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2013 State Tax Forms

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2013 State Tax Forms

2013 state tax forms Publication 536 - Main Content Table of Contents NOL Steps How To Figure an NOLNonbusiness deductions (line 6). 2013 state tax forms Nonbusiness income (line 7). 2013 state tax forms Nonbusiness capital losses. 2013 state tax forms Business capital losses. 2013 state tax forms Illustrated Form 1045, Schedule A When To Use an NOLExceptions to 2-Year Carryback Rule Waiving the Carryback Period How To Carry an NOL Back or Forward How To Claim an NOL DeductionDeducting a Carryback Deducting a Carryforward Change in Marital Status Change in Filing Status Illustrated Form 1045 How To Figure an NOL CarryoverIllustrated Form 1045, Schedule B NOL Carryover From 2013 to 2014Worksheet Instructions How To Get Tax HelpLow Income Taxpayer Clinics NOL Steps Follow Steps 1 through 5 to figure and use your NOL. 2013 state tax forms Step 1. 2013 state tax forms   Complete your tax return for the year. 2013 state tax forms You may have an NOL if a negative figure appears on the line below: Individuals — Form 1040, line 41, or Form 1040NR, line 39. 2013 state tax forms Estates and trusts — Form 1041, line 22. 2013 state tax forms   If the amount on that line is not negative, stop here — you do not have an NOL. 2013 state tax forms Step 2. 2013 state tax forms   Determine whether you have an NOL and its amount. 2013 state tax forms See How To Figure an NOL , later. 2013 state tax forms If you do not have an NOL, stop here. 2013 state tax forms Step 3. 2013 state tax forms   Decide whether to carry the NOL back to a past year or to waive the carryback period and instead carry the NOL forward to a future year. 2013 state tax forms See When To Use an NOL , later. 2013 state tax forms Step 4. 2013 state tax forms   Deduct the NOL in the carryback or carryforward year. 2013 state tax forms See How To Claim an NOL Deduction , later. 2013 state tax forms If your NOL deduction is equal to or less than your taxable income without the deduction, stop here — you have used up your NOL. 2013 state tax forms Step 5. 2013 state tax forms   Determine the amount of your unused NOL. 2013 state tax forms See How To Figure an NOL Carryover , later. 2013 state tax forms Carry over the unused NOL to the next carryback or carryforward year and begin again at Step 4. 2013 state tax forms Note. 2013 state tax forms   If your NOL deduction includes more than one NOL amount, apply Step 5 separately to each NOL amount, starting with the amount from the earliest year. 2013 state tax forms How To Figure an NOL If your deductions for the year are more than your income for the year, you may have an NOL. 2013 state tax forms There are rules that limit what you can deduct when figuring an NOL. 2013 state tax forms In general, the following items are not allowed when figuring an NOL. 2013 state tax forms Any deduction for personal exemptions. 2013 state tax forms Capital losses in excess of capital gains. 2013 state tax forms The section 1202 exclusion of the gain from the sale or exchange of qualified small business stock. 2013 state tax forms Nonbusiness deductions in excess of nonbusiness income. 2013 state tax forms The net operating loss deduction. 2013 state tax forms The domestic production activities deduction. 2013 state tax forms Form 1045, Schedule A. 2013 state tax forms   Use Form 1045, Schedule A, to figure an NOL. 2013 state tax forms The following discussion explains Schedule A and includes an illustrated example. 2013 state tax forms   First, complete Form 1045, Schedule A, line 1, using amounts from your return. 2013 state tax forms If line 1 is a negative amount, you may have an NOL. 2013 state tax forms   Next, complete the rest of Form 1045, Schedule A, to figure your NOL. 2013 state tax forms Nonbusiness deductions (line 6). 2013 state tax forms   Enter on line 6 deductions that are not connected to your trade or business or your employment. 2013 state tax forms Examples of deductions not related to your trade or business are: Alimony paid, Deductions for contributions to an IRA or a self-employed retirement plan, Health savings account deduction, Archer medical savings account deduction, Most itemized deductions (except for casualty and theft losses, state income tax on trade and business income, and any employee business expenses), and The standard deduction. 2013 state tax forms   Do not include on line 6 the deduction for personal exemptions for you, your spouse, or your dependents. 2013 state tax forms   Do not enter business deductions on line 6. 2013 state tax forms These are deductions that are connected to your trade or business. 2013 state tax forms They include the following. 2013 state tax forms State income tax on income attributable to trade or business (including wages, salary, and unemployment compensation). 2013 state tax forms Moving expenses. 2013 state tax forms Educator expenses. 2013 state tax forms The deduction for the deductible part of self-employed health insurance. 2013 state tax forms Domestic production activities deduction. 2013 state tax forms Rental losses. 2013 state tax forms Loss on the sale or exchange of business real estate or depreciable property. 2013 state tax forms Your share of a business loss from a partnership or an S corporation. 2013 state tax forms Ordinary loss on the sale or exchange of stock in a small business corporation or a small business investment company. 2013 state tax forms If you itemize your deductions, casualty and theft losses (even if they involve nonbusiness property) and employee business expenses (such as union dues, uniforms, tools, education expenses, and travel and transportation expenses). 2013 state tax forms Loss on the sale of accounts receivable (if you use an accrual method of accounting). 2013 state tax forms Interest and litigation expenses on state and federal income taxes related to your business. 2013 state tax forms Unrecovered investment in a pension or annuity claimed on a decedent's final return. 2013 state tax forms Payment by a federal employee to buy back sick leave used in an earlier year. 2013 state tax forms Nonbusiness income (line 7). 2013 state tax forms   Enter on line 7 only income that is not related to your trade or business or your employment. 2013 state tax forms For example, enter your annuity income, dividends, and interest on investments. 2013 state tax forms Also, include your share of nonbusiness income from partnerships and S corporations. 2013 state tax forms   Do not include on line 7 the income you receive from your trade or business or your employment. 2013 state tax forms This includes salaries and wages, self-employment income, unemployment compensation included in your gross income, and your share of business income from partnerships and S corporations. 2013 state tax forms Also, do not include rental income or ordinary gain from the sale or other disposition of business real estate or depreciable business property. 2013 state tax forms Adjustment for section 1202 exclusion (line 17). 2013 state tax forms   Enter on line 17 any gain you excluded under section 1202 on the sale or exchange of qualified small business stock. 2013 state tax forms Adjustments for capital losses (lines 19–22). 2013 state tax forms   The amount deductible for capital losses is limited based on whether the losses are business capital losses or nonbusiness capital losses. 2013 state tax forms Nonbusiness capital losses. 2013 state tax forms   You can deduct your nonbusiness capital losses (line 2) only up to the amount of your nonbusiness capital gains without regard to any section 1202 exclusion (line 3). 2013 state tax forms If your nonbusiness capital losses are more than your nonbusiness capital gains without regard to any section 1202 exclusion, you cannot deduct the excess. 2013 state tax forms Business capital losses. 2013 state tax forms   You can deduct your business capital losses (line 11) only up to the total of: Your nonbusiness capital gains that are more than the total of your nonbusiness capital losses and excess nonbusiness deductions (line 10), and Your total business capital gains without regard to any section 1202 exclusion (line 12). 2013 state tax forms Domestic production activities deduction (line 23). 2013 state tax forms   You cannot take the domestic production activities deduction when figuring your NOL. 2013 state tax forms Enter on line 23 any domestic production activities deduction claimed on your return. 2013 state tax forms NOLs from other years (line 24). 2013 state tax forms   You cannot deduct any NOL carryovers or carrybacks from other years. 2013 state tax forms Enter the total amount of your NOL deduction for losses from other years. 2013 state tax forms Illustrated Form 1045, Schedule A The following example illustrates how to figure an NOL. 2013 state tax forms It includes filled-in pages 1 and 2 of Form 1040 and Form 1045, Schedule A. 2013 state tax forms Example. 2013 state tax forms Glenn Johnson is in the retail record business. 2013 state tax forms He is single and has the following income and deductions on his Form 1040 for 2013. 2013 state tax forms See the illustrated Form 1040 , later. 2013 state tax forms INCOME   Wages from part-time job $1,225 Interest on savings 425 Net long-term capital gain on sale of real estate used in business 2,000 Glenn's total income $3,650 DEDUCTIONS   Net loss from business (gross income of $67,000 minus expenses of $72,000) $5,000 Net short-term capital loss on sale of stock 1,000 Standard deduction 6,100 Personal exemption 3,900 Glenn's total deductions $16,000 Glenn's deductions exceed his income by $12,350 ($16,000 − $3,650). 2013 state tax forms However, to figure whether he has an NOL, certain deductions are not allowed. 2013 state tax forms He uses Form 1045, Schedule A, to figure his NOL. 2013 state tax forms See the Illustrated Form 1045, Schedule A , later. 2013 state tax forms The following items are not allowed on Form 1045, Schedule A. 2013 state tax forms Nonbusiness net short-term capital loss $1,000 Nonbusiness deductions (standard deduction, $6,100) minus nonbusiness income (interest, $425) 5,675 Deduction for personal exemption 3,900 Total adjustments to net loss $10,575     Therefore, Glenn's NOL for 2013 is figured as follows: Glenn's total 2013 income $3,650 Less:     Glenn's original 2013 total deductions $16,000   Reduced by the disallowed items − 10,575 − 5,425 Glenn's NOL for 2013 $1,775 This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1040, page 1 This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1040, page 2 This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1045, page 2 When To Use an NOL Generally, if you have an NOL for a tax year ending in 2013, you must carry back the entire amount of the NOL to the 2 tax years before the NOL year (the carryback period), and then carry forward any remaining NOL for up to 20 years after the NOL year (the carryforward period). 2013 state tax forms You can, however, choose not to carry back an NOL and only carry it forward. 2013 state tax forms See Waiving the Carryback Period , later. 2013 state tax forms You cannot deduct any part of the NOL remaining after the 20-year carryforward period. 2013 state tax forms NOL year. 2013 state tax forms   This is the year in which the NOL occurred. 2013 state tax forms Exceptions to 2-Year Carryback Rule Eligible losses, farming losses, qualified disaster losses, and specified liability losses, all defined next, qualify for longer carryback periods. 2013 state tax forms Eligible loss. 2013 state tax forms   The carryback period for eligible losses is 3 years. 2013 state tax forms Only the eligible loss portion of the NOL can be carried back 3 years. 2013 state tax forms An eligible loss is any part of an NOL that: Is from a casualty or theft, or Is attributable to a federally declared disaster for a qualified small business or certain qualified farming businesses. 2013 state tax forms Qualified small business. 2013 state tax forms   A qualified small business is a sole proprietorship or a partnership that has average annual gross receipts (reduced by returns and allowances) of $5 million or less during the 3-year period ending with the tax year of the NOL. 2013 state tax forms If the business did not exist for this entire 3-year period, use the period the business was in existence. 2013 state tax forms   An eligible loss does not include a farming loss or a qualified disaster loss. 2013 state tax forms Farming loss. 2013 state tax forms   The carryback period for a farming loss is 5 years. 2013 state tax forms Only the farming loss portion of the NOL can be carried back 5 years. 2013 state tax forms A farming loss is the smaller of: The amount that would be the NOL for the tax year if only income and deductions attributable to farming businesses were taken into account, or The NOL for the tax year. 2013 state tax forms Farming business. 2013 state tax forms   A farming business is a trade or business involving cultivation of land or the raising or harvesting of any agricultural or horticultural commodity. 2013 state tax forms A farming business can include operating a nursery or sod farm or raising or harvesting most ornamental trees or trees bearing fruit, nuts, or other crops. 2013 state tax forms The raising, shearing, feeding, caring for, training, and management of animals is also considered a farming business. 2013 state tax forms   A farming business does not include contract harvesting of an agricultural or horticultural commodity grown or raised by someone else. 2013 state tax forms It also does not include a business in which you merely buy or sell plants or animals grown or raised entirely by someone else. 2013 state tax forms Waiving the 5-year carryback. 2013 state tax forms   You can choose to figure the carryback period for a farming loss without regard to the special 5-year carryback rule. 2013 state tax forms To make this choice for 2013, attach to your 2013 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2013 farming losses without regard to the special 5-year carryback rule. 2013 state tax forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months after the due date of the return (excluding extensions). 2013 state tax forms Attach an election statement to your amended return, and write “Filed pursuant to section 301. 2013 state tax forms 9100-2” at the top of the statement. 2013 state tax forms Once made, this choice is irrevocable. 2013 state tax forms Qualified disaster loss. 2013 state tax forms   The carryback period for a qualified disaster loss is 5 years. 2013 state tax forms Only the qualified disaster loss portion of the NOL can be carried back 5 years. 2013 state tax forms A qualified disaster loss is the smaller of: The sum of: Any losses attributable to a federally declared disaster and occurring before January 1, 2010, in the disaster area, plus Any allowable qualified disaster expenses (even if you did not choose to treat those expenses as deductions in the current year), or The NOL for the tax year. 2013 state tax forms Qualified disaster expenses. 2013 state tax forms   A qualified disaster expense is any capital expense paid or incurred in connection with a trade or business or with business-related property which is: For the abatement or control of hazardous substances that were released as a result of a federally declared disaster occurring before January 1, 2010, For the removal of debris from, or the demolition of structures on, real property which is business-related property damaged or destroyed as a result of a federally declared disaster occurring before January 1, 2010, or For the repair of business-related property damaged as a result of a federally declared disaster occurring before January 1, 2010. 2013 state tax forms Business-related property is property held for use in a trade or business, property held for the production of income, or inventory property. 2013 state tax forms Note. 2013 state tax forms Section 198A allows taxpayers to treat certain capital expenses (qualified disaster expenses) as deductions in the year the expenses were paid or incurred. 2013 state tax forms Excluded losses. 2013 state tax forms   A qualified disaster loss does not include any losses from property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store for which the principal business is the sale of alcoholic beverages for consumption off premises. 2013 state tax forms   A qualified disaster loss also does not include any losses from any gambling or animal racing property. 2013 state tax forms Gambling or animal racing property is any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and the portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet. 2013 state tax forms Specified liability loss. 2013 state tax forms   The carryback period for a specified liability loss is 10 years. 2013 state tax forms Only the specified liability loss portion of the NOL can be carried back 10 years. 2013 state tax forms Generally, a specified liability loss is a loss arising from: Product liability and expenses incurred in the investigation or settlement of, or opposition to, product liability claims, or An act (or failure to act) that occurred at least 3 years before the beginning of the loss year and resulted in a liability under a federal or state law requiring: Reclamation of land, Dismantling of a drilling platform, Remediation of environmental contamination, or Payment under any workers compensation act. 2013 state tax forms   Any loss from a liability arising from (1) through (4) above can be taken into account as a specified liability loss only if you used an accrual method of accounting throughout the period in which the act (or failure to act) occurred. 2013 state tax forms For details, see section 172(f). 2013 state tax forms Waiving the 10-year carryback. 2013 state tax forms   You can choose to figure the carryback period for a specified liability loss without regard to the special 10-year carryback rule. 2013 state tax forms To make this choice for 2013 attach to your 2013 income tax return filed by the due date (including extensions) a statement that you are choosing to treat any 2013 specified liability losses without regard to the special 10-year carryback rule. 2013 state tax forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months after the due date of the return (excluding extensions). 2013 state tax forms Attach a statement to your amended return and write “Filed pursuant to section 301. 2013 state tax forms 9100-2” at the top of the statement. 2013 state tax forms Once made, this choice is irrevocable. 2013 state tax forms Waiving the Carryback Period You can choose not to carry back your NOL. 2013 state tax forms If you make this choice, then you can use your NOL only in the 20-year carryforward period. 2013 state tax forms (This choice means you also choose not to carry back any alternative tax NOL. 2013 state tax forms ) To make this choice, attach a statement to your original return filed by the due date (including extensions) for the NOL year. 2013 state tax forms This statement must show that you are choosing to waive the carryback period under section 172(b)(3). 2013 state tax forms If you filed your original return on time but did not file the statement with it, you can make this choice on an amended return filed within 6 months of the due date of the return (excluding extensions). 2013 state tax forms Attach a statement to your amended return, and write “Filed pursuant to section 301. 2013 state tax forms 9100-2” at the top of the statement. 2013 state tax forms Once you choose to waive the carryback period, it generally is irrevocable. 2013 state tax forms If you choose to waive the carryback period for more than one NOL, you must make a separate choice and attach a separate statement for each NOL year. 2013 state tax forms If you do not file this statement on time, you cannot waive the carryback period. 2013 state tax forms How To Carry an NOL Back or Forward If you choose to carry back the NOL, you must first carry the entire NOL to the earliest carryback year. 2013 state tax forms If your NOL is not used up, you can carry the rest to the next earliest carryback year, and so on. 2013 state tax forms If you waive the carryback period or do not use up the NOL in the carryback period, carry forward what remains of the NOL to the 20 tax years following the NOL year. 2013 state tax forms Start by carrying it to the first tax year after the NOL year. 2013 state tax forms If you do not use it up, carry the unused part to the next year. 2013 state tax forms Continue to carry any unused part of the NOL forward until the NOL is used up or you complete the 20-year carryforward period. 2013 state tax forms Example 1. 2013 state tax forms You started your business as a sole proprietor in 2013 and had a $42,000 NOL for the year. 2013 state tax forms No part of the NOL qualifies for the 3-year, 5-year, or 10-year carryback. 2013 state tax forms You begin using your NOL in 2011, the second year before the NOL year, as shown in the following chart. 2013 state tax forms Year   Carryback/  Carryover Unused  Loss 2011 $42,000 $40,000 2012 40,000 37,000 2013 (NOL year)     2014 37,000 31,500 2015 31,500 22,500 2016 22,500 12,700 2017 12,700 4,000 2018 4,000 -0- If your loss were larger, you could carry it forward until the year 2033. 2013 state tax forms If you still had an unused 2013 carryforward after the year 2033, you would not be allowed to deduct it. 2013 state tax forms Example 2. 2013 state tax forms Assume the same facts as in Example 1 , except that $4,000 of the NOL is attributable to a casualty loss and this loss qualifies for a 3-year carryback period. 2013 state tax forms You begin using the $4,000 in 2010. 2013 state tax forms As shown in the following chart, $3,000 of this NOL is used in 2010. 2013 state tax forms The remaining $1,000 is carried to 2011 with the $38,000 NOL that you must begin using in 2011. 2013 state tax forms Year   Carryback/  Carryover Unused  Loss 2010 $4,000 $1,000 2011 39,000 37,000 2012 37,000 34,000 2013 (NOL year)     2014 34,000 28,500 2015 28,500 19,500 2016 19,500 9,700 2017 9,700 1,000 2018 1,000 -0- How To Claim an NOL Deduction If you have not already carried the NOL to an earlier year, your NOL deduction is the total NOL. 2013 state tax forms If you carried the NOL to an earlier year, your NOL deduction is the carried over NOL minus the NOL amount you used in the earlier year or years. 2013 state tax forms If you carry more than one NOL to the same year, your NOL deduction is the total of these carrybacks and carryovers. 2013 state tax forms NOL resulting in no taxable income. 2013 state tax forms   If your NOL is more than the taxable income of the year you carry it to (figured before deducting the NOL), you generally will have an NOL carryover to the next year. 2013 state tax forms See How To Figure an NOL Carryover , later, to determine how much NOL you have used and how much you carry to the next year. 2013 state tax forms Deducting a Carryback If you carry back your NOL, you can use either Form 1045 or Form 1040X. 2013 state tax forms You can get your refund faster by using Form 1045, but you have a shorter time to file it. 2013 state tax forms You can use Form 1045 to apply an NOL to all carryback years. 2013 state tax forms If you use Form 1040X, you must use a separate Form 1040X for each carryback year to which you apply the NOL. 2013 state tax forms Estates and trusts that do not file Form 1045 must file an amended Form 1041 (instead of Form 1040X) for each carryback year to which NOLs are applied. 2013 state tax forms Use a copy of the appropriate year's Form 1041, check the “Amended return” box, and follow the Form 1041 instructions for amended returns. 2013 state tax forms Include the NOL deduction with other deductions not subject to the 2% limit (line 15a). 2013 state tax forms Also, see the special procedures for filing an amended return due to an NOL carryback, explained under Form 1040X , later. 2013 state tax forms Form 1045. 2013 state tax forms   You can apply for a quick refund by filing Form 1045. 2013 state tax forms This form results in a tentative adjustment of tax in the carryback year. 2013 state tax forms See the Illustrated Form 1045 . 2013 state tax forms at the end of this discussion. 2013 state tax forms   If the IRS refunds or credits an amount to you from Form 1045 and later determines that the refund or credit is too much, the IRS may assess and collect the excess immediately. 2013 state tax forms   Generally, you must file Form 1045 on or after the date you file your tax return for the NOL year, but not later than one year after the end of the NOL year. 2013 state tax forms If the last day of the NOL year falls on a Saturday, Sunday, or holiday, the form will be considered timely if postmarked on the next business day. 2013 state tax forms For example, if you are a calendar year taxpayer with a carryback from 2013 to 2011, you must file Form 1045 on or after the date you file your tax return for 2013, but no later than December 31, 2014. 2013 state tax forms Form 1040X. 2013 state tax forms   If you do not file Form 1045, you can file Form 1040X to get a refund of tax because of an NOL carryback. 2013 state tax forms File Form 1040X within 3 years after the due date, including extensions, for filing the return for the NOL year. 2013 state tax forms For example, if you are a calendar year taxpayer and filed your 2011 return by the April 15, 2012, due date, you must file a claim for refund of 2008 tax because of an NOL carryback from 2011 by April 15, 2015. 2013 state tax forms   Attach a computation of your NOL using Form 1045, Schedule A, and, if it applies, your NOL carryover using Form 1045, Schedule B, discussed later . 2013 state tax forms Refiguring your tax. 2013 state tax forms   To refigure your total tax liability for a carryback year, first refigure your adjusted gross income for that year. 2013 state tax forms (On Form 1045, use lines 10 and 11 and the “After carryback” column for the applicable carryback year. 2013 state tax forms ) Use your adjusted gross income after applying the NOL deduction to refigure income or deduction items that are based on, or limited to, a percentage of your adjusted gross income. 2013 state tax forms Refigure the following items. 2013 state tax forms The special allowance for passive activity losses from rental real estate activities. 2013 state tax forms Taxable social security and tier 1 railroad retirement benefits. 2013 state tax forms IRA deductions. 2013 state tax forms Excludable savings bond interest. 2013 state tax forms Excludable employer-provided adoption benefits. 2013 state tax forms The student loan interest deduction. 2013 state tax forms The tuition and fees deduction. 2013 state tax forms   If more than one of these items apply, refigure them in the order listed above, using your adjusted gross income after applying the NOL deduction and any previous item. 2013 state tax forms (Enter your NOL deduction on Form 1045, line 10. 2013 state tax forms On line 11, using the “After carryback” column, enter your adjusted gross income refigured after applying the NOL deduction and after refiguring any above items. 2013 state tax forms )   Next, refigure your taxable income. 2013 state tax forms (On Form 1045, use lines 12 through 15 and the “After carryback” column. 2013 state tax forms ) Use your refigured adjusted gross income (Form 1045, line 11, using the “After carryback” column) to refigure certain deductions and other items that are based on or limited to a percentage of your adjusted gross income. 2013 state tax forms Refigure the following items. 2013 state tax forms The itemized deduction for medical expenses. 2013 state tax forms The itemized deduction for qualified mortgage insurance premiums. 2013 state tax forms The itemized deduction for casualty losses. 2013 state tax forms Miscellaneous itemized deductions subject to the 2% limit. 2013 state tax forms The overall limit on itemized deductions (do not apply to carryback years beginning after December 31, 2009). 2013 state tax forms The phaseout of the deduction for exemptions (do not apply to carryback years beginning after December 31, 2009). 2013 state tax forms Qualified motor vehicle tax (do not apply to carryback years beginning after December 31, 2009). 2013 state tax forms    Do not refigure the itemized deduction for charitable contributions. 2013 state tax forms   Finally, use your refigured taxable income (Form 1045, line 15, using the “After carryback” column) to refigure your total tax liability. 2013 state tax forms Refigure your income tax, your alternative minimum tax, and any credits that are based on or limited by your adjusted gross income (AGI), modified adjusted gross income (MAGI), or tax liability. 2013 state tax forms (On Form 1045, use lines 16 through 25, and the “After carryback” column. 2013 state tax forms ) The earned income credit, for example, may be affected by changes to adjusted gross income or the amount of tax (or both) and, therefore, must be recomputed. 2013 state tax forms If you become eligible for a credit because of the carryback, complete the form for that specific credit (such as the EIC Worksheet) for that year. 2013 state tax forms   While it is necessary to refigure your income tax, alternative minimum tax, and credits, do not refigure your self-employment tax. 2013 state tax forms Deducting a Carryforward If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the “Other income” line of Form 1040 or Form 1040NR (line 21 for 2013). 2013 state tax forms Estates and trusts include an NOL deduction on Form 1041 with other deductions not subject to the 2% limit (line 15a for 2013). 2013 state tax forms You must attach a statement that shows all the important facts about the NOL. 2013 state tax forms Your statement should include a computation showing how you figured the NOL deduction. 2013 state tax forms If you deduct more than one NOL in the same year, your statement must cover each of them. 2013 state tax forms Change in Marital Status If you and your spouse were not married to each other in all years involved in figuring NOL carrybacks and carryovers, only the spouse who had the loss can take the NOL deduction. 2013 state tax forms If you file a joint return, the NOL deduction is limited to the income of that spouse. 2013 state tax forms For example, if your marital status changes because of death or divorce, and in a later year you have an NOL, you can carry back that loss only to the part of the income reported on the joint return (filed with your former spouse) that was related to your taxable income. 2013 state tax forms After you deduct the NOL in the carryback year, the joint rates apply to the resulting taxable income. 2013 state tax forms Refund limit. 2013 state tax forms   If you are not married in the NOL year (or are married to a different spouse), and in the carryback year you were married and filed a joint return, your refund for the overpaid joint tax may be limited. 2013 state tax forms You can claim a refund for the difference between your share of the refigured tax and your contribution toward the tax paid on the joint return. 2013 state tax forms The refund cannot be more than the joint overpayment. 2013 state tax forms Attach a statement showing how you figured your refund. 2013 state tax forms Figuring your share of a joint tax liability. 2013 state tax forms   There are five steps for figuring your share of the refigured joint tax liability. 2013 state tax forms Figure your total tax as though you had filed as married filing separately. 2013 state tax forms Figure your spouse's total tax as though your spouse had also filed as married filing separately. 2013 state tax forms Add the amounts in (1) and (2). 2013 state tax forms Divide the amount in (1) by the amount in (3). 2013 state tax forms Multiply the refigured tax on your joint return by the amount figured in (4). 2013 state tax forms This is your share of the joint tax liability. 2013 state tax forms Figuring your contribution toward tax paid. 2013 state tax forms   Unless you have an agreement or clear evidence of each spouse's contributions toward the payment of the joint tax liability, figure your contribution by adding the tax withheld on your wages and your share of joint estimated tax payments or tax paid with the return. 2013 state tax forms If the original return for the carryback year resulted in an overpayment, reduce your contribution by your share of the tax refund. 2013 state tax forms Figure your share of a joint payment or refund by the same method used in figuring your share of the joint tax liability. 2013 state tax forms Use your taxable income as originally reported on the joint return in steps (1) and (2) above, and substitute the joint payment or refund for the refigured joint tax in step (5). 2013 state tax forms Change in Filing Status If you and your spouse were married and filed a joint return for each year involved in figuring NOL carrybacks and carryovers, figure the NOL deduction on a joint return as you would for an individual. 2013 state tax forms However, treat the NOL deduction as a joint NOL. 2013 state tax forms If you and your spouse were married and filed separate returns for each year involved in figuring NOL carrybacks and carryovers, the spouse who sustained the loss may take the NOL deduction on a separate return. 2013 state tax forms Special rules apply for figuring the NOL carrybacks and carryovers of married people whose filing status changes for any tax year involved in figuring an NOL carryback or carryover. 2013 state tax forms Separate to joint return. 2013 state tax forms   If you and your spouse file a joint return for a carryback or carryforward year, and were married but filed separate returns for any of the tax years involved in figuring the NOL carryback or carryover, treat the separate carryback or carryover as a joint carryback or carryover. 2013 state tax forms Joint to separate returns. 2013 state tax forms   If you and your spouse file separate returns for a carryback or carryforward year, but filed a joint return for any or all of the tax years involved in figuring the NOL carryover, figure each of your carryovers separately. 2013 state tax forms Joint return in NOL year. 2013 state tax forms   Figure each spouse's share of the joint NOL through the following steps. 2013 state tax forms Figure each spouse's NOL as if he or she filed a separate return. 2013 state tax forms See How To Figure an NOL , earlier. 2013 state tax forms If only one spouse has an NOL, stop here. 2013 state tax forms All of the joint NOL is that spouse's NOL. 2013 state tax forms If both spouses have an NOL, multiply the joint NOL by a fraction, the numerator of which is spouse A's NOL figured in (1) and the denominator of which is the total of the spouses' NOLs figured in (1). 2013 state tax forms The result is spouse A's share of the joint NOL. 2013 state tax forms The rest of the joint NOL is spouse B's share. 2013 state tax forms Example 1. 2013 state tax forms Mark and Nancy are married and file a joint return for 2013. 2013 state tax forms They have an NOL of $5,000. 2013 state tax forms They carry the NOL back to 2011, a year in which Mark and Nancy filed separate returns. 2013 state tax forms Figured separately, Nancy's 2013 deductions were more than her income, and Mark's income was more than his deductions. 2013 state tax forms Mark does not have any NOL to carry back. 2013 state tax forms Nancy can carry back the entire $5,000 NOL to her 2011 separate return. 2013 state tax forms Example 2. 2013 state tax forms Assume the same facts as in Example 1 , except that both Mark and Nancy had deductions in 2013 that were more than their income. 2013 state tax forms Figured separately, his NOL is $1,800 and her NOL is $3,000. 2013 state tax forms The sum of their separate NOLs ($4,800) is less than their $5,000 joint NOL because his deductions included a $200 net capital loss that is not allowed in figuring his separate NOL. 2013 state tax forms The loss is allowed in figuring their joint NOL because it was offset by Nancy's capital gains. 2013 state tax forms Mark's share of their $5,000 joint NOL is $1,875 ($5,000 × $1,800/$4,800) and Nancy's is $3,125 ($5,000 − $1,875). 2013 state tax forms Joint return in previous carryback or carryforward year. 2013 state tax forms   If only one spouse had an NOL deduction on the previous year's joint return, all of the joint carryover is that spouse's carryover. 2013 state tax forms If both spouses had an NOL deduction (including separate carryovers of a joint NOL, figured as explained in the previous discussion ), figure each spouse's share of the joint carryover through the following steps. 2013 state tax forms Figure each spouse's modified taxable income as if he or she filed a separate return. 2013 state tax forms See Modified taxable income under How To Figure an NOL Carryover , later. 2013 state tax forms Multiply the joint modified taxable income you used to figure the joint carryover by a fraction, the numerator of which is spouse A's modified taxable income figured in (1) and the denominator of which is the total of the spouses' modified taxable incomes figured in (1). 2013 state tax forms This is spouse A's share of the joint modified taxable income. 2013 state tax forms Subtract the amount figured in (2) from the joint modified taxable income. 2013 state tax forms This is spouse B's share of the joint modified taxable income. 2013 state tax forms Reduce the amount figured in (3), but not below zero, by spouse B's NOL deduction. 2013 state tax forms Add the amounts figured in (2) and (4). 2013 state tax forms Subtract the amount figured in (5) from spouse A's NOL deduction. 2013 state tax forms This is spouse A's share of the joint carryover. 2013 state tax forms The rest of the joint carryover is spouse B's share. 2013 state tax forms Example. 2013 state tax forms Sam and Wanda filed a joint return for 2011 and separate returns for 2012 and 2013. 2013 state tax forms In 2013, Sam had an NOL of $18,000 and Wanda had an NOL of $2,000. 2013 state tax forms They choose to carry back both NOLs 2 years to their 2011 joint return and claim a $20,000 NOL deduction. 2013 state tax forms Their joint modified taxable income (MTI) for 2011 is $15,000, and their joint NOL carryover to 2012 is $5,000 ($20,000 – $15,000). 2013 state tax forms Sam and Wanda each figure their separate MTI for 2011 as if they had filed separate returns. 2013 state tax forms Then they figure their shares of the $5,000 carryover as follows. 2013 state tax forms Step 1. 2013 state tax forms   Sam's separate MTI $9,000 Wanda's separate MTI + 3,000 Total MTI $12,000 Step 2. 2013 state tax forms   Joint MTI $15,000 Sam's MTI ÷ total MTI ($9,000 ÷ $12,000) × . 2013 state tax forms 75 Sam's share of joint MTI $11,250 Step 3. 2013 state tax forms   Joint MTI $15,000 Sam's share of joint MTI − 11,250 Wanda's share of joint MTI $3,750 Step 4. 2013 state tax forms   Wanda's share of joint MTI $3,750 Wanda's NOL deduction − 2,000 Wanda's remaining share $1,750 Step 5. 2013 state tax forms   Sam's share of joint MTI $11,250 Wanda's remaining share + 1,750 Joint MTI to be offset $13,000 Step 6. 2013 state tax forms   Sam's NOL deduction $18,000 Joint MTI to be offset − 13,000 Sam's carryover to 2012 $5,000 Joint carryover to 2012 $5,000 Sam's carryover − 5,000 Wanda's carryover to 2012 $-0- Wanda's $2,000 NOL deduction offsets $2,000 of her $3,750 share of the joint modified taxable income and is completely used up. 2013 state tax forms She has no carryover to 2012. 2013 state tax forms Sam's $18,000 NOL deduction offsets all of his $11,250 share of joint modified taxable income and the remaining $1,750 of Wanda's share. 2013 state tax forms His carryover to 2012 is $5,000. 2013 state tax forms Illustrated Form 1045 The following example illustrates how to use Form 1045 to claim an NOL deduction in a carryback year. 2013 state tax forms It includes a filled-in page 1 of Form 1045. 2013 state tax forms Example. 2013 state tax forms Martha Sanders is a self-employed contractor. 2013 state tax forms Martha's 2013 deductions are more than her 2013 income because of a business loss. 2013 state tax forms She uses Form 1045 to carry back her NOL 2 years and claim an NOL deduction in 2011. 2013 state tax forms Her filing status in both years was single. 2013 state tax forms See the filled-in Form 1045 later. 2013 state tax forms Martha figures her 2013 NOL on Form 1045, Schedule A (not shown). 2013 state tax forms (For an example using Form 1045, Schedule A, see Illustrated Form 1045, Schedule A under How To Figure an NOL , earlier. 2013 state tax forms ) She enters the $10,000 NOL from Form 1045, Schedule A, line 25, on Form 1045, line 1a. 2013 state tax forms Martha completes lines 10 through 25, using the “Before carryback” column under the column for the second preceding tax year ended 12/31/11 on page 1 of Form 1045 using the following amounts from her 2011 return. 2013 state tax forms 2011 Adjusted gross income $50,000 Itemized deductions:     Medical expenses [$6,000 − ($50,000 × 7. 2013 state tax forms 5%)] $2,250   State income tax + 2,000   Real estate tax + 4,000   Home mortgage interest + 5,000   Total itemized deductions $13,250 Exemption $3,700 Income tax $4,550 Self-employment tax $6,120   Martha refigures her taxable income for 2011 after carrying back her 2013 NOL as follows: 2011 Adjusted gross income $50,000 Less:     NOL from 2013 −10,000 2011 Adjusted gross income after carryback $40,000 Less:     Itemized deductions:     Medical expenses [$6,000 − ($40,000 × 7. 2013 state tax forms 5%)] $3,000   State income tax + 2,000   Real estate tax + 4,000   Home mortgage interest + 5,000   Total itemized deductions −14,000 Less:     Exemption − 3,700 2011 Taxable income after carryback $22,300 Martha then completes lines 10 through 25, using the “After carryback” column under the column for the second preceding tax year ended 12/31/11. 2013 state tax forms On line 10, Martha enters her $10,000 NOL deduction. 2013 state tax forms Her new adjusted gross income on line 11 is $40,000 ($50,000 − $10,000). 2013 state tax forms To complete line 12, she must refigure her medical expense deduction using her new adjusted gross income. 2013 state tax forms Her refigured medical expense deduction is $3,000 [$6,000 − ($40,000 × 7. 2013 state tax forms 5%)]. 2013 state tax forms This increases her total itemized deductions to $14,000 [$13,250 + ($3,000 − $2,250)]. 2013 state tax forms Martha uses her refigured taxable income ($22,300) from line 15, and the tax tables in her 2011 Form 1040 instructions to find her income tax. 2013 state tax forms She enters the new amount, $2,924, on line 16, and her new total tax liability, $9,044, on line 25. 2013 state tax forms Martha used up her $10,000 NOL in 2011 so she does not complete a column for the first preceding tax year ended 12/31/2012. 2013 state tax forms The decrease in tax because of her NOL deduction (line 27) is $1,612. 2013 state tax forms Martha files Form 1045 after filing her 2013 return, but no later than December 31, 2014. 2013 state tax forms She mails it to the Internal Revenue Service Center for the place where she lives as shown in the 2013 instructions for Form 1040 and attaches a copy of her 2013 return (including the applicable forms and schedules). 2013 state tax forms This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1045, page 1 How To Figure an NOL Carryover If your NOL is more than your taxable income for the year to which you carry it (figured before deducting the NOL), you may have an NOL carryover. 2013 state tax forms You must make certain modifications to your taxable income to determine how much NOL you will use up in that year and how much you can carry over to the next tax year. 2013 state tax forms Your carryover is the excess of your NOL deduction over your modified taxable income for the carryback or carryforward year. 2013 state tax forms If your NOL deduction includes more than one NOL, apply the NOLs against your modified taxable income in the same order in which you incurred them, starting with the earliest. 2013 state tax forms Modified taxable income. 2013 state tax forms   Your modified taxable income is your taxable income figured with the following changes. 2013 state tax forms You cannot claim an NOL deduction for the NOL carryover you are figuring or for any later NOL. 2013 state tax forms You cannot claim a deduction for capital losses in excess of your capital gains. 2013 state tax forms Also, you must increase your taxable income by the amount of any section 1202 exclusion. 2013 state tax forms You cannot claim the domestic production activities deduction. 2013 state tax forms You cannot claim a deduction for your exemptions for yourself, your spouse, or dependents. 2013 state tax forms You must figure any item affected by the amount of your adjusted gross income after making the changes in (1), (2), and (3), above, and certain other changes to your adjusted gross income that result from (1), (2), and (3). 2013 state tax forms This includes income and deduction items used to figure adjusted gross income (for example, IRA deductions), as well as certain itemized deductions. 2013 state tax forms To figure a charitable contribution deduction, do not include deductions for NOL carrybacks in the change in (1) but do include deductions for NOL carryforwards from tax years before the NOL year. 2013 state tax forms   Your taxable income as modified cannot be less than zero. 2013 state tax forms Form 1045, Schedule B. 2013 state tax forms   You can use Form 1045, Schedule B, to figure your modified taxable income for carryback years and your carryover from each of those years. 2013 state tax forms Do not use Form 1045, Schedule B, for a carryforward year. 2013 state tax forms If your 2013 return includes an NOL deduction from an NOL year before 2013 that reduced your taxable income to zero (to less than zero, if an estate or trust), see NOL Carryover From 2013 to 2014 , later. 2013 state tax forms Illustrated Form 1045, Schedule B The following example illustrates how to figure an NOL carryover from a carryback year. 2013 state tax forms It includes a filled-in Form 1045, Schedule B. 2013 state tax forms Example. 2013 state tax forms Ida Brown runs a small clothing shop. 2013 state tax forms In 2013, she has an NOL of $36,000 that she carries back to 2011. 2013 state tax forms She has no other carrybacks or carryforwards to 2011. 2013 state tax forms Ida's adjusted gross income in 2011 was $35,000, consisting of her salary of $36,000 minus a $1,000 capital loss deduction. 2013 state tax forms She is single and claimed only one personal exemption of $3,700. 2013 state tax forms During that year, she gave $1,450 in charitable contributions. 2013 state tax forms Her medical expenses were $3,000. 2013 state tax forms She also deducted $1,650 in taxes and $3,125 in home mortgage interest. 2013 state tax forms Her deduction for charitable contributions was not limited because her contributions, $1,450, were less than 50% of her adjusted gross income. 2013 state tax forms The deduction for medical expenses was limited to expenses over 7. 2013 state tax forms 5% of adjusted gross income (. 2013 state tax forms 075 × $35,000 = $2,625; $3,000 − $2,625 = $375). 2013 state tax forms The deductions for taxes and home mortgage interest were not subject to any limits. 2013 state tax forms She was able to claim $6,600 ($1,450 + $375 + $1,650 + $3,125) in itemized deductions and a personal exemption deduction of $3,700 for 2011. 2013 state tax forms She had no other deductions in 2011 (except the NOL deduction). 2013 state tax forms Her taxable income (figured without the NOL deduction) for the year was $24,700. 2013 state tax forms Ida's adjusted gross income in 2012 was $9,325, consisting of net business income from the clothing shop of $12,325 and a net capital loss of $3,000. 2013 state tax forms She did not itemize her deductions in 2012. 2013 state tax forms She deducted the standard deduction of $5,950 and the personal exemption deduction of $3,800. 2013 state tax forms She had no other deductions in 2012 (other than the NOL deduction). 2013 state tax forms Her taxable income, therefore, was ($425). 2013 state tax forms Ida's $36,000 carryback will result in her having 2011 taxable income of zero. 2013 state tax forms She then completes the column for the second preceding tax year ended 12/31/11 on Form 1045, Schedule B, to figure how much of her NOL she uses up in 2011 and how much she can carry over to 2012. 2013 state tax forms She completes the column for the first preceding tax year ended 12/31/12. 2013 state tax forms See the illustrated Form 1045, Schedule B , shown later. 2013 state tax forms Column 1, line 1. 2013 state tax forms Ida enters $36,000, her 2013 net operating loss, on line 1. 2013 state tax forms Column 1, line 2. 2013 state tax forms She enters $24,700, her 2011 taxable income (figured without the NOL deduction), on line 2. 2013 state tax forms Column 1, line 3. 2013 state tax forms Ida enters her net capital loss deduction of $1,000 on line 3. 2013 state tax forms Column 1, lines 4 and 5. 2013 state tax forms Ida had no section 1202 exclusion or domestic production activities deduction in 2011. 2013 state tax forms She enters zero on lines 4 and 5. 2013 state tax forms Column 1, line 6. 2013 state tax forms Although Ida's entry on line 3 modifies her adjusted gross income, that does not affect any other items included in her adjusted gross income. 2013 state tax forms Ida enters zero on line 6. 2013 state tax forms Column 1, line 7. 2013 state tax forms Ida had itemized deductions and entered $1,000 on line 3, so she completes lines 11 through 38 to figure her adjustment to itemized deductions. 2013 state tax forms On line 7, she enters the total adjustment from line 38. 2013 state tax forms Column 1, line 8. 2013 state tax forms Ida enters the deduction for her personal exemption of $3,700 for 2011. 2013 state tax forms Column 1, line 9. 2013 state tax forms After combining lines 2 through 8, Ida's modified taxable income is $29,475. 2013 state tax forms Column 1, line 10. 2013 state tax forms Ida figures her carryover to 2012 by subtracting her modified taxable income (line 9) from her NOL deduction (line 1). 2013 state tax forms She enters the $6,525 carryover on line 10. 2013 state tax forms She also enters the $6,525 as her NOL deduction for 2012 on Form 1045, page 1, line 10, in the “After carryback” column under the column for the first preceding tax year ended 12/31/12. 2013 state tax forms (For an illustrated example of page 1 of Form 1045, see Illustrated Form 1045 under How To Claim an NOL Deduction , earlier. 2013 state tax forms ) Next, Ida completes column 2 for the first preceding tax year ended 12/31/12. 2013 state tax forms Column 1, line 11. 2013 state tax forms Ida's adjusted gross income for 2011 was $35,000. 2013 state tax forms Column 1, line 12. 2013 state tax forms She adds lines 3 through 6 and enters $1,000 on line 12. 2013 state tax forms (This is her net capital loss deduction added back, which modifies her adjusted gross income. 2013 state tax forms ) Column 1, line 13. 2013 state tax forms Her modified adjusted gross income for 2011 is now $36,000. 2013 state tax forms Column 1, line 14. 2013 state tax forms On her 2011 tax return, she deducted $375 as medical expenses. 2013 state tax forms Column 1, line 15. 2013 state tax forms Her actual medical expenses were $3,000. 2013 state tax forms Column 1, line 16. 2013 state tax forms She multiplies her modified adjusted gross income, $36,000, by . 2013 state tax forms 075. 2013 state tax forms She enters $2,700 on line 16. 2013 state tax forms Column 1, line 17. 2013 state tax forms She substracts $2,700 from her actual medical expenses, $3,000. 2013 state tax forms She enters $300 on line 17. 2013 state tax forms This is her modified medical deduction. 2013 state tax forms Column 1, line 18. 2013 state tax forms The difference between her medical deduction and her modified medical deduction is $75. 2013 state tax forms She enters this on line 18. 2013 state tax forms Column 1, lines 19 through 21. 2013 state tax forms Ida had no deduction for qualified mortgage insurance premiums in 2011. 2013 state tax forms She skips lines 19 and 20 and enters zero on line 21. 2013 state tax forms Column 1, line 22. 2013 state tax forms She enters her modified adjusted gross income of $36,000 on line 22. 2013 state tax forms Column 1, line 23. 2013 state tax forms She had no other carrybacks to 2011 and enters zero on line 23. 2013 state tax forms Column 1, line 24. 2013 state tax forms Her modified adjusted gross income remains $36,000. 2013 state tax forms Column 1, line 25. 2013 state tax forms Her actual contributions for 2011 were $1,450, which she enters on line 25. 2013 state tax forms Column 1, line 26. 2013 state tax forms She now refigures her charitable contributions based on her modified adjusted gross income. 2013 state tax forms Her contributions are well below the 50% limit, so she enters $1,450 on line 26. 2013 state tax forms Column 1, line 27. 2013 state tax forms The difference is zero. 2013 state tax forms Column 1, lines 28 through 37. 2013 state tax forms Ida had no casualty losses or deductions for miscellaneous items in 2011. 2013 state tax forms She skips lines 28 through 31 and lines 33 through 36. 2013 state tax forms Ida enters zero on lines 32 and 37. 2013 state tax forms Column 1, line 38. 2013 state tax forms She combines lines 18, 21, 27, 32, and 37 and enters $75 on line 38. 2013 state tax forms She carries this figure to line 7. 2013 state tax forms Column 2, line 1. 2013 state tax forms Ida enters $6,525, the carryback of her 2013 NOL to 2012, from column 1, line 10, on line 1. 2013 state tax forms Column 2, line 2. 2013 state tax forms She enters ($425), her 2012 taxable income, on line 2. 2013 state tax forms Column 2, line 3. 2013 state tax forms Ida enters her net capital loss deduction of $3,000 on line 3. 2013 state tax forms Column 2, lines 4 and 5. 2013 state tax forms Ida had no section 1202 exclusion or domestic production activities deduction in 2012. 2013 state tax forms She enters zero on lines 4 and 5. 2013 state tax forms Column 2, line 6. 2013 state tax forms Although Ida's entry on line 3 modifies her adjusted gross income, that does not affect any other items included in her adjusted gross income. 2013 state tax forms Ida enters zero on line 6. 2013 state tax forms Column 2, line 7. 2013 state tax forms Because Ida did not itemize deductions on her 2012 tax return, she enters zero on line 7. 2013 state tax forms Column 2, line 8. 2013 state tax forms Ida enters the deduction for her personal exemption of $3,800 for 2012. 2013 state tax forms Column 2, line 9. 2013 state tax forms After combining lines 2 through 8, Ida's modified taxable income is $6,375. 2013 state tax forms Column 2, line 10. 2013 state tax forms Ida figures her carryforward to 2014 by subtracting her modified taxable income (line 9) from her NOL deduction (line 1). 2013 state tax forms She enters the $150 carryover on line 10. 2013 state tax forms This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1045, page 3 This image is too large to be displayed in the current screen. 2013 state tax forms Please click the link to view the image. 2013 state tax forms Form 1045, page 4 NOL Carryover From 2013 to 2014 If you had an NOL deduction carried forward from a year prior to 2013 that resulted in your having taxable income on your 2013 return of zero (of less than zero, if an estate or trust), complete Table 1 , Worksheet for NOL Carryover From 2013 to 2014, on the following pages. 2013 state tax forms It will help you figure your NOL to carry to 2014. 2013 state tax forms Keep the worksheet for your records. 2013 state tax forms Worksheet Instructions At the top of the worksheet, enter the NOL year for which you are figuring the carryover. 2013 state tax forms More than one NOL. 2013 state tax forms   If your 2013 NOL deduction includes amounts for more than one loss year, complete this worksheet only for one loss year. 2013 state tax forms To determine which year, start with your earliest NOL and subtract each NOL separately from your taxable income figured without the NOL deduction. 2013 state tax forms Complete this worksheet for the earliest NOL that results in your having taxable income below zero. 2013 state tax forms Your NOL carryover to 2014 is the total of the amount on line 10 of the worksheet and all later NOL amounts. 2013 state tax forms Example. 2013 state tax forms Your taxable income for 2013 is $5,000 without your $9,000 NOL deduction. 2013 state tax forms Your NOL deduction includes a $2,000 carryover from 2011 and a $7,000 carryover from 2012. 2013 state tax forms Subtract your 2011 NOL of $2,000 from $5,000. 2013 state tax forms This gives you taxable income of $3,000. 2013 state tax forms Your 2011 NOL is now completely used up. 2013 state tax forms Subtract your $7,000 2012 NOL from $3,000. 2013 state tax forms This gives you taxable income of ($4,000). 2013 state tax forms You now complete the worksheet for your 2012 NOL. 2013 state tax forms Your NOL carryover to 2014 is the unused part of your 2012 NOL from line 10 of the worksheet. 2013 state tax forms Line 2. 2013 state tax forms   Treat your NOL deduction for the NOL year entered at the top of the worksheet and later years as a positive amount. 2013 state tax forms Add it to your negative taxable income (figured without the NOL deduction). 2013 state tax forms Enter the result on line 2. 2013 state tax forms Line 6. 2013 state tax forms   You must refigure the following income and deductions based on adjusted gross income. 2013 state tax forms The special allowance for passive activity losses from rental real estate activities. 2013 state tax forms Taxable social security and tier 1 railroad retirement benefits. 2013 state tax forms IRA deductions. 2013 state tax forms Excludable savings bond interest. 2013 state tax forms Excludable employer-provided adoption benefits. 2013 state tax forms The student loan interest deduction. 2013 state tax forms The tuition and fees deduction. 2013 state tax forms   If none of these items apply to you, enter zero on line 6. 2013 state tax forms Otherwise, increase your adjusted gross income by the total of lines 3 through 5 and your NOL deduction for the NOL year entered at the top of the worksheet and later years. 2013 state tax forms Using this increased adjusted gross income, refigure the items that apply, in the order listed above. 2013 state tax forms Your adjustment for each item is the difference between the refigured amount and the amount included on your return. 2013 state tax forms Combine the adjustments for previous items with your adjusted gross income before refiguring the next item. 2013 state tax forms Keep a record of your computations. 2013 state tax forms   Enter your total adjustments for the above items on line 6. 2013 state tax forms Line 7. 2013 state tax forms   Enter zero if you claimed the standard deduction or the amounts on lines 3 through 5 are zero. 2013 state tax forms Otherwise, use lines 11 through 33 of the worksheet to figure the amount to enter on this line. 2013 state tax forms Complete only those sections that apply to you. 2013 state tax forms Estates and trusts. 2013 state tax forms   Enter zero on line 7 if you did not claim any miscellaneous deductions on Form 1041, line 15c, or a casualty or theft loss. 2013 state tax forms Otherwise, refigure these deductions by substituting modified adjusted gross income (see below ) for adjusted gross income. 2013 state tax forms Subtract the recomputed deductions from those claimed on the return. 2013 state tax forms Enter the result on line 7. 2013 state tax forms Modified adjusted gross income. 2013 state tax forms   To refigure miscellaneous itemized deductions of an estate or trust (Form 1041, line 15c), modified adjusted gross income is the total of the following amounts. 2013 state tax forms The adjusted gross income on the return. 2013 state tax forms The amounts from lines 3 through 5 of the worksheet. 2013 state tax forms The exemption amount from Form 1041, line 20. 2013 state tax forms The NOL deduction for the NOL year entered at the top of the worksheet and for later years. 2013 state tax forms   To refigure the casualty and theft loss deduction of an estate or trust, modified adjusted gross income is the total of the following amounts. 2013 state tax forms The adjusted gross income amount you used to figure the deduction claimed on the return. 2013 state tax forms The amounts from lines 3 through 5 of the worksheet. 2013 state tax forms The NOL deduction for the NOL year entered at the top of the worksheet and for later years. 2013 state tax forms Line 11. 2013 state tax forms   Treat your NOL deduction for the NOL year entered at the top of the worksheet and for later years as a positive amount. 2013 state tax forms Add it to your adjusted gross income. 2013 state tax forms Enter the result on line 11. 2013 state tax forms Line 20. 2013 state tax forms   Is your modified adjusted gross income from line 13 of this worksheet more than $100,000 ($50,000 if married filing separately)?   □ Yes. 2013 state tax forms Your deduction is limited. 2013 state tax forms Refigure your deduction using the Mortgage Insurance Premiums Deduction Worksheet in the 2013 Instructions for Form 1045. 2013 state tax forms On line 2 of the Mortgage Insurance Premiums Deduction Worksheet, enter the amount from line 13 of this worksheet. 2013 state tax forms   □ No. 2013 state tax forms Your deduction is not limited. 2013 state tax forms Enter the amount from line 19 on line 20 and enter -0- on line 21. 2013 state tax forms Line 23. 2013 state tax forms   If you had a contributions carryover from 2012 to 2013 and your NOL deduction includes an amount from an NOL year before 2012, you may have to reduce your contributions carryover. 2013 state tax forms Reduce the contributions carryover by the amount of any adjustment you made to your 2012 charitable contributions deduction when figuring your NOL carryover to 2013. 2013 state tax forms Use the reduced contributions carryover to figure the amount to enter on line 23. 2013 state tax forms Please click here for the text description of the image. 2013 state tax forms Worksheet for NOL Carryover Worksheet for NOL Carryover (Continued) How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2013 state tax forms Free help with your tax return. 2013 state tax forms   You can get free help preparing your return nationwide from IRS-certified volunteers. 2013 state tax forms The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2013 state tax forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2013 state tax forms Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2013 state tax forms In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2013 state tax forms To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2013 state tax forms gov, download the IRS2Go app, or call 1-800-906-9887. 2013 state tax forms   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2013 state tax forms To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2013 state tax forms aarp. 2013 state tax forms org/money/taxaide or call 1-888-227-7669. 2013 state tax forms For more information on these programs, go to IRS. 2013 state tax forms gov and enter “VITA” in the search box. 2013 state tax forms Internet. 2013 state tax forms    IRS. 2013 state tax forms gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2013 state tax forms Download the free IRS2Go app from the iTunes app store or from Google Play. 2013 state tax forms Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2013 state tax forms Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2013 state tax forms gov or download the IRS2Go app and select the Refund Status option. 2013 state tax forms The IRS issues more than 9 out of 10 refunds in less than 21 days. 2013 state tax forms Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2013 state tax forms You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2013 state tax forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2013 state tax forms Use the Interactive Tax Assistant (ITA) to research your tax questions. 2013 state tax forms No need to wait on the phone or stand in line. 2013 state tax forms The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2013 state tax forms When you reach the response screen, you can print the entire interview and the final response for your records. 2013 state tax forms New subject areas are added on a regular basis. 2013 state tax forms  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2013 state tax forms gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2013 state tax forms You can use the IRS Tax Map to search publications and instructions by topic or keyword. 2013 state tax forms The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2013 state tax forms When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2013 state tax forms Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2013 state tax forms You can also ask the IRS to mail a return or an account transcript to you. 2013 state tax forms Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2013 state tax forms gov or by calling 1-800-908-9946. 2013 state tax forms Tax return and tax account transcripts are generally available for the current year and the past three years. 2013 state tax forms Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2013 state tax forms Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2013 state tax forms If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2013 state tax forms Check the status of your amended return using Where's My Amended Return? Go to IRS. 2013 state tax forms gov and enter Where's My Amended Return? in the search box. 2013 state tax forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2013 state tax forms It can take up to 3 weeks from the date you mailed it to show up in our system. 2013 state tax forms Make a payment using one of several safe and convenient electronic payment options available on IRS. 2013 state tax forms gov. 2013 state tax forms Select the Payment tab on the front page of IRS. 2013 state tax forms gov for more information. 2013 state tax forms Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2013 state tax forms Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2013 state tax forms gov. 2013 state tax forms Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2013 state tax forms Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2013 state tax forms gov. 2013 state tax forms Request an Electronic Filing PIN by going to IRS. 2013 state tax forms gov and entering Electronic Filing PIN in the search box. 2013 state tax forms Download forms, instructions and publications, including accessible versions for people with disabilities. 2013 state tax forms Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2013 state tax forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2013 state tax forms An employee can answer questions about your tax account or help you set up a payment plan. 2013 state tax forms Before you visit, check the Office Locator on IRS. 2013 state tax forms gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2013 state tax forms If you have a special need, such as a disability, you can request an appointment. 2013 state tax forms Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2013 state tax forms Apply for an Employer Identification Number (EIN). 2013 state tax forms Go to IRS. 2013 state tax forms gov and enter Apply for an EIN in the search box. 2013 state tax forms Read the Internal Revenue Code, regulations, or other official guidance. 2013 state tax forms Read Internal Revenue Bulletins. 2013 state tax forms Sign up to receive local and national tax news and more by email. 2013 state tax forms Just click on “subscriptions” above the search box on IRS. 2013 state tax forms gov and choose from a variety of options. 2013 state tax forms Phone. 2013 state tax forms    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2013 state tax forms Download the free IRS2Go app from the iTunes app store or from Google Play. 2013 state tax forms Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2013 state tax forms gov, or download the IRS2Go app. 2013 state tax forms Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2013 state tax forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2013 state tax forms Most VITA and TCE sites offer free electronic filing. 2013 state tax forms Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 2013 state tax forms Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 2013 state tax forms Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 2013 state tax forms If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 2013 state tax forms The IRS issues more than 9 out of 10 refunds in less than 21 days. 2013 state tax forms Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2013 state tax forms Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 2013 state tax forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2013 state tax forms Note, the above information is for our automated hotline. 2013 state tax forms Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 2013 state tax forms Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 2013 state tax forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2013 state tax forms It can take up to 3 weeks from the date you mailed it to show up in our system. 2013 state tax forms Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 2013 state tax forms You should receive your order within 10 business days. 2013 state tax forms Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 2013 state tax forms If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 2013 state tax forms Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 2013 state tax forms The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 2013 state tax forms These individuals can also contact the IRS through relay services such as the Federal Relay Service. 2013 state tax forms Walk-in. 2013 state tax forms   You can find a selection of forms, publications and services — in person. 2013 state tax forms Products. 2013 state tax forms You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2013 state tax forms Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 2013 state tax forms Services. 2013 state tax forms You can walk in to your local TAC for face-to-face tax help. 2013 state tax forms An employee can answer questions about your tax account or help you set up a payment plan. 2013 state tax forms Before visiting, use the Office Locator tool on IRS. 2013 state tax forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 2013 state tax forms Mail. 2013 state tax forms   You can send your order for forms, instructions, and publications to the address below. 2013 state tax forms You should receive a response within 10 business days after your request is received. 2013 state tax forms Internal Revenue Service 1201 N. 2013 state tax forms Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 2013 state tax forms The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2013 state tax forms Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 2013 state tax forms   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 2013 state tax forms We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 2013 state tax forms You face (or your business is facing) an immediate threat of adverse action. 2013 state tax forms You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 2013 state tax forms   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 2013 state tax forms Here's why we can help: TAS is an independent organization within the IRS. 2013 state tax forms Our advocates know how to work with the IRS. 2013 state tax forms Our services are free and tailored to meet your needs. 2013 state tax forms We have offices in every state, the District of Columbia, and Puerto Rico. 2013 state tax forms   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 2013 state tax forms   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 2013 state tax forms If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 2013 state tax forms Low Income Taxpayer Clinics Low Income
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Know the Risks

Cyber security, phishing, worms, firewalls, Trojan horses, hackers, and viruses seem to be in the news every day. Plus warnings to update your virus protection, watch out for online scams, protect your privacy, and watch what you click on are everywhere. But what does it all mean? And what can you do to safeguard access to your computer and to protect yourself and your family? What is this all about?

The first step in protecting yourself is to recognize the risks and become familiar with some of the terminology associated with cyber security. The Department of Homeland Security created this list of terms: Hacker, attacker, or intruder - These terms are applied to the people who seek to exploit weaknesses in software and computer systems for their own gain. Although their intentions are sometimes fairly benign and motivated solely by curiosity, their actions are typically in violation of the intended use of the systems they are exploiting. The results can range from mere mischief (creating a virus with no intentionally negative impact) to malicious (stealing or altering information).

Malicious code includes code such as viruses, worms, and Trojan horses. Although some people use these terms interchangeably, they have unique characteristics:

  • Viruses - This type of malicious code requires you to actually do something before it infects your computer. This action could be opening an email attachment or going to a particular web page.
  • Worms - Worms propagate without you r doing anything. They typically start by exploiting a software vulnerability (a flaw that allows the software's intended security policy to be violated). Then once the victim computer has been infected, the worm will attempt to find and infect other computers. Similar to viruses, worms can propagate via email, web sites, or network-based software. The automated self-propagation of worms distinguishes them from viruses.
  • Trojan horses - A Trojan horse program is software that claims to do one thing while, in fact, doing something different behind the scenes. For example, a program that claims it will speed up your computer may actually be sending your confidential information to an intruder.
  • Spyware - This sneaky software rides its way onto computers when you download screensavers, games, music, and other applications. Spyware sends information about what you're doing on the Internet to a third-party, usually to target you with pop-up ads. Browsers enable you to block pop-ups. You can also install anti-spyware to stop this threat to your privacy.

Minimize Access to Your Information

It is probably easy for you to identify people who could gain physical access to your computer—family members, roommates, co-workers, members of a cleaning crew, and maybe some others. But identifying the people who could gain remote access to your computer becomes much more difficult. As long as you have a computer and connect it to a network or the internet, you are vulnerable to someone or something else accessing or corrupting your information. Luckily, you can develop habits that make it more difficult.

Lock or log-off your computer when you are away from it. This prevents another person from waiting for you to leave and then sitting down at your computer and accessing all of your information.

To be really secure, disconnect your computer from the Internet when you aren't using it. DSL and cable modems make it possible for users to be online all the time, but this convenience comes with risks. The likelihood that attackers or viruses scanning the network for available computers will target your computer becomes much higher if your computer is always connected.

Evaluate your security settings. It is important to examine your computer's settings, especially the security settings, and select options that meet your needs without putting you at increased risk. Many, but not all Internet providers offer free security software. If you don't receive free software, you should consider buying a commercial product that includes virus scan, firewall, and pop-up blockers. You should also be aware of your Internet cookies setting. Cookies are short pieces of data used by web servers to identify users. Some cookies are useful for storing images and data from websites that you frequent, but others are malicious and collect information about you. You'll have to decide how much risk from cookies you can accept. Finally, if you install a patch or a new version of software, or if you hear of something that might affect your settings, reevaluate your settings to make sure they are still appropriate.

Look for a privacy policy statement or seal that indicates the site abides by privacy standards. Take time to read how your privacy is protected.

Look for signals that you are using a secure web page. A secure site encrypts or scrambles personal information so it cannot be easily intercepted. Signals include a screen notice that says you are on a secure site, a closed lock or unbroken key in the bottom corner of your screen, or the first letters of the Internet address you are viewing changes from "http" to "https."

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What if Your Online Privacy is Compromised?

If you believe you might have revealed sensitive information about your organization, report it to the appropriate people within the organization, including network administrators. They can be alert for any suspicious or unusual activity.

If you believe your financial accounts may be compromised, contact your financial institution immediately and close any accounts that may have been compromised. Watch for any unexplainable charges to your account.

Check your credit reports for unusual activity.

Report your situation to local police, and file a report with the Federal Trade Commission.

Protecting Children Online

The Children's Online Privacy Protection Act requires commercial websites to obtain parental consent before collecting, using, or disclosing personal information from children under 13. For more information, contact the FTC about Children's Privacy.

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The 2013 State Tax Forms

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