returns filed during the 2014 calendar year.
    • IRS is exploring the use of an online process through IRS.gov that will allow taxpayers who have an IP PIN requirement and lose their IP PIN to create an account and receive their original IP PIN online. 
  • Victim case resolution:  The IRS continues to dedicate more and more employees to resolution of victim cases. These are extremely complex cases to resolve, frequently touching on multiple issues and multiple tax years. Cases of resolving identity theft can be complicated by the thieves themselves contacting the IRS. The IRS is working hard to streamline its internal process, but much more work remains. A typical case can take 180 days to resolve, and the IRS is working to reduce that time period.
  • Service options. The IRS is providing information in several ways ranging from a special section on IRS.gov devoted to identity theft to a special phone number available for victims to obtain assistance and resource information for resolving tax issues. The IRS Identity Protection Specialized Unit is available at 1-800-908-4490.
  • More information is available on IRS.gov, including the Taxpayer Guide to Identity Theft.

IRS Criminal Investigation

In FY 2013, the IRS initiated 1,492 identity theft related criminal investigations, an increase of 66% over investigations initiated in FY 2012. Indictments and sentencing doubled in FY 2013 and the average prison term was more than three years (38 months).

In January 2013, the IRS conducted a coordinated and highly successful identity theft enforcement sweep.  The coast-to-coast effort against identity theft suspects led to 734 enforcement actions, including 298 indictments, informations, complaints and arrests.

The Law Enforcement Assistance Program, formerly known as the Identity Theft Pilot Disclosure Program, was expanded nationwide.  This program provides for the disclosure of federal tax return information associated with the accounts of known and suspected victims of identity theft with the express written consent of those victims.  There are currently more than 300 state/local law enforcement agencies from 35 states participating.  For FY 2013, more than 2,400 requests were received from state and local law enforcement agencies.

The Identity Theft Clearinghouse (ITC) continues to develop and refer identity theft refund fraud schemes to Criminal Investigation (CI) Field Offices for investigation.  For FY 2013, the ITC received over 1,400 identity theft related leads.  Those leads related to more than 391,000 tax returns claiming in excess of $1.3 billion dollars in potentially fraudulent federal income tax refunds. 

CI continues to be the lead agency or actively involved in more than 30 multi-regional task forces or working groups including state/local and federal law enforcement agencies solely focusing on identity theft.     

For more information, see the special identity theft section on IRS.gov and IRS Fact Sheet 2014-2, Tips for Taxpayers and Victims about Identity Theft and Tax Returns.

Page Last Reviewed or Updated: 07-Jan-2014

The 2011 1040a Tax Form

2011 1040a tax form 2. 2011 1040a tax form   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. 2011 1040a tax form The pay may be in cash, property, or services. 2011 1040a tax form It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. 2011 1040a tax form For information about deducting employment taxes, see chapter 5. 2011 1040a tax form You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. 2011 1040a tax form Empowerment zone employment credit (Form 8844). 2011 1040a tax form Indian employment credit (Form 8845). 2011 1040a tax form Work opportunity credit (Form 5884). 2011 1040a tax form Credit for employer differential wage payments (Form 8932). 2011 1040a tax form Reduce your deduction for employee wages by the amount of employment credits you claim. 2011 1040a tax form For more information about these credits, see the form on which the credit is claimed. 2011 1040a tax form Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. 2011 1040a tax form Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. 2011 1040a tax form These and other requirements that apply to all business expenses are explained in chapter 1. 2011 1040a tax form In addition, the pay must meet both of the following tests. 2011 1040a tax form Test 1. 2011 1040a tax form It must be reasonable. 2011 1040a tax form Test 2. 2011 1040a tax form It must be for services performed. 2011 1040a tax form The form or method of figuring the pay does not affect its deductibility. 2011 1040a tax form For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. 2011 1040a tax form Test 1—Reasonableness You must be able to prove that the pay is reasonable. 2011 1040a tax form Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. 2011 1040a tax form If the pay is excessive, the excess pay is disallowed as a deduction. 2011 1040a tax form Factors to consider. 2011 1040a tax form   Determine the reasonableness of pay by the facts and circumstances. 2011 1040a tax form Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. 2011 1040a tax form   To determine if pay is reasonable, also consider the following items and any other pertinent facts. 2011 1040a tax form The duties performed by the employee. 2011 1040a tax form The volume of business handled. 2011 1040a tax form The character and amount of responsibility. 2011 1040a tax form The complexities of your business. 2011 1040a tax form The amount of time required. 2011 1040a tax form The cost of living in the locality. 2011 1040a tax form The ability and achievements of the individual employee performing the service. 2011 1040a tax form The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. 2011 1040a tax form Your policy regarding pay for all your employees. 2011 1040a tax form The history of pay for each employee. 2011 1040a tax form Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. 2011 1040a tax form Employee-shareholder salaries. 2011 1040a tax form   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. 2011 1040a tax form The excessive part of the salary would not be allowed as a salary deduction by the corporation. 2011 1040a tax form For more information on corporate distributions to shareholders, see Publication 542, Corporations. 2011 1040a tax form Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. 2011 1040a tax form For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. 2011 1040a tax form Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. 2011 1040a tax form If you give property to an employee as an employee achievement award, your deduction may be limited. 2011 1040a tax form Achievement awards. 2011 1040a tax form   An achievement award is an item of tangible personal property that meets all the following requirements. 2011 1040a tax form It is given to an employee for length of service or safety achievement. 2011 1040a tax form It is awarded as part of a meaningful presentation. 2011 1040a tax form It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. 2011 1040a tax form Length-of-service award. 2011 1040a tax form    An award will qualify as a length-of-service award only if either of the following applies. 2011 1040a tax form The employee receives the award after his or her first 5 years of employment. 2011 1040a tax form The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. 2011 1040a tax form Safety achievement award. 2011 1040a tax form    An award for safety achievement will qualify as an achievement award unless one of the following applies. 2011 1040a tax form It is given to a manager, administrator, clerical employee, or other professional employee. 2011 1040a tax form During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). 2011 1040a tax form Deduction limit. 2011 1040a tax form   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. 2011 1040a tax form $400 for awards that are not qualified plan awards. 2011 1040a tax form $1,600 for all awards, whether or not qualified plan awards. 2011 1040a tax form   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. 2011 1040a tax form   A highly compensated employee is an employee who meets either of the following tests. 2011 1040a tax form The employee was a 5% owner at any time during the year or the preceding year. 2011 1040a tax form The employee received more than $115,000 in pay for the preceding year. 2011 1040a tax form You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. 2011 1040a tax form   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. 2011 1040a tax form To figure this average cost, ignore awards of nominal value. 2011 1040a tax form Deduct achievement awards as a nonwage business expense on your return or business schedule. 2011 1040a tax form You may not owe employment taxes on the value of some achievement awards you provide to an employee. 2011 1040a tax form See Publication 15-B. 2011 1040a tax form Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. 2011 1040a tax form However, the total bonuses, salaries, and other pay must be reasonable for the services performed. 2011 1040a tax form If the bonus is paid in property, see Property , later. 2011 1040a tax form Gifts of nominal value. 2011 1040a tax form    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. 2011 1040a tax form Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. 2011 1040a tax form For more information on this deduction limit, see Meals and lodging , later. 2011 1040a tax form Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. 2011 1040a tax form Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. 2011 1040a tax form For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. 2011 1040a tax form Fringe Benefits A fringe benefit is a form of pay for the performance of services. 2011 1040a tax form You can generally deduct the cost of fringe benefits. 2011 1040a tax form You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. 2011 1040a tax form You also may not owe employment taxes on the value of the fringe benefits. 2011 1040a tax form See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. 2011 1040a tax form Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. 2011 1040a tax form Certain fringe benefits are discussed next. 2011 1040a tax form See Publication 15-B for more details on these and other fringe benefits. 2011 1040a tax form Meals and lodging. 2011 1040a tax form   You can usually deduct the cost of furnishing meals and lodging to your employees. 2011 1040a tax form Deduct the cost in whatever category the expense falls. 2011 1040a tax form For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. 2011 1040a tax form If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. 2011 1040a tax form Deduction limit on meals. 2011 1040a tax form   You can generally deduct only 50% of the cost of furnishing meals to your employees. 2011 1040a tax form However, you can deduct the full cost of the following meals. 2011 1040a tax form Meals whose value you include in an employee's wages. 2011 1040a tax form Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. 2011 1040a tax form This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. 2011 1040a tax form Meals you furnish to your employees at the work site when you operate a restaurant or catering service. 2011 1040a tax form Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. 2011 1040a tax form Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). 2011 1040a tax form This does not include meals you furnish on vessels primarily providing luxury water transportation. 2011 1040a tax form Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. 2011 1040a tax form This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. 2011 1040a tax form Employee benefit programs. 2011 1040a tax form   Employee benefit programs include the following. 2011 1040a tax form Accident and health plans. 2011 1040a tax form Adoption assistance. 2011 1040a tax form Cafeteria plans. 2011 1040a tax form Dependent care assistance. 2011 1040a tax form Education assistance. 2011 1040a tax form Life insurance coverage. 2011 1040a tax form Welfare benefit funds. 2011 1040a tax form   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. 2011 1040a tax form For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. 2011 1040a tax form ). 2011 1040a tax form Life insurance coverage. 2011 1040a tax form   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. 2011 1040a tax form See Regulations section 1. 2011 1040a tax form 264-1 for more information. 2011 1040a tax form Welfare benefit funds. 2011 1040a tax form   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. 2011 1040a tax form Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. 2011 1040a tax form   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. 2011 1040a tax form If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. 2011 1040a tax form   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. 2011 1040a tax form The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. 2011 1040a tax form The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. 2011 1040a tax form These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. 2011 1040a tax form   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. 2011 1040a tax form Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. 2011 1040a tax form However, if the employee performs no services, treat the amount you advanced as a loan. 2011 1040a tax form If the employee does not repay the loan, treat it as income to the employee. 2011 1040a tax form Below-market interest rate loans. 2011 1040a tax form   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. 2011 1040a tax form See Below-Market Loans in chapter 4. 2011 1040a tax form Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. 2011 1040a tax form The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. 2011 1040a tax form You can claim the deduction only for the tax year in which your employee includes the property's value in income. 2011 1040a tax form Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. 2011 1040a tax form You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. 2011 1040a tax form Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. 2011 1040a tax form These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. 2011 1040a tax form Restricted property. 2011 1040a tax form   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. 2011 1040a tax form However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. 2011 1040a tax form    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. 2011 1040a tax form This means that the recipient is not likely to have to give up his or her rights in the property in the future. 2011 1040a tax form Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. 2011 1040a tax form However, your deduction may be limited. 2011 1040a tax form If you make the payment under an accountable plan, deduct it in the category of the expense paid. 2011 1040a tax form For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. 2011 1040a tax form If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. 2011 1040a tax form See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. 2011 1040a tax form Sick and Vacation Pay Sick pay. 2011 1040a tax form   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. 2011 1040a tax form However, your deduction is limited to amounts not compensated by insurance or other means. 2011 1040a tax form Vacation pay. 2011 1040a tax form   Vacation pay is an employee benefit. 2011 1040a tax form It includes amounts paid for unused vacation leave. 2011 1040a tax form You can deduct vacation pay only in the tax year in which the employee actually receives it. 2011 1040a tax form This rule applies regardless of whether you use the cash or accrual method of accounting. 2011 1040a tax form Prev  Up  Next   Home   More Online Publications