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2012 State Tax

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2012 State Tax

2012 state tax Publication 529 - Main Content Table of Contents Deductions Subject to the 2% LimitUnreimbursed Employee Expenses Tax Preparation Fees Other Expenses Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses How To ReportWho can use Form 2106-EZ. 2012 state tax Computer used in a home office. 2012 state tax Example How To Get Tax HelpLow Income Taxpayer Clinics Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). 2012 state tax You can claim the amount of expenses that is more than 2% of your adjusted gross income. 2012 state tax You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. 2012 state tax Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. 2012 state tax Generally, you apply the 2% limit after you apply any other deduction limit. 2012 state tax For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging ) before you apply the 2% limit. 2012 state tax Deductions subject to the 2% limit are discussed in the following three categories. 2012 state tax Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). 2012 state tax Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). 2012 state tax Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). 2012 state tax Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 2012 state tax You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. 2012 state tax An expense is ordinary if it is common and accepted in your trade, business, or profession. 2012 state tax An expense is necessary if it is appropriate and helpful to your business. 2012 state tax An expense does not have to be required to be considered necessary. 2012 state tax You may be able to deduct the following items as unreimbursed employee expenses. 2012 state tax Business bad debt of an employee. 2012 state tax Business liability insurance premiums. 2012 state tax Damages paid to a former employer for breach of an employment contract. 2012 state tax Depreciation on a computer your employer requires you to use in your work. 2012 state tax Dues to a chamber of commerce if membership helps you do your job. 2012 state tax Dues to professional societies. 2012 state tax Educator expenses. 2012 state tax Home office or part of your home used regularly and exclusively in your work. 2012 state tax Job search expenses in your present occupation. 2012 state tax Laboratory breakage fees. 2012 state tax Legal fees related to your job. 2012 state tax Licenses and regulatory fees. 2012 state tax Malpractice insurance premiums. 2012 state tax Medical examinations required by an employer. 2012 state tax Occupational taxes. 2012 state tax Passport for a business trip. 2012 state tax Repayment of an income aid payment received under an employer's plan. 2012 state tax Research expenses of a college professor. 2012 state tax Rural mail carriers' vehicle expenses. 2012 state tax Subscriptions to professional journals and trade magazines related to your work. 2012 state tax Tools and supplies used in your work. 2012 state tax Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. 2012 state tax Union dues and expenses. 2012 state tax Work clothes and uniforms if required and not suitable for everyday use. 2012 state tax Work-related education. 2012 state tax Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. 2012 state tax Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. 2012 state tax A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. 2012 state tax Example. 2012 state tax You make a bona fide loan to the corporation you work for. 2012 state tax It fails to pay you back. 2012 state tax You had to make the loan in order to keep your job. 2012 state tax You have a business bad debt as an employee. 2012 state tax More information. 2012 state tax   For more information on business bad debts, see chapter 10 in Publication 535. 2012 state tax For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. 2012 state tax Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. 2012 state tax Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. 2012 state tax Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. 2012 state tax For the convenience of your employer. 2012 state tax   This means that your use of the computer is for a substantial business reason of your employer. 2012 state tax You must consider all facts in making this determination. 2012 state tax Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. 2012 state tax Required as a condition of your employment. 2012 state tax   This means that you cannot properly perform your duties without the computer. 2012 state tax Whether you can properly perform your duties without it depends on all the facts and circumstances. 2012 state tax It is not necessary that your employer explicitly requires you to use your computer. 2012 state tax But neither is it enough that your employer merely states that your use of the item is a condition of your employment. 2012 state tax Example. 2012 state tax You are an engineer with an engineering firm. 2012 state tax You occasionally take work home at night rather than work late at the office. 2012 state tax You own and use a computer that is similar to the one you use at the office to complete your work at home. 2012 state tax Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. 2012 state tax Which depreciation method to use. 2012 state tax   The depreciation method you use depends on whether you meet the more-than-50%-use test. 2012 state tax More-than-50%-use test met. 2012 state tax   You meet this test if you use the computer more than 50% in your work. 2012 state tax If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). 2012 state tax In addition, you may be able to take the section 179 deduction for the year you place the item in service. 2012 state tax More-than-50%-use test not met. 2012 state tax   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). 2012 state tax You also cannot claim the section 179 deduction. 2012 state tax (But if you use your computer in a home office, see the exception below. 2012 state tax ) Investment use. 2012 state tax   Your use of a computer in connection with investments (described later under Other Expenses ) does not count as use in your work. 2012 state tax However, you can combine your investment use with your work use in figuring your depreciation deduction. 2012 state tax Exception for computer used in a home office. 2012 state tax   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office . 2012 state tax You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. 2012 state tax You also may be able to take a section 179 deduction for the year you place the computer in service. 2012 state tax See Computer used in a home office under How To Report, later. 2012 state tax More information. 2012 state tax   For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. 2012 state tax Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. 2012 state tax Reporting your depreciation deduction. 2012 state tax    See How To Report, later, for information about reporting a deduction for depreciation. 2012 state tax You must keep records to prove your percentage of business and investment use. 2012 state tax Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. 2012 state tax Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. 2012 state tax Lobbying and political activities. 2012 state tax    You may not be able to deduct that part of your dues that is for certain lobbying and political activities. 2012 state tax See Lobbying Expenses under Nondeductible Expenses, later. 2012 state tax Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. 2012 state tax If you file Form 1040A, you can deduct these expenses on line 16. 2012 state tax If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. 2012 state tax However, neither spouse can deduct more than $250 of his or her qualified expenses. 2012 state tax Eligible educator. 2012 state tax   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. 2012 state tax Qualified expenses. 2012 state tax   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. 2012 state tax An ordinary expense is one that is common and accepted in your educational field. 2012 state tax A necessary expense is one that is helpful and appropriate for your profession as an educator. 2012 state tax An expense does not have to be required to be considered necessary. 2012 state tax   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. 2012 state tax You must reduce your qualified expenses by the following amounts. 2012 state tax Excludable U. 2012 state tax S. 2012 state tax series EE and I savings bond interest from Form 8815. 2012 state tax Nontaxable qualified state tuition program earnings. 2012 state tax Nontaxable earnings from Coverdell education savings accounts. 2012 state tax Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. 2012 state tax Educator expenses over limit. 2012 state tax   If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. 2012 state tax Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. 2012 state tax You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. 2012 state tax The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. 2012 state tax Principal place of business. 2012 state tax   If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. 2012 state tax   Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. 2012 state tax You should keep records that will give the information needed to figure the deduction according to these rules. 2012 state tax Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. 2012 state tax More information. 2012 state tax   See Publication 587 for more detailed information and a worksheet for figuring the deduction. 2012 state tax Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. 2012 state tax You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. 2012 state tax Employment and outplacement agency fees. 2012 state tax    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. 2012 state tax Employer pays you back. 2012 state tax   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. 2012 state tax See Recoveries in Publication 525. 2012 state tax Employer pays the employment agency. 2012 state tax   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. 2012 state tax Résumé. 2012 state tax   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. 2012 state tax Travel and transportation expenses. 2012 state tax   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. 2012 state tax You can deduct the travel expenses if the trip is primarily to look for a new job. 2012 state tax The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. 2012 state tax   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. 2012 state tax    You can choose to use the standard mileage rate to figure your car expenses. 2012 state tax The 2013 rate for business use of a vehicle is 56½ cents per mile. 2012 state tax See Publication 463 for more information on travel and car expenses. 2012 state tax Legal Fees You can deduct legal fees related to doing or keeping your job. 2012 state tax Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. 2012 state tax Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. 2012 state tax If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. 2012 state tax Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. 2012 state tax If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. 2012 state tax Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. 2012 state tax You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. 2012 state tax However, you cannot deduct the cost of travel as a form of education. 2012 state tax Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. 2012 state tax See chapter 4 of Publication 463 for more information. 2012 state tax Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. 2012 state tax You can depreciate the cost of tools that have a useful life substantially beyond the tax year. 2012 state tax For more information about depreciation, see Publication 946. 2012 state tax Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. 2012 state tax Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. 2012 state tax Travel expenses. 2012 state tax   Travel expenses are those incurred while traveling away from home for your employer. 2012 state tax You can deduct travel expenses paid or incurred in connection with a temporary work assignment. 2012 state tax Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. 2012 state tax   Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc. 2012 state tax ), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. 2012 state tax   Travel expenses are discussed more fully in chapter 1 of Publication 463. 2012 state tax Temporary work assignment. 2012 state tax    If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. 2012 state tax Indefinite work assignment. 2012 state tax   If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. 2012 state tax If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. 2012 state tax Federal crime investigation and prosecution. 2012 state tax   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. 2012 state tax This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. 2012 state tax   To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. 2012 state tax Armed Forces reservists traveling more than 100 miles from home. 2012 state tax   If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. 2012 state tax The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. 2012 state tax The balance, if any, is reported on Schedule A. 2012 state tax   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. 2012 state tax   For more information on travel expenses, see Publication 463. 2012 state tax Local transportation expenses. 2012 state tax   Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. 2012 state tax They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. 2012 state tax   You can choose to use the standard mileage rate to figure your car expenses. 2012 state tax The 2013 rate for business use of a vehicle is 56½ cents per mile. 2012 state tax    In general, the costs of commuting between your residence and your place of business are nondeductible. 2012 state tax Work at two places in a day. 2012 state tax   If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. 2012 state tax Temporary work location. 2012 state tax   You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. 2012 state tax The work location is outside the metropolitan area where you live and normally work. 2012 state tax You have at least one regular work location (other than your home) for the same trade or business. 2012 state tax (If this applies, the distance between your home and the temporary work location does not matter. 2012 state tax )   For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. 2012 state tax It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. 2012 state tax If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. 2012 state tax For more information, see chapter 1 of Publication 463. 2012 state tax Home office. 2012 state tax   You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. 2012 state tax (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter. 2012 state tax ) See Home Office , earlier, for a discussion on the use of your home as your principal place of business. 2012 state tax Meals and entertainment. 2012 state tax   Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. 2012 state tax However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. 2012 state tax   You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. 2012 state tax You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. 2012 state tax Meals when subject to “hours of service” limits. 2012 state tax   You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. 2012 state tax You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. 2012 state tax Gift expenses. 2012 state tax   You can generally deduct up to $25 of business gifts you give to any one individual during the year. 2012 state tax The following items do not count toward the $25 limit. 2012 state tax Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. 2012 state tax Signs, racks, and promotional materials to be displayed on the business premises of the recipient. 2012 state tax Local lodging. 2012 state tax   If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. 2012 state tax   If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. 2012 state tax Additional information. 2012 state tax    See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. 2012 state tax Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. 2012 state tax You can also deduct assessments for benefit payments to unemployed union members. 2012 state tax However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. 2012 state tax Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. 2012 state tax You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. 2012 state tax See Lobbying Expenses under Nondeductible Expenses, later. 2012 state tax Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. 2012 state tax You must wear them as a condition of your employment. 2012 state tax The clothes are not suitable for everyday wear. 2012 state tax It is not enough that you wear distinctive clothing. 2012 state tax The clothing must be specifically required by your employer. 2012 state tax Nor is it enough that you do not, in fact, wear your work clothes away from work. 2012 state tax The clothing must not be suitable for taking the place of your regular clothing. 2012 state tax Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. 2012 state tax ). 2012 state tax Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. 2012 state tax However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. 2012 state tax Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. 2012 state tax Protective clothing. 2012 state tax   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. 2012 state tax   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. 2012 state tax Military uniforms. 2012 state tax   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. 2012 state tax However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. 2012 state tax In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. 2012 state tax   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. 2012 state tax   If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. 2012 state tax However, you can deduct the cost of insignia, shoulder boards, and related items. 2012 state tax    You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. 2012 state tax Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. 2012 state tax It maintains or improves skills required in your present work. 2012 state tax It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. 2012 state tax You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. 2012 state tax If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. 2012 state tax If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. 2012 state tax Travel as education. 2012 state tax   You cannot deduct the cost of travel that in itself constitutes a form of education. 2012 state tax For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. 2012 state tax More information. 2012 state tax    See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. 2012 state tax Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. 2012 state tax Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. 2012 state tax Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. 2012 state tax Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. 2012 state tax These fees include the cost of tax preparation software programs and tax publications. 2012 state tax They also include any fee you paid for electronic filing of your return. 2012 state tax See Tax preparation fees under How To Report, later. 2012 state tax Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. 2012 state tax On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. 2012 state tax You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. 2012 state tax These other expenses include the following items. 2012 state tax Appraisal fees for a casualty loss or charitable contribution. 2012 state tax Casualty and theft losses from property used in performing services as an employee. 2012 state tax Clerical help and office rent in caring for investments. 2012 state tax Depreciation on home computers used for investments. 2012 state tax Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. 2012 state tax Fees to collect interest and dividends. 2012 state tax Hobby expenses, but generally not more than hobby income. 2012 state tax Indirect miscellaneous deductions from pass-through entities. 2012 state tax Investment fees and expenses. 2012 state tax Legal fees related to producing or collecting taxable income or getting tax advice. 2012 state tax Loss on deposits in an insolvent or bankrupt financial institution. 2012 state tax Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. 2012 state tax Repayments of income. 2012 state tax Repayments of social security benefits. 2012 state tax Safe deposit box rental, except for storing jewelry and other personal effects. 2012 state tax Service charges on dividend reinvestment plans. 2012 state tax Tax advice fees. 2012 state tax Trustee's fees for your IRA, if separately billed and paid. 2012 state tax If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses. 2012 state tax Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. 2012 state tax Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. 2012 state tax First report the loss in Section B of Form 4684, Casualties and Thefts. 2012 state tax You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. 2012 state tax To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. 2012 state tax For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. 2012 state tax Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. 2012 state tax Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. 2012 state tax The fees are deductible on the return for the year in which you paid them. 2012 state tax For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. 2012 state tax Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). 2012 state tax You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. 2012 state tax But if you work as an employee and also use the computer in that work, see Depreciation on Computers under Unreimbursed Employee Expenses, earlier. 2012 state tax For more information on depreciation, see Publication 946. 2012 state tax Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. 2012 state tax Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. 2012 state tax The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. 2012 state tax For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. 2012 state tax Fees To Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. 2012 state tax But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. 2012 state tax You must add the fee to the cost of the property. 2012 state tax You cannot deduct the fee you pay to a broker to sell securities. 2012 state tax You can use the fee only to figure gain or loss from the sale. 2012 state tax See the instructions for Schedule D (Form 1040) for information on how to report the fee. 2012 state tax Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. 2012 state tax A hobby is not a business because it is not carried on to make a profit. 2012 state tax See Not-for-Profit Activities in chapter 1 of Publication 535. 2012 state tax Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. 2012 state tax Deductions of pass-through entities are passed through to the partners or shareholders. 2012 state tax The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. 2012 state tax Example. 2012 state tax You are a member of an investment club that is formed solely to invest in securities. 2012 state tax The club is treated as a partnership. 2012 state tax The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. 2012 state tax In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. 2012 state tax However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. 2012 state tax Publicly offered mutual funds. 2012 state tax   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. 2012 state tax A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. 2012 state tax   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). 2012 state tax This net figure is the amount you report on your return as income. 2012 state tax You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. 2012 state tax Information returns. 2012 state tax   You should receive information returns from pass-through entities. 2012 state tax Partnerships and S corporations. 2012 state tax   These entities issue Schedule K-1, which lists the items and amounts you must report, and identifies the tax return schedules and lines to use. 2012 state tax Nonpublicly offered mutual funds. 2012 state tax   These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. 2012 state tax You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. 2012 state tax Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. 2012 state tax Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. 2012 state tax You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. 2012 state tax You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. 2012 state tax You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). 2012 state tax See Tax Preparation Fees, earlier. 2012 state tax Unlawful discrimination claims. 2012 state tax   You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U. 2012 state tax S. 2012 state tax Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. 2012 state tax However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. 2012 state tax See Publication 525 for more information. 2012 state tax Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. 2012 state tax If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. 2012 state tax If elected, the casualty loss is subject to certain deduction limitations. 2012 state tax The election is made on Form 4684. 2012 state tax Once you make this choice, you cannot change it without IRS approval. 2012 state tax If none of the deposit is federally insured, you can deduct the loss in either of the following ways. 2012 state tax As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). 2012 state tax Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. 2012 state tax This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. 2012 state tax As a casualty loss. 2012 state tax Report it on Form 4684 first and then on Schedule A (Form 1040). 2012 state tax See Publication 547 for details. 2012 state tax As a nonbusiness bad debt. 2012 state tax Report it on Schedule D (Form 1040). 2012 state tax If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. 2012 state tax Exception. 2012 state tax   You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. 2012 state tax For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. 2012 state tax Actual loss different from estimated loss. 2012 state tax   If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. 2012 state tax See Recoveries in Publication 525. 2012 state tax If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. 2012 state tax Choice not made. 2012 state tax   If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. 2012 state tax See Nonbusiness Bad Debts in chapter 4 of Publication 550. 2012 state tax Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. 2012 state tax For more information, see Publication 590, Individual Retirement Arrangements (IRAs). 2012 state tax Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. 2012 state tax If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. 2012 state tax If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. 2012 state tax Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. 2012 state tax The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. 2012 state tax The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. 2012 state tax It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). 2012 state tax If the deduction is more than $3,000, you will have to use a special computation to figure your tax. 2012 state tax See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional information. 2012 state tax Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. 2012 state tax You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. 2012 state tax Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. 2012 state tax These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. 2012 state tax Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. 2012 state tax Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. 2012 state tax They are not subject to the 2% limit. 2012 state tax Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. 2012 state tax List of Deductions Amortizable premium on taxable bonds. 2012 state tax Casualty and theft losses from income-producing property. 2012 state tax Federal estate tax on income in respect of a decedent. 2012 state tax Gambling losses up to the amount of gambling winnings. 2012 state tax Impairment-related work expenses of persons with disabilities. 2012 state tax Loss from other activities from Schedule K-1 (Form 1065-B), box 2. 2012 state tax Losses from Ponzi-type investment schemes. 2012 state tax Repayments of more than $3,000 under a claim of right. 2012 state tax Unrecovered investment in an annuity. 2012 state tax Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. 2012 state tax You can elect to amortize the premium on taxable bonds. 2012 state tax The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. 2012 state tax Pre-1998 election to amortize bond premium. 2012 state tax   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. 2012 state tax Bonds acquired after October 22, 1986, and before 1988. 2012 state tax   The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. 2012 state tax Bonds acquired before October 23, 1986. 2012 state tax   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. 2012 state tax Deduction for excess premium. 2012 state tax   On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. 2012 state tax If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. 2012 state tax However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. 2012 state tax If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. 2012 state tax    Pre-1998 choice to amortize bond premium. 2012 state tax If you made the choice to amortize the premium on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your interest income only for bonds acquired during 1998 and later years. 2012 state tax More information. 2012 state tax    For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. 2012 state tax Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). 2012 state tax First report the loss in Section B of Form 4684. 2012 state tax You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. 2012 state tax To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. 2012 state tax For more information on casualty and theft losses, see Publication 547. 2012 state tax Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. 2012 state tax Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. 2012 state tax See Publication 559 for information about figuring the amount of this deduction. 2012 state tax Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. 2012 state tax You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. 2012 state tax You cannot deduct gambling losses that are more than your winnings. 2012 state tax Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). 2012 state tax You cannot reduce your gambling winnings by your gambling losses and report the difference. 2012 state tax You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. 2012 state tax Therefore, your records should show your winnings separately from your losses. 2012 state tax Diary of winnings and losses. 2012 state tax You must keep an accurate diary or similar record of your losses and winnings. 2012 state tax Your diary should contain at least the following information. 2012 state tax The date and type of your specific wager or wagering activity. 2012 state tax The name and address or location of the gambling establishment. 2012 state tax The names of other persons present with you at the gambling establishment. 2012 state tax The amount(s) you won or lost. 2012 state tax Proof of winnings and losses. 2012 state tax   In addition to your diary, you should also have other documentation. 2012 state tax You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. 2012 state tax   For specific wagering transactions, you can use the following items to support your winnings and losses. 2012 state tax    These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. 2012 state tax They are not all-inclusive. 2012 state tax Your tax liability depends on your particular facts and circumstances. 2012 state tax Keno. 2012 state tax   Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. 2012 state tax Slot machines. 2012 state tax   A record of the machine number and all winnings by date and time the machine was played. 2012 state tax Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc. 2012 state tax ). 2012 state tax   The number of the table at which you were playing. 2012 state tax Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. 2012 state tax Bingo. 2012 state tax   A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. 2012 state tax Supplemental records include any receipts from the casino, parlor, etc. 2012 state tax Racing (horse, harness, dog, etc. 2012 state tax ). 2012 state tax   A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. 2012 state tax Supplemental records include unredeemed tickets and payment records from the racetrack. 2012 state tax Lotteries. 2012 state tax   A record of ticket purchases, dates, winnings, and losses. 2012 state tax Supplemental records include unredeemed tickets, payment slips, and winnings statements. 2012 state tax Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. 2012 state tax Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. 2012 state tax Example. 2012 state tax You are blind. 2012 state tax You must use a reader to do your work. 2012 state tax You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. 2012 state tax The reader's services are only for your work. 2012 state tax You can deduct your expenses for the reader as impairment-related work expenses. 2012 state tax Self-employed. 2012 state tax   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. 2012 state tax See Impairment-related work expenses. 2012 state tax , later under How To Report. 2012 state tax Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U. 2012 state tax S. 2012 state tax trade or business). 2012 state tax It is not subject to the passive activity limitations. 2012 state tax Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. 2012 state tax See Publication 463 for more information. 2012 state tax Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. 2012 state tax If you are an employee, complete Form 2106 or Form 2106-EZ. 2012 state tax See Publication 463 for more information. 2012 state tax Losses From Ponzi-type Investment Schemes These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. 2012 state tax You figure the deductible loss in Section B of Form 4684. 2012 state tax However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. 2012 state tax Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 2012 state tax You do not need to complete Appendix A. 2012 state tax See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. 2012 state tax Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid, or take a credit against your tax. 2012 state tax See Repayments in Publication 525 for more information. 2012 state tax Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. 2012 state tax If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. 2012 state tax See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. 2012 state tax Nondeductible Expenses You cannot deduct the following expenses. 2012 state tax List of Nondeductible Expenses Adoption expenses. 2012 state tax Broker's commissions. 2012 state tax Burial or funeral expenses, including the cost of a cemetery lot. 2012 state tax Campaign expenses. 2012 state tax Capital expenses. 2012 state tax Check-writing fees. 2012 state tax Club dues. 2012 state tax Commuting expenses. 2012 state tax Fees and licenses, such as car licenses, marriage licenses, and dog tags. 2012 state tax Fines and penalties, such as parking tickets. 2012 state tax Health spa expenses. 2012 state tax Hobby losses—but see Hobby Expenses, earlier. 2012 state tax Home repairs, insurance, and rent. 2012 state tax Home security system. 2012 state tax Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535. 2012 state tax Investment-related seminars. 2012 state tax Life insurance premiums paid by the insured. 2012 state tax Lobbying expenses. 2012 state tax Losses from the sale of your home, furniture, personal car, etc. 2012 state tax Lost or misplaced cash or property. 2012 state tax Lunches with co-workers. 2012 state tax Meals while working late. 2012 state tax Medical expenses as business expenses other than medical examinations required by your employer. 2012 state tax Personal disability insurance premiums. 2012 state tax Personal legal expenses. 2012 state tax Personal, living, or family expenses. 2012 state tax Political contributions. 2012 state tax Professional accreditation fees. 2012 state tax Professional reputation, expenses to improve. 2012 state tax Relief fund contributions. 2012 state tax Residential telephone line. 2012 state tax Stockholders' meeting, expenses of attending. 2012 state tax Tax-exempt income, expenses of earning or collecting. 2012 state tax The value of wages never received or lost vacation time. 2012 state tax Travel expenses for another individual. 2012 state tax Voluntary unemployment benefit fund contributions. 2012 state tax Wristwatches. 2012 state tax Adoption Expenses You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. 2012 state tax For details, see Form 8839, Qualified Adoption Expenses. 2012 state tax Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. 2012 state tax Instead, these fees must be added to the taxpayer's cost of the securities. 2012 state tax Commissions paid on the sale are deductible as business expenses only by dealers. 2012 state tax Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. 2012 state tax These include qualification and registration fees for primary elections. 2012 state tax Legal fees. 2012 state tax   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. 2012 state tax Capital Expenses You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. 2012 state tax If you use such property in your work, you may be able to take a depreciation deduction. 2012 state tax See Publication 946. 2012 state tax If the property is a car used in your work, also see Publication 463. 2012 state tax Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. 2012 state tax Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. 2012 state tax This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. 2012 state tax You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. 2012 state tax Dues paid to airline, hotel, and luncheon clubs are not deductible. 2012 state tax Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). 2012 state tax If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items, such as the rent on a trailer to carry the items. 2012 state tax Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. 2012 state tax This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). 2012 state tax Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. 2012 state tax Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. 2012 state tax Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. 2012 state tax However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. 2012 state tax See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. 2012 state tax Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. 2012 state tax Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. 2012 state tax You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. 2012 state tax See Publication 504, Divorced or Separated Individuals, for information on alimony. 2012 state tax Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. 2012 state tax These include expenses to: Influence legislation, Participate, or intervene, in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. 2012 state tax Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. 2012 state tax Covered executive branch official. 2012 state tax   A covered executive branch official, for the purpose of (4) above, is any of the following officials. 2012 state tax The President. 2012 state tax The Vice President. 2012 state tax 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. 2012 state tax Any individual serving in a position in Level I of the Executive Schedule under section 5312 of Title 5, United States Code, any other individual designated by the President as having Cabinet-level status, and any immediate deputy of one of these individuals. 2012 state tax Dues used for lobbying. 2012 state tax   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. 2012 state tax Exceptions. 2012 state tax   You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business. 2012 state tax You can deduct expenses for attempting to influence the legislation of any local council or similar governing body (local legislation). 2012 state tax An Indian tribal government is considered a local council or similar governing body. 2012 state tax You can deduct in-house expenses for influencing legislation or communicating directly with a covered executive branch official if the expenses for the tax year are not more than $2,000 (not counting overhead expenses). 2012 state tax If you are a professional lobbyist, you can deduct the expenses you incur in the trade or business of lobbying on behalf of another person. 2012 state tax Payments by the other person to you for lobbying activities cannot be deducted. 2012 state tax Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. 2012 state tax However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. 2012 state tax See Publication 547. 2012 state tax Example. 2012 state tax A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2012 state tax The diamond falls from the ring and is never found. 2012 state tax The loss of the diamond is a casualty. 2012 state tax Lunches With Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. 2012 state tax See Publication 463 for information on deductible expenses while traveling away from home. 2012 state tax Meals While Working Late You cannot deduct the cost of meals while working late. 2012 state tax However, you may be able to claim a deduction if the cost of the meals is a deductible entertainment expense, or if you are traveling away from home. 2012 state tax See Publication 463 for information on deductible entertainment expenses and expenses while traveling away from home. 2012 state tax Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. 2012 state tax Custody of children. 2012 state tax Breach of promise to marry suit. 2012 state tax Civil or criminal charges resulting from a personal relationship. 2012 state tax Damages for personal injury (except certain whistleblower claims and unlawful discrimination claims). 2012 state tax For more information about unlawful discrimination claims, see Deductions Subject to the 2% Limit, earlier. 2012 state tax Preparation of a title (or defense or perfection of a title). 2012 state tax Preparation of a will. 2012 state tax Property claims or property settlement in a divorce. 2012 state tax You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. 2012 state tax Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. 2012 state tax Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. 2012 state tax Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. 2012 state tax Accounting certificate fees paid for the initial right to practice accounting. 2012 state tax Bar exam fees and incidental expenses in securing initial admission to the bar. 2012 state tax Medical and dental license fees paid to get initial licensing. 2012 state tax Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. 2012 state tax Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. 2012 state tax Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. 2012 state tax Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. 2012 state tax You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. 2012 state tax Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. 2012 state tax You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. 2012 state tax If you have expenses to p
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This agency borrows moneys to make sure that the federal government continues to operate. You can contact them to purchase bonds or to check on the maturity of bonds you have already purchased.

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Website: Bureau of the Public Debt Buy and Redeem U.S. Government Securities

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Toll-free: (800) 722-2678

The 2012 State Tax

2012 state tax 8. 2012 state tax   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. 2012 state tax Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. 2012 state tax Introduction This chapter discusses how to pay your U. 2012 state tax S. 2012 state tax income tax as you earn or receive income during the year. 2012 state tax In general, the federal income tax is a pay as you go tax. 2012 state tax There are two ways to pay as you go. 2012 state tax Withholding. 2012 state tax If you are an employee, your employer probably withholds income tax from your pay. 2012 state tax Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. 2012 state tax In each case, the amount withheld is paid to the U. 2012 state tax S. 2012 state tax Treasury in your name. 2012 state tax Estimated tax. 2012 state tax If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. 2012 state tax People who are in business for themselves generally will have to pay their tax this way. 2012 state tax You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. 2012 state tax Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. 2012 state tax Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. 2012 state tax Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. 2012 state tax S. 2012 state tax Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. 2012 state tax S. 2012 state tax Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. 2012 state tax S. 2012 state tax Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. 2012 state tax Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. 2012 state tax If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. 2012 state tax If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. 2012 state tax S. 2012 state tax citizens. 2012 state tax If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. 2012 state tax If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. 2012 state tax However, if the income is effectively connected with a U. 2012 state tax S. 2012 state tax trade or business, file Form W-8ECI instead. 2012 state tax Withholding From Compensation The following discussion generally applies only to nonresident aliens. 2012 state tax Tax is withheld from resident aliens in the same manner as U. 2012 state tax S. 2012 state tax citizens. 2012 state tax Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. 2012 state tax S. 2012 state tax citizens. 2012 state tax Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. 2012 state tax Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. 2012 state tax Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). 2012 state tax These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). 2012 state tax Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. 2012 state tax This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. 2012 state tax Enter your social security number (SSN) on line 2. 2012 state tax Do not enter an individual taxpayer identification number (ITIN). 2012 state tax Check only “Single” marital status on line 3 (regardless of your actual marital status). 2012 state tax Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. 2012 state tax S. 2012 state tax national. 2012 state tax Write “Nonresident Alien” or “NRA” on the dotted line on line 6. 2012 state tax You can request additional withholding on line 6 at your option. 2012 state tax Do not claim “Exempt” withholding status on line 7. 2012 state tax A U. 2012 state tax S. 2012 state tax national is an individual who, although not a U. 2012 state tax S. 2012 state tax citizen, owes his or her allegiance to the United States. 2012 state tax U. 2012 state tax S. 2012 state tax nationals include American Samoans, and Northern Mariana Islanders who chose to become U. 2012 state tax S. 2012 state tax nationals instead of U. 2012 state tax S. 2012 state tax citizens. 2012 state tax See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. 2012 state tax S. 2012 state tax source scholarship or fellowship grant that is not a payment for services. 2012 state tax Students and business apprentices from India. 2012 state tax   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. 2012 state tax You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. 2012 state tax S. 2012 state tax taxpayer's 2013 return. 2012 state tax You may also claim an additional withholding allowance for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 2012 state tax S. 2012 state tax citizens. 2012 state tax Household employees. 2012 state tax   If you work as a household employee, your employer does not have to withhold income tax. 2012 state tax However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. 2012 state tax The agreement goes into effect when your employer accepts the agreement by beginning the withholding. 2012 state tax You or your employer may end the agreement by letting the other know in writing. 2012 state tax Agricultural workers. 2012 state tax   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. 2012 state tax However, your employer will withhold income tax only if you and your employer agree to withhold. 2012 state tax In that case, you must provide your employer with a properly completed Form W-4. 2012 state tax You can find more information about not having tax withheld at www. 2012 state tax irs. 2012 state tax gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 2012 state tax Wages Exempt From Withholding Wages that are exempt from U. 2012 state tax S. 2012 state tax income tax under an income tax treaty are generally exempt from withholding. 2012 state tax For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. 2012 state tax Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. 2012 state tax S. 2012 state tax Virgin Islands may be exempt from withholding. 2012 state tax The following paragraphs explain these exemptions. 2012 state tax Residents of Canada or Mexico engaged in transportation-related employment. 2012 state tax   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. 2012 state tax These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. 2012 state tax    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. 2012 state tax   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. 2012 state tax S. 2012 state tax citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. 2012 state tax   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. 2012 state tax Residents of American Samoa and Puerto Rico. 2012 state tax   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. 2012 state tax Residents of the U. 2012 state tax S. 2012 state tax Virgin Islands. 2012 state tax   Nonresident aliens who are bona fide residents of the U. 2012 state tax S Virgin Islands are not subject to withholding of U. 2012 state tax S. 2012 state tax tax on income earned while temporarily employed in the United States. 2012 state tax This is because those persons pay their income tax to the U. 2012 state tax S. 2012 state tax Virgin Islands. 2012 state tax To avoid having tax withheld on income earned in the United States, bona fide residents of the U. 2012 state tax S. 2012 state tax Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. 2012 state tax S. 2012 state tax Virgin Islands and expect to pay tax on all income to the U. 2012 state tax S. 2012 state tax Virgin Islands. 2012 state tax Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. 2012 state tax You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. 2012 state tax You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. 2012 state tax Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. 2012 state tax S. 2012 state tax income tax. 2012 state tax Include them in taxable income. 2012 state tax In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. 2012 state tax Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. 2012 state tax However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. 2012 state tax An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. 2012 state tax You must agree to timely file an income tax return for the current tax year. 2012 state tax Central withholding agreements. 2012 state tax   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. 2012 state tax Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. 2012 state tax   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. 2012 state tax Either you or your authorized representative can file the form. 2012 state tax It should be sent to the IRS at least 45 days before the tour begins or the event occurs. 2012 state tax Exceptions will be considered on a case by case basis. 2012 state tax   For more information on the CWA program, go to www. 2012 state tax irs. 2012 state tax gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. 2012 state tax Final payment exemption. 2012 state tax   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. 2012 state tax This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. 2012 state tax To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. 2012 state tax A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. 2012 state tax Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 2012 state tax A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. 2012 state tax This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 2012 state tax A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. 2012 state tax The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. 2012 state tax The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. 2012 state tax Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. 2012 state tax A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. 2012 state tax   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. 2012 state tax Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. 2012 state tax   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. 2012 state tax You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. 2012 state tax Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). 2012 state tax To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. 2012 state tax S. 2012 state tax national and are not a resident of Canada, Mexico, or South Korea. 2012 state tax For purposes of 30% withholding, the exemption is prorated at $10. 2012 state tax 82 a day in 2014 for the period that labor or personal services are performed in the United States. 2012 state tax To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. 2012 state tax Example. 2012 state tax Eric Johannsen, who is a resident of Country X worked under a contract with a U. 2012 state tax S. 2012 state tax firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. 2012 state tax He earned $6,000 for the services performed (not considered wages) in the United States. 2012 state tax Eric is married and has three dependent children. 2012 state tax His wife is not employed and has no income subject to U. 2012 state tax S. 2012 state tax tax. 2012 state tax The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. 2012 state tax 82), and withholding at 30% is applied against the balance. 2012 state tax Thus, $1,475. 2012 state tax 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). 2012 state tax U. 2012 state tax S. 2012 state tax nationals or residents of Canada, Mexico, or South Korea. 2012 state tax   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. 2012 state tax However, if you are a U. 2012 state tax S. 2012 state tax national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. 2012 state tax S. 2012 state tax citizens. 2012 state tax For the 30% (or lower treaty) rate withholding, you can take $10. 2012 state tax 82 per day for each allowable exemption in 2014. 2012 state tax If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. 2012 state tax However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . 2012 state tax Students and business apprentices from India. 2012 state tax   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. 2012 state tax S. 2012 state tax taxpayer's 2014 return. 2012 state tax You are also allowed an exemption for each dependent not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 2012 state tax S. 2012 state tax citizens. 2012 state tax For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. 2012 state tax 82 per day for each allowable exemption in 2014. 2012 state tax Refund of Taxes Withheld in Error Multi-level marketing. 2012 state tax   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. 2012 state tax S. 2012 state tax income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. 2012 state tax You must also attach to the U. 2012 state tax S. 2012 state tax income tax return or claim for refund supporting information that includes, but is not limited to, the following items. 2012 state tax A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. 2012 state tax A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. 2012 state tax S. 2012 state tax taxation. 2012 state tax A statement listing all the dates you entered and left the United States during the taxable year. 2012 state tax If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. 2012 state tax A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. 2012 state tax A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. 2012 state tax Any further relevant document or record supporting your claim that the taxes were withheld in error. 2012 state tax Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. 2012 state tax It also includes 85% of social security benefits paid to nonresident aliens. 2012 state tax Refund of taxes withheld in error on social security benefits paid to resident aliens. 2012 state tax   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. 2012 state tax For U. 2012 state tax S. 2012 state tax income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. 2012 state tax See Green Card Test in chapter 1. 2012 state tax If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. 2012 state tax SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 2012 state tax If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. 2012 state tax You must also attach the following to your Form 1040 or 1040A. 2012 state tax A copy of Form SSA-1042S, Social Security Benefit Statement. 2012 state tax A copy of the “green card. 2012 state tax ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. 2012 state tax S. 2012 state tax lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 2012 state tax I am filing a U. 2012 state tax S. 2012 state tax income tax return for the tax year as a resident alien reporting all of my worldwide income. 2012 state tax I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. 2012 state tax Other income not subject to withholding of 30% (or lower treaty) rate. 2012 state tax   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. 2012 state tax Income (other than compensation) that is effectively connected with your U. 2012 state tax S. 2012 state tax trade or business. 2012 state tax Income from real property that you choose to treat as effectively connected with a U. 2012 state tax S. 2012 state tax trade or business. 2012 state tax See Income From Real Property in chapter 4 for details about this choice. 2012 state tax   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. 2012 state tax Tax Withheld on Partnership Income If you are a foreign partner in a U. 2012 state tax S. 2012 state tax or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. 2012 state tax You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. 2012 state tax Generally, you must use Form 8804-C for this purpose. 2012 state tax See the Instructions for Form 8804-C for more information. 2012 state tax The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. 2012 state tax 6% for 2014). 2012 state tax However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. 2012 state tax Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. 2012 state tax Claim the tax withheld as a credit on your 2014 Form 1040NR. 2012 state tax The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. 2012 state tax A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. 2012 state tax In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. 2012 state tax S. 2012 state tax Source Income Subject to Withholding. 2012 state tax Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. 2012 state tax See chapter 3. 2012 state tax If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. 2012 state tax S. 2012 state tax source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. 2012 state tax However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. 2012 state tax Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. 2012 state tax Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). 2012 state tax Use the following instructions instead of the Form W-4 instructions to complete the worksheet. 2012 state tax Line A. 2012 state tax   Enter the total of the following amounts on line A. 2012 state tax Personal exemption. 2012 state tax   Include the prorated part of your allowable personal exemption. 2012 state tax Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. 2012 state tax 82). 2012 state tax Expenses. 2012 state tax   Include expenses that will be deductible on your return. 2012 state tax These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. 2012 state tax They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. 2012 state tax Nontaxable grant or scholarship. 2012 state tax   Include the part of your grant or scholarship that is not taxable under U. 2012 state tax S. 2012 state tax law or under a tax treaty. 2012 state tax Line B. 2012 state tax   Enter -0- unless the following paragraph applies to you. 2012 state tax   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. 2012 state tax The standard deduction amount for 2013 is $6,100. 2012 state tax Lines C and D. 2012 state tax   Enter -0- on both lines unless the following paragraphs apply to you. 2012 state tax   If you are a resident of Canada, Mexico, South Korea, or a U. 2012 state tax S. 2012 state tax national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. 2012 state tax   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. 2012 state tax S. 2012 state tax taxpayer's 2014 return. 2012 state tax You can also claim an additional amount for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 2012 state tax S. 2012 state tax citizens. 2012 state tax   Enter any additional amount for your spouse on line C. 2012 state tax Enter any additional amount for your dependents on line D. 2012 state tax Lines E, F, and G. 2012 state tax   No entries should be made on lines E, F, and G. 2012 state tax Line H. 2012 state tax   Add the amounts on lines A through D and enter the total on line H. 2012 state tax Form W-4. 2012 state tax   Complete lines 1 through 4 of Form W-4. 2012 state tax Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. 2012 state tax   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. 2012 state tax S. 2012 state tax income tax return to be allowed the exemptions and deductions you claimed on that form. 2012 state tax If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. 2012 state tax S. 2012 state tax income tax return for the previous year. 2012 state tax If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. 2012 state tax S. 2012 state tax income tax return when required. 2012 state tax After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. 2012 state tax The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. 2012 state tax You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. 2012 state tax Use this form to prepare your annual U. 2012 state tax S. 2012 state tax income tax return. 2012 state tax Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. 2012 state tax Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. 2012 state tax File Form W-8BEN for income that is not personal services income. 2012 state tax File Form 8233 for personal services income as discussed next. 2012 state tax Employees and independent contractors. 2012 state tax   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. 2012 state tax   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. 2012 state tax This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. 2012 state tax In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. 2012 state tax Students, teachers, and researchers. 2012 state tax   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. 2012 state tax For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. 2012 state tax   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. 2012 state tax Special events and promotions. 2012 state tax   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. 2012 state tax Form 13930 is used to request a reduction in withholding. 2012 state tax Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. 2012 state tax One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. 2012 state tax You will be required to pay U. 2012 state tax S. 2012 state tax tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. 2012 state tax For more details on treaty provisions that apply to compensation, see Publication 901. 2012 state tax Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. 2012 state tax S. 2012 state tax real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. 2012 state tax A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. 2012 state tax S. 2012 state tax real property interest by the shareholder is subject to withholding at 35%. 2012 state tax Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. 2012 state tax These rules are covered in Publication 515. 2012 state tax For information on the tax treatment of dispositions of U. 2012 state tax S. 2012 state tax real property interests, see Real Property Gain or Loss in chapter 4. 2012 state tax If you are a partner in a domestic partnership, and the partnership disposes of a U. 2012 state tax S. 2012 state tax real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. 2012 state tax Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. 2012 state tax S. 2012 state tax Source Income Subject to Withholding (in the case of a publicly traded partnership). 2012 state tax Withholding is not required in the following situations. 2012 state tax The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. 2012 state tax The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. 2012 state tax However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. 2012 state tax The property disposed of is an interest in a U. 2012 state tax S. 2012 state tax corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. 2012 state tax S. 2012 state tax real property interest. 2012 state tax You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. 2012 state tax S. 2012 state tax taxpayer identification number, and home address. 2012 state tax You can give the certification to a qualified substitute. 2012 state tax The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. 2012 state tax For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. 2012 state tax The buyer receives a withholding certificate from the Internal Revenue Service. 2012 state tax You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. 2012 state tax S. 2012 state tax tax treaty. 2012 state tax The buyer must file a copy of the notice with the Ogden Service Center, P. 2012 state tax O. 2012 state tax Box 409101, Ogden, UT 84409. 2012 state tax You must verify the notice as true and sign it under penalties of perjury. 2012 state tax The notice must contain the following information. 2012 state tax A statement that the notice is a notice of nonrecognition under regulation section 1. 2012 state tax 1445-2(d)(2). 2012 state tax Your name, taxpayer identification number, and home address. 2012 state tax A statement that you are not required to recognize any gain or loss on the transfer. 2012 state tax A brief description of the transfer. 2012 state tax A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. 2012 state tax You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. 2012 state tax Instead, a withholding certificate (described next) must be obtained. 2012 state tax The amount you realize on the transfer of a U. 2012 state tax S. 2012 state tax real property interest is zero. 2012 state tax The property is acquired by the United States, a U. 2012 state tax S. 2012 state tax state or possession, a political subdivision, or the District of Columbia. 2012 state tax The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. 2012 state tax S. 2012 state tax real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. 2012 state tax For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. 2012 state tax See Wash sale under Real Property Gain or Loss in chapter 4. 2012 state tax The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. 2012 state tax This also applies to the qualified substitute's statement under (4). 2012 state tax Withholding certificates. 2012 state tax   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. 2012 state tax Either you or the buyer can request a withholding certificate. 2012 state tax   A withholding certificate can be issued due to any of the following. 2012 state tax The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. 2012 state tax All of your realized gain is exempt from U. 2012 state tax S. 2012 state tax tax. 2012 state tax You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. 2012 state tax   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. 2012 state tax Credit for tax withheld. 2012 state tax   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. 2012 state tax S. 2012 state tax Withholding Tax Return for Dispositions by Foreign Persons of U. 2012 state tax S. 2012 state tax Real Property Interests. 2012 state tax This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. 2012 state tax S. 2012 state tax Real Property Interests. 2012 state tax Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). 2012 state tax You must file Copy B with your tax return to take credit for the tax withheld. 2012 state tax   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. 2012 state tax The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. 2012 state tax When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. 2012 state tax Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. 2012 state tax Your payments of these taxes contribute to your coverage under the U. 2012 state tax S. 2012 state tax social security system. 2012 state tax Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. 2012 state tax In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. 2012 state tax All taxable wages are subject to Medicare tax. 2012 state tax Your employer deducts these taxes from each wage payment. 2012 state tax Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. 2012 state tax You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. 2012 state tax 40. 2012 state tax Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. 2012 state tax If any one employer deducted more than $7,049. 2012 state tax 40, you cannot claim a credit for that amount. 2012 state tax Ask your employer to refund the excess. 2012 state tax If your employer does not refund the excess, you can file a claim for refund using Form 843. 2012 state tax In general, U. 2012 state tax S. 2012 state tax social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. 2012 state tax In limited situations, these taxes apply to wages for services performed outside the United States. 2012 state tax Your employer should be able to tell you if social security and Medicare taxes apply to your wages. 2012 state tax You cannot make voluntary payments if no taxes are due. 2012 state tax Additional Medicare Tax. 2012 state tax   Beginning in 2013, in addition to the Medicare tax, a 0. 2012 state tax 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. 2012 state tax   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. 2012 state tax Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. 2012 state tax   Your employer is responsible for withholding the 0. 2012 state tax 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. 2012 state tax If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. 2012 state tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). 2012 state tax    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 2012 state tax For more information on Additional Medicare Tax, go to IRS. 2012 state tax gov and enter “Additional Medicare Tax” in the search box. 2012 state tax   Self-employed individuals may also be required to pay Additional Medicare Tax. 2012 state tax See Self-Employment Tax , later. 2012 state tax Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. 2012 state tax This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. 2012 state tax These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. 2012 state tax Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. 2012 state tax Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. 2012 state tax Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. 2012 state tax In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. 2012 state tax Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. 2012 state tax Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. 2012 state tax The U. 2012 state tax S. 2012 state tax Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. 2012 state tax S. 2012 state tax resident. 2012 state tax On-campus work means work performed on the school's premises. 2012 state tax On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. 2012 state tax On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. 2012 state tax Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. 2012 state tax If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. 2012 state tax Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. 2012 state tax Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. 2012 state tax If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. 2012 state tax Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. 2012 state tax The employer must be the petitioner through whom the alien obtained the “Q” visa. 2012 state tax Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. 2012 state tax Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. 2012 state tax If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. 2012 state tax Attach the following items to Form 843. 2012 state tax A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. 2012 state tax A copy of your visa. 2012 state tax Form I-94 (or other documentation showing your dates of arrival or departure). 2012 state tax If you have an F-1 visa, documentation showing permission to work in the U. 2012 state tax S. 2012 state tax If you have a J-1 visa, documentation showing permission to work in the U. 2012 state tax S. 2012 state tax If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. 2012 state tax S. 2012 state tax A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. 2012 state tax If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. 2012 state tax If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. 2012 state tax File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. 2012 state tax Do not use Form 843 to request a refund of Additional Medicare Tax. 2012 state tax If Additional Medicare Tax was withheld from your pay in error, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959 with Form 1040 or 1040NR. 2012 state tax If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. 2012 state tax S. 2012 state tax Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. 2012 state tax See the Instructions for Form 1040X. 2012 state tax Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. 2012 state tax You can find more information about not having tax withheld at www. 2012 state tax irs. 2012 state tax gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 2012 state tax Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. 2012 state tax Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. 2012 state tax S. 2012 state tax social security system. 2012 state tax Residents of the U. 2012 state tax S. 2012 state tax Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. 2012 state tax S. 2012 state tax residents for this purpose and are subject to the self-employment tax. 2012 state tax Resident aliens must pay self-employment tax under the same rules that apply to U. 2012 state tax S. 2012 state tax citizens. 2012 state tax However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. 2012 state tax Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. 2012 state tax Example. 2012 state tax Bill Jones is an author engaged in the business of writing books. 2012 state tax Bill had several books published in a foreign country while he was a citizen and resident of that country. 2012 state tax During 2013, Bill entered the United States as a resident alien. 2012 state tax After becoming a U. 2012 state tax S. 2012 state tax resident, he continued to receive royalties from his foreign publisher. 2012 state tax Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). 2012 state tax Bill's 2013 self-employment income includes the royalties received after he became a U. 2012 state tax S. 2012 state tax resident even though the books were published while he was a nonresident alien. 2012 state tax This royalty income is subject to self-employment tax. 2012 state tax Reporting self-employment tax. 2012 state tax   Use Schedule SE (Form 1040) to report and figure your self-employment tax. 2012 state tax Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. 2012 state tax Attach Schedule SE to Form 1040 or Form 1040NR. 2012 state tax Additional Medicare Tax. 2012 state tax   Self-employed individuals must pay a 0. 2012 state tax 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. 2012 state tax   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. 2012 state tax A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). 2012 state tax   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 2012 state tax For more information on Additional Medicare Tax, go to IRS. 2012 state tax gov and enter “Additional Medicare Tax” in the search box. 2012 state tax Deduction for employer-equivalent portion of self-employment tax. 2012 state tax   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. 2012 state tax This deduction is figured on Schedule SE (Form 1040). 2012 state tax Note. 2012 state tax No portion of the Additional Medicare Tax is deductible for self-employment tax. 2012 state tax More information. 2012 state tax   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. 2012 state tax International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. 2012 state tax These agreements are commonly referred to as totalization agreements. 2012 state tax Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. 2012 state tax The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. 2012 state tax Agreements are in effect with the following countries. 2012 state tax Australia. 2012 state tax Austria. 2012 state tax Belgium. 2012 state tax Canada. 2012 state tax Chile. 2012 state tax Czech Republic. 2012 state tax Denmark. 2012 state tax Finland. 2012 state tax France. 2012 state tax Germany. 2012 state tax Greece. 2012 state tax Ireland. 2012 state tax Italy. 2012 state tax Japan. 2012 state tax Korea, South. 2012 state tax Luxembourg. 2012 state tax The Netherlands. 2012 state tax Norway. 2012 state tax Poland. 2012 state tax Portugal. 2012 state tax Spain. 2012 state tax Sweden. 2012 state tax Switzerland. 2012 state tax The United Kingdom. 2012 state tax Agreements with other countries are expected to enter into force in the future. 2012 state tax Employees. 2012 state tax   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. 2012 state tax However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. 2012 state tax You can get more information on any agreement by contacting the U. 2012 state tax S. 2012 state tax Social Security Administration at the address given later. 2012 state tax If you have access to the Internet, you can get more information at www. 2012 state tax socialsecurity. 2012 state tax gov/international. 2012 state tax   To establish that your pay is subject only to foreign social security taxes and is exempt from U. 2012 state tax S. 2012 state tax social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. 2012 state tax This will usually be the same agency to which you or your employer pays your foreign social security taxes. 2012 state tax The foreign agency will be able to tell you what information is needed for them to issue the certificate. 2012 state tax Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. 2012 state tax S. 2012 state tax social security taxes. 2012 state tax Only wages paid on or after the effective date of the agreement can be exempt from U. 2012 state tax S. 2012 state tax social security taxes. 2012 state tax    Some of the countries with which the United States has agreements will not issue certificates of coverage. 2012 state tax In this case, either you or your employer should request a statement that your wages are not covered by the U. 2012 state tax S. 2012 state tax social security system. 2012 state tax Request the statement from the following address. 2012 state tax U. 2012 state tax S. 2012 state tax Social Security Administration Office of International Programs P. 2012 state tax O. 2012 state tax Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. 2012 state tax   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. 2012 state tax However, under some agreements, you may be exempt from U. 2012 state tax S. 2012 state tax self-employment tax if you temporarily transfer your business activity to or from the United States. 2012 state tax   If you believe that your self-employment income is subject only to U. 2012 state tax S. 2012 state tax self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. 2012 state tax S. 2012 state tax Social Security Administration at the address given earlier. 2012 state tax This certificate will establish your exemption from foreign social security taxes. 2012 state tax   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. 2012 state tax S. 2012 state tax self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. 2012 state tax If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. 2012 state tax S. 2012 state tax social security system. 2012 state tax Request it from the U. 2012 state tax S. 2012 state tax Social Security Administration at the address given earlier. 2012 state tax Attach a photocopy of either statement to Form 1040 each year you are exempt. 2012 state tax Also print “Exempt, see attached statement” on the line for self-employment tax. 2012 state tax Estimated Tax Form 1040-ES (NR) You may have income from which no U. 2012 state tax S. 2012 state tax income tax is withheld. 2012 state tax Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. 2012 state tax If so, you may have to pay estimated tax. 2012 state tax Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). 2012 state tax If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. 2012 state tax Item (2) does not apply if you did not file a 2013 return. 2012 state tax A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. 2012 state tax If you pay by check, make it payable to the "United States Treasury. 2012 state tax " How to estimate your tax for 2014. 2012 state tax   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. 2012 state tax If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. 2012 state tax Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. 2012 state tax Note. 2012 state tax If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). 2012 state tax When to pay estimated tax. 2012 state tax   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. 2012 state tax If you have wages subject to the same withholding rules that apply to U. 2012 state tax S. 2012 state tax citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. 2012 state tax If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. 2012 state tax   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. 2012 state tax 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. 2012 state tax 15, 2014 4th installment Jan. 2012 state tax 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. 2012 state tax    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. 2012 state tax Fiscal year. 2012 state tax   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. 2012 state tax If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. 2012 state tax Changes in income, deductions, or exemptions. 2012 state tax   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. 2012 state tax This can happen if you receive additional income or if any of your deductions are reduced or eliminated. 2012 state tax If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. 2012 state tax Amended estimated tax. 2012 state tax   If, after you have made estimated tax payments, you find your estimated tax is substantially increased or decreased because of a change in your income or exemptions, you should adjust your remaining estimated tax payments. 2012 state tax To do this, see the instructions for Form 1040-ES (NR) and Publication 505. 2012 state tax Penalty for failure to pay estimated income tax. 2012 state tax   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. 2012 state tax These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. 2012 state tax Prev  Up  Next   Home   More Online Publications