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Aarp tax aide locations 13. Aarp tax aide locations   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. Aarp tax aide locations Wage limit. Aarp tax aide locations Federal Income Tax WithholdingNew Form W-4 for 2014. Aarp tax aide locations Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. Aarp tax aide locations Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. Aarp tax aide locations  The employee tax rate for social security is 6. Aarp tax aide locations 2%. Aarp tax aide locations Previously, the employee tax rate for social security was 4. Aarp tax aide locations 2%. Aarp tax aide locations The employer tax rate for social security remains unchanged at 6. Aarp tax aide locations 2%. Aarp tax aide locations The social security wage base limit is $113,700. Aarp tax aide locations The Medicare tax rate is 1. Aarp tax aide locations 45% each for the employee and employer, unchanged from 2012. Aarp tax aide locations There is no wage base limit for Medicare tax. Aarp tax aide locations Additional Medicare Tax. Aarp tax aide locations  In addition to withholding Medicare tax at 1. Aarp tax aide locations 45%, you must withhold a 0. Aarp tax aide locations 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Aarp tax aide locations You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Aarp tax aide locations Additional Medicare Tax is only imposed on the employee. Aarp tax aide locations There is no employer share of Additional Medicare Tax. Aarp tax aide locations All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Aarp tax aide locations For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. Aarp tax aide locations For more information on Additional Medicare Tax, visit IRS. Aarp tax aide locations gov and enter “Additional Medicare Tax” in the search box. Aarp tax aide locations Leave-based donation programs to aid victims of Hurricane Sandy. Aarp tax aide locations  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. Aarp tax aide locations The donated leave will not be included in the income or wages of the employee. Aarp tax aide locations The employer may deduct the cash payments as business expenses or charitable contributions. Aarp tax aide locations For more information, see Notice 2012-69, 2012-51 I. Aarp tax aide locations R. Aarp tax aide locations B. Aarp tax aide locations 712, available at www. Aarp tax aide locations irs. Aarp tax aide locations gov/irb/2012-51_IRB/ar09. Aarp tax aide locations html. Aarp tax aide locations Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. Aarp tax aide locations  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Aarp tax aide locations Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Aarp tax aide locations Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Aarp tax aide locations For more information, visit IRS. Aarp tax aide locations gov and enter “work opportunity credit” in the search box. Aarp tax aide locations What's New for 2014 Social security and Medicare tax for 2014. Aarp tax aide locations  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). Aarp tax aide locations The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). Aarp tax aide locations There is no limit on the amount of wages subject to Medicare tax. Aarp tax aide locations Reminders Additional employment tax information for farmers. Aarp tax aide locations  See Publication 51 (Circular A) for more detailed guidance on employment taxes. Aarp tax aide locations For the latest information about employment tax developments impacting farmers, go to www. Aarp tax aide locations irs. Aarp tax aide locations gov/pub51. Aarp tax aide locations Correcting a previously filed Form 943. Aarp tax aide locations  If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Aarp tax aide locations Form 943-X is filed separately from Form 943. Aarp tax aide locations For more information on correcting Form 943, see the Instructions for Form 943-X. Aarp tax aide locations Federal tax deposits must be made by electronic funds transfer. Aarp tax aide locations  You must use electronic funds transfer to make all federal tax deposits. Aarp tax aide locations Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Aarp tax aide locations If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Aarp tax aide locations Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Aarp tax aide locations EFTPS is a free service provided by the Department of Treasury. Aarp tax aide locations Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Aarp tax aide locations For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Aarp tax aide locations To get more information about EFTPS or to enroll in EFTPS, visit www. Aarp tax aide locations eftps. Aarp tax aide locations gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Aarp tax aide locations Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Aarp tax aide locations Important Dates for 2014 You should take the action indicated by the dates listed. Aarp tax aide locations See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Aarp tax aide locations Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. Aarp tax aide locations For these dates, see Publication 509, Tax Calendars (For use in 2014). Aarp tax aide locations Note. Aarp tax aide locations  If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. Aarp tax aide locations A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. Aarp tax aide locations For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Aarp tax aide locations S. Aarp tax aide locations Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. Aarp tax aide locations See Private delivery services in Publication 51 (Circular A). Aarp tax aide locations Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Aarp tax aide locations Statewide holidays no longer apply. Aarp tax aide locations For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). Aarp tax aide locations Fiscal year taxpayers. Aarp tax aide locations  The due dates listed below apply whether you use a calendar or a fiscal year. Aarp tax aide locations By January 31. Aarp tax aide locations   File Form 943 with the IRS. Aarp tax aide locations If you deposited all Form 943 taxes when due, you have 10 additional days to file. Aarp tax aide locations Furnish each employee with a completed Form W-2, Wage and Tax Statement. Aarp tax aide locations Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). Aarp tax aide locations File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. Aarp tax aide locations If you deposited all the FUTA tax when due, you have 10 additional days to file. Aarp tax aide locations File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. Aarp tax aide locations If you deposited all Form 945 taxes when due, you have 10 additional days to file. Aarp tax aide locations By February 15. Aarp tax aide locations  Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year. Aarp tax aide locations On February 16. Aarp tax aide locations  Any Form W-4 claiming exemption from withholding for the previous year has now expired. Aarp tax aide locations Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. Aarp tax aide locations If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. Aarp tax aide locations If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. Aarp tax aide locations By February 28. Aarp tax aide locations   File paper Forms 1099 and 1096. Aarp tax aide locations File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. Aarp tax aide locations S. Aarp tax aide locations Information Returns, with the IRS. Aarp tax aide locations For electronically filed returns, see By March 31 below. Aarp tax aide locations File paper Forms W-2 and W-3. Aarp tax aide locations File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). Aarp tax aide locations For electronically filed returns, see By March 31 below. Aarp tax aide locations By March 31. Aarp tax aide locations   File electronic Forms W-2 and 1099. Aarp tax aide locations File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. Aarp tax aide locations For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. Aarp tax aide locations socialsecurity. Aarp tax aide locations gov/employer. Aarp tax aide locations For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Aarp tax aide locations By April 30, July 31, October 31, and January 31. Aarp tax aide locations   Deposit FUTA taxes. Aarp tax aide locations Deposit FUTA tax due if it is more than $500. Aarp tax aide locations Before December 1. Aarp tax aide locations  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. Aarp tax aide locations Introduction You are generally required to withhold federal income tax from the wages of your employees. Aarp tax aide locations You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). Aarp tax aide locations You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Aarp tax aide locations This chapter includes information about these taxes. Aarp tax aide locations You must also pay self-employment tax on your net earnings from farming. Aarp tax aide locations See chapter 12 for information on self-employment tax. Aarp tax aide locations Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. Aarp tax aide locations Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 926 Household Employer's Tax Guide Form (and Instructions) W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification 940 Employer's Annual Federal Unemployment (FUTA) Tax Return 943 Employer's Annual Federal Tax Return for Agricultural Employees 943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund See chapter 16 for information about getting publications and forms. Aarp tax aide locations Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. Aarp tax aide locations Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. Aarp tax aide locations Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. Aarp tax aide locations Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). Aarp tax aide locations Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity). Aarp tax aide locations Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Aarp tax aide locations For more information, see Publication 51 (Circular A). Aarp tax aide locations Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. Aarp tax aide locations This is so even when you give the employee freedom of action. Aarp tax aide locations What matters is that you have the right to control the details of how the services are performed. Aarp tax aide locations You are responsible for withholding and paying employment taxes for your employees. Aarp tax aide locations You are also required to file employment tax returns. Aarp tax aide locations These requirements do not apply to amounts that you pay to independent contractors. Aarp tax aide locations See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Aarp tax aide locations If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. Aarp tax aide locations Special rules apply to crew leaders. Aarp tax aide locations See Crew Leaders , later. Aarp tax aide locations Employer identification number (EIN). Aarp tax aide locations   If you have employees, you must have an EIN. Aarp tax aide locations If you do not have an EIN, you may apply for one online. Aarp tax aide locations Go to IRS. Aarp tax aide locations gov and click on the Apply for an EIN Online link under Tools. Aarp tax aide locations You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Aarp tax aide locations The hours of operation for both numbers are Monday–Friday form 7:00 a. Aarp tax aide locations m. Aarp tax aide locations –7:00 p. Aarp tax aide locations m. Aarp tax aide locations local time (Alaska and Hawaii follow Pacific time). Aarp tax aide locations You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Aarp tax aide locations Employee's social security number (SSN). Aarp tax aide locations   An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Aarp tax aide locations Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). Aarp tax aide locations It is also available from the SSA's website at www. Aarp tax aide locations socialsecurity. Aarp tax aide locations gov. Aarp tax aide locations   The employee must furnish evidence of age, identity, and U. Aarp tax aide locations S. Aarp tax aide locations citizenship or lawful immigration status permitting employment with the Form SS-5. Aarp tax aide locations An employee who is age 18 or older must appear in person with this evidence at an SSA office. Aarp tax aide locations Form I-9. Aarp tax aide locations    You must verify that each new employee is legally eligible to work in the United States. Aarp tax aide locations This includes completing the Form I-9, Employment Eligibility Verification. Aarp tax aide locations Form I-9 is available from the U. Aarp tax aide locations S. Aarp tax aide locations Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Aarp tax aide locations Form I-9 is also available from the USCIS website at www. Aarp tax aide locations uscis. Aarp tax aide locations gov. Aarp tax aide locations You can also contact the USCIS at 1-800-375-5283 for more information. Aarp tax aide locations New hire reporting. Aarp tax aide locations   You are required to report any new employee to a designated state new hire registry. Aarp tax aide locations Many states accept a copy of Form W-4 with employer information added. Aarp tax aide locations Visit the Office of Child Support Enforcement website at www. Aarp tax aide locations acf. Aarp tax aide locations hhs. Aarp tax aide locations gov/programs/cse/newhire for more information. Aarp tax aide locations Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. Aarp tax aide locations However, certain exemptions may apply to wages paid to your child, spouse, or parent. Aarp tax aide locations Exemptions for your child. Aarp tax aide locations   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. Aarp tax aide locations However, see Nonexempt services of a child or spouse , later. Aarp tax aide locations Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. Aarp tax aide locations Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. Aarp tax aide locations Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Aarp tax aide locations Exemptions for your spouse. Aarp tax aide locations   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Aarp tax aide locations   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. Aarp tax aide locations Nonexempt services of a child or spouse. Aarp tax aide locations   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. Aarp tax aide locations A corporation, even if it is controlled by you. Aarp tax aide locations A partnership, even if you are a partner. Aarp tax aide locations This does not apply to wages paid to your child if each partner is a parent of the child. Aarp tax aide locations An estate or trust, even if it is the estate of a deceased parent. Aarp tax aide locations In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Aarp tax aide locations Exemptions for your parent. Aarp tax aide locations   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Aarp tax aide locations Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. Aarp tax aide locations You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. Aarp tax aide locations You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. Aarp tax aide locations   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. Aarp tax aide locations Qualified joint venture. Aarp tax aide locations   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. Aarp tax aide locations For more information about qualified joint ventures, see chapter 12. Aarp tax aide locations Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. Aarp tax aide locations Social security and Medicare taxes. Aarp tax aide locations   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. Aarp tax aide locations The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. Aarp tax aide locations The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. Aarp tax aide locations Federal income tax withholding. Aarp tax aide locations   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. Aarp tax aide locations Federal unemployment (FUTA) tax. Aarp tax aide locations   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. Aarp tax aide locations The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. Aarp tax aide locations Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. Aarp tax aide locations   The farmer is the employer of workers furnished by a crew leader in all other situations. Aarp tax aide locations In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. Aarp tax aide locations For example, some farmers employ individuals to recruit farmworkers exclusively for them. Aarp tax aide locations Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. Aarp tax aide locations The farmer is the employer in these cases. Aarp tax aide locations For information about common-law employees, see section 1 of Publication 15-A. Aarp tax aide locations For information about crew leaders, see the Department of Labor website at www. Aarp tax aide locations dol. Aarp tax aide locations gov/whd/regs/compliance/whdfs49. Aarp tax aide locations htm. Aarp tax aide locations Social Security and Medicare Taxes All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests. Aarp tax aide locations You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). Aarp tax aide locations The $150 test applies separately to each farmworker that you employ. Aarp tax aide locations If you employ a family of workers, each member is treated separately. Aarp tax aide locations Do not count wages paid by other employers. Aarp tax aide locations You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). Aarp tax aide locations If the $2,500 test for the group is not met, the $150 test for an employee still applies. Aarp tax aide locations Exceptions. Aarp tax aide locations   Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. Aarp tax aide locations However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. Aarp tax aide locations   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. Aarp tax aide locations   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. Aarp tax aide locations Religious exemption. Aarp tax aide locations   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. Aarp tax aide locations This exemption is available only if both the employee and the employer are members of the group or division. Aarp tax aide locations   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Aarp tax aide locations Cash wages. Aarp tax aide locations   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Aarp tax aide locations Cash wages include checks, money orders, and any kind of money or cash. Aarp tax aide locations   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Aarp tax aide locations Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. Aarp tax aide locations For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. Aarp tax aide locations socialsecurity. Aarp tax aide locations gov. Aarp tax aide locations Noncash wages. Aarp tax aide locations    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Aarp tax aide locations Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. Aarp tax aide locations However, they are subject to these taxes if the substance of the transaction is a cash payment. Aarp tax aide locations For information on lodging provided as a condition of employment, see Publication 15-B. Aarp tax aide locations   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Aarp tax aide locations Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). Aarp tax aide locations Tax rates and social security wage limit. Aarp tax aide locations   For 2013, the employer and the employee will pay the following taxes. Aarp tax aide locations The employer and employee each pay 6. Aarp tax aide locations 2% of cash wages for social security tax (old-age, survivors, and disability insurance). Aarp tax aide locations The employer and employee each pay 1. Aarp tax aide locations 45% of cash wages for Medicare tax (hospital insurance). Aarp tax aide locations The employee pays 0. Aarp tax aide locations 9% of cash wages in excess of $200,000 for Additional Medicare Tax. Aarp tax aide locations Wage limit. Aarp tax aide locations   The limit on wages subject to the social security tax for 2013 is $113,700. Aarp tax aide locations There is no limit on wages subject to the Medicare tax. Aarp tax aide locations All covered wages are subject to the Medicare tax. Aarp tax aide locations Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. Aarp tax aide locations Paying employee's share. Aarp tax aide locations   If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. Aarp tax aide locations It is additional income to the employee. Aarp tax aide locations You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes. Aarp tax aide locations Example. Aarp tax aide locations Jane operates a small family fruit farm. Aarp tax aide locations She employs day laborers in the picking season to enable her to timely get her crop to market. Aarp tax aide locations She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. Aarp tax aide locations When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips). Aarp tax aide locations For 2013, Jane paid Mary $1,000 during the year. Aarp tax aide locations Susan enters $1,076. Aarp tax aide locations 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. Aarp tax aide locations 50 social security and Medicare taxes paid for Mary). Aarp tax aide locations She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. Aarp tax aide locations Additional Medicare Tax. Aarp tax aide locations   In addition to withholding Medicare tax at 1. Aarp tax aide locations 45%, you must withhold a 0. Aarp tax aide locations 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Aarp tax aide locations You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Aarp tax aide locations Additional Medicare Tax is only imposed on the employee. Aarp tax aide locations There is no employer share of Additional Medicare Tax. Aarp tax aide locations All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. Aarp tax aide locations   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). Aarp tax aide locations For more information on Additional Medicare Tax, visit IRS. Aarp tax aide locations gov and enter “Additional Medicare Tax” in the search box. Aarp tax aide locations Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Aarp tax aide locations Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. Aarp tax aide locations The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. Aarp tax aide locations Form W-4. Aarp tax aide locations   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. Aarp tax aide locations In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. Aarp tax aide locations An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. Aarp tax aide locations   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. Aarp tax aide locations   You should give each new employee a Form W-4 as soon as you hire the employee. Aarp tax aide locations For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. Aarp tax aide locations Have the employee complete and return the form to you before the first payday. Aarp tax aide locations If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. Aarp tax aide locations New Form W-4 for 2014. Aarp tax aide locations   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. Aarp tax aide locations Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. Aarp tax aide locations You cannot accept substitute Forms W-4 developed by employees. Aarp tax aide locations How to figure withholding. Aarp tax aide locations   You can use one of several methods to determine the amount to withhold. Aarp tax aide locations The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. Aarp tax aide locations Publication 51 (Circular A) also contains additional information about federal income tax withholding. Aarp tax aide locations Nonemployee compensation. Aarp tax aide locations   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. Aarp tax aide locations However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. Aarp tax aide locations For more information, see the Instructions for Form 1099-MISC. Aarp tax aide locations Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. Aarp tax aide locations However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. Aarp tax aide locations You meet the notification requirement by giving each employee any of the following. Aarp tax aide locations Form W-2, which contains EIC notification on the back of Copy B. Aarp tax aide locations A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. Aarp tax aide locations Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). Aarp tax aide locations Your own written statement with the exact wording of Notice 797. Aarp tax aide locations For more information, see Publication 51 (Circular A). Aarp tax aide locations Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. Aarp tax aide locations You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. Aarp tax aide locations If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. Aarp tax aide locations You must also pay the employer's share of social security and Medicare taxes. Aarp tax aide locations There is no employer share of Additional Medicare Tax. Aarp tax aide locations Form 943. Aarp tax aide locations   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. Aarp tax aide locations Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). Aarp tax aide locations Deposits. Aarp tax aide locations   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. Aarp tax aide locations However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. Aarp tax aide locations   For more information on deposit rules, see Publication 51 (Circular A). Aarp tax aide locations Electronic deposit requirement. Aarp tax aide locations   You must use electronic funds transfer to make all federal tax deposits. Aarp tax aide locations Generally, electronic funds transfers are made using EFTPS. Aarp tax aide locations If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Aarp tax aide locations Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Aarp tax aide locations EFTPS is a free service provided by the Department of Treasury. Aarp tax aide locations Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Aarp tax aide locations   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Aarp tax aide locations To get more information about EFTPS or to enroll in EFTPS, visit www. Aarp tax aide locations eftps. Aarp tax aide locations gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Aarp tax aide locations Additional information about EFTPS is also available in Publication 966. Aarp tax aide locations Form W-2. Aarp tax aide locations   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. Aarp tax aide locations However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. Aarp tax aide locations The date the employee requests the form. Aarp tax aide locations The date you make your final payment of wages to the employee. Aarp tax aide locations Compensation paid to H-2A visa holders. Aarp tax aide locations   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. Aarp tax aide locations Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. Aarp tax aide locations   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. Aarp tax aide locations In this case, the worker must give the employer a completed Form W-4. Aarp tax aide locations Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. Aarp tax aide locations   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. Aarp tax aide locations For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. Aarp tax aide locations Trust fund recovery penalty. Aarp tax aide locations   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. Aarp tax aide locations A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. Aarp tax aide locations A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. Aarp tax aide locations   Willfully means voluntarily, consciously, and intentionally. Aarp tax aide locations Paying other expenses of the business instead of the taxes due is acting willfully. Aarp tax aide locations Consequences of treating an employee as an independent contractor. Aarp tax aide locations   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. Aarp tax aide locations See Publication 15-A for more information. Aarp tax aide locations Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. Aarp tax aide locations You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. Aarp tax aide locations You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. Aarp tax aide locations These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. Aarp tax aide locations See Family Employees , earlier. Aarp tax aide locations Alien farmworkers. Aarp tax aide locations   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. Aarp tax aide locations However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. Aarp tax aide locations Commodity wages. Aarp tax aide locations   Payments in kind for farm labor are not cash wages. Aarp tax aide locations Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. Aarp tax aide locations Tax rate and credit. Aarp tax aide locations   The gross FUTA tax rate is 6. Aarp tax aide locations 0% of the first $7,000 cash wages you pay to each employee during the year. Aarp tax aide locations However, you are given a credit of up to 5. Aarp tax aide locations 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. Aarp tax aide locations If your state tax rate (experience rate) is less than 5. Aarp tax aide locations 4%, you may still be allowed the full 5. Aarp tax aide locations 4% credit. Aarp tax aide locations   If you do not pay the state tax, you cannot take the credit. Aarp tax aide locations If you are exempt from state unemployment tax for any reason, the full 6. Aarp tax aide locations 0% rate applies. Aarp tax aide locations See the Instructions for Form 940 for additional information. Aarp tax aide locations More information. Aarp tax aide locations   For more information on FUTA tax, see Publication 51 (Circular A). Aarp tax aide locations Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. Aarp tax aide locations It must not be collected or deducted from the wages of your employees. Aarp tax aide locations Form 940. Aarp tax aide locations   Report FUTA tax on Form 940. Aarp tax aide locations The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). Aarp tax aide locations Deposits. Aarp tax aide locations   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. Aarp tax aide locations If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. Aarp tax aide locations You can add it to the tax for the next quarter. Aarp tax aide locations If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. Aarp tax aide locations If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. Aarp tax aide locations Electronic deposit requirement. Aarp tax aide locations   You must use electronic funds transfer to make all federal tax deposits. Aarp tax aide locations Generally, electronic funds transfers are made using EFTPS. Aarp tax aide locations If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Aarp tax aide locations Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Aarp tax aide locations EFTPS is a free service provided by the Department of Treasury. Aarp tax aide locations Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Aarp tax aide locations   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). Aarp tax aide locations To get more information about EFTPS or to enroll in EFTPS, visit www. Aarp tax aide locations eftps. Aarp tax aide locations gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Aarp tax aide locations Additional information about EFTPS is also available in Publication 966. Aarp tax aide locations Prev  Up  Next   Home   More Online Publications
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Aarp tax aide locations 28. Aarp tax aide locations   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. Aarp tax aide locations  The 2013 rate for business use of a vehicle is 56½ cents per mile. Aarp tax aide locations Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Aarp tax aide locations You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Aarp tax aide locations This chapter covers the following topics. Aarp tax aide locations Deductions subject to the 2% limit. Aarp tax aide locations Deductions not subject to the 2% limit. Aarp tax aide locations Expenses you cannot deduct. Aarp tax aide locations You must keep records to verify your deductions. Aarp tax aide locations You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Aarp tax aide locations For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Aarp tax aide locations Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). Aarp tax aide locations You can claim the amount of expenses that is more than 2% of your adjusted gross income. Aarp tax aide locations You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Aarp tax aide locations Your adjusted gross income is the amount on Form 1040, line 38. Aarp tax aide locations Generally, you apply the 2% limit after you apply any other deduction limit. Aarp tax aide locations For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. Aarp tax aide locations Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Aarp tax aide locations Unreimbursed employee expenses (line 21). Aarp tax aide locations Tax preparation fees (line 22). Aarp tax aide locations Other expenses (line 23). Aarp tax aide locations Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Aarp tax aide locations An expense is ordinary if it is common and accepted in your trade, business, or profession. Aarp tax aide locations An expense is necessary if it is appropriate and helpful to your business. Aarp tax aide locations An expense does not have to be required to be considered necessary. Aarp tax aide locations Examples of unreimbursed employee expenses are listed next. Aarp tax aide locations The list is followed by discussions of additional unreimbursed employee expenses. Aarp tax aide locations Business bad debt of an employee. Aarp tax aide locations Education that is work related. Aarp tax aide locations (See chapter 27. Aarp tax aide locations ) Legal fees related to your job. Aarp tax aide locations Licenses and regulatory fees. Aarp tax aide locations Malpractice insurance premiums. Aarp tax aide locations Medical examinations required by an employer. Aarp tax aide locations Occupational taxes. Aarp tax aide locations Passport for a business trip. Aarp tax aide locations Subscriptions to professional journals and trade magazines related to your work. Aarp tax aide locations Travel, transportation, entertainment, and gifts related to your work. Aarp tax aide locations (See chapter 26. Aarp tax aide locations ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Aarp tax aide locations Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. Aarp tax aide locations Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. Aarp tax aide locations For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Aarp tax aide locations Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. Aarp tax aide locations Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Aarp tax aide locations Lobbying and political activities. Aarp tax aide locations   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Aarp tax aide locations See Dues used for lobbying under Nondeductible Expenses, later. Aarp tax aide locations Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. Aarp tax aide locations If you file Form 1040A, you can deduct these expenses on line 16. Aarp tax aide locations If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Aarp tax aide locations However, neither spouse can deduct more than $250 of his or her qualified expenses. Aarp tax aide locations Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. Aarp tax aide locations You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. Aarp tax aide locations The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Aarp tax aide locations See Publication 587 for more detailed information and a worksheet. Aarp tax aide locations Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. Aarp tax aide locations You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. Aarp tax aide locations Employment and outplacement agency fees. Aarp tax aide locations   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Aarp tax aide locations Employer pays you back. Aarp tax aide locations   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. Aarp tax aide locations (See Recoveries in chapter 12. Aarp tax aide locations ) Employer pays the employment agency. Aarp tax aide locations   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. Aarp tax aide locations Résumé. Aarp tax aide locations   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. Aarp tax aide locations Travel and transportation expenses. Aarp tax aide locations   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. Aarp tax aide locations You can deduct the travel expenses if the trip is primarily to look for a new job. Aarp tax aide locations The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. Aarp tax aide locations   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. Aarp tax aide locations   You can choose to use the standard mileage rate to figure your car expenses. Aarp tax aide locations The 2013 rate for business use of a vehicle is 56½ cents per mile. Aarp tax aide locations See chapter 26 for more information. Aarp tax aide locations Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. Aarp tax aide locations Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. Aarp tax aide locations If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. Aarp tax aide locations Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. Aarp tax aide locations If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. Aarp tax aide locations Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Aarp tax aide locations You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. Aarp tax aide locations However, you cannot deduct the cost of travel as a form of education. Aarp tax aide locations Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. Aarp tax aide locations You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Aarp tax aide locations For more information about depreciation, see Publication 946. Aarp tax aide locations Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Aarp tax aide locations You can also deduct assessments for benefit payments to unemployed union members. Aarp tax aide locations However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Aarp tax aide locations Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Aarp tax aide locations You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Aarp tax aide locations See Lobbying Expenses under Nondeductible Expenses, later. Aarp tax aide locations Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Aarp tax aide locations You must wear them as a condition of your employment. Aarp tax aide locations The clothes are not suitable for everyday wear. Aarp tax aide locations It is not enough that you wear distinctive clothing. Aarp tax aide locations The clothing must be specifically required by your employer. Aarp tax aide locations Nor is it enough that you do not, in fact, wear your work clothes away from work. Aarp tax aide locations The clothing must not be suitable for taking the place of your regular clothing. Aarp tax aide locations Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. Aarp tax aide locations ). Aarp tax aide locations Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Aarp tax aide locations However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. Aarp tax aide locations Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Aarp tax aide locations Protective clothing. Aarp tax aide locations   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. Aarp tax aide locations   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. Aarp tax aide locations Military uniforms. Aarp tax aide locations   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Aarp tax aide locations However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. Aarp tax aide locations In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Aarp tax aide locations   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. Aarp tax aide locations   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Aarp tax aide locations Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Aarp tax aide locations Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Aarp tax aide locations These fees include the cost of tax preparation software programs and tax publications. Aarp tax aide locations They also include any fee you paid for electronic filing of your return. Aarp tax aide locations Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Aarp tax aide locations On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Aarp tax aide locations You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. Aarp tax aide locations Some of these other expenses are explained in the following discussions. Aarp tax aide locations If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Aarp tax aide locations Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Aarp tax aide locations Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. Aarp tax aide locations First report the loss in Section B of Form 4684, Casualties and Thefts. Aarp tax aide locations You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Aarp tax aide locations To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. Aarp tax aide locations For other casualty and theft losses, see chapter 25. Aarp tax aide locations Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. Aarp tax aide locations Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. Aarp tax aide locations The fees are deductible in the year paid. Aarp tax aide locations Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). Aarp tax aide locations You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Aarp tax aide locations But if you work as an employee and also use the computer in that work, see Publication 946. Aarp tax aide locations Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. Aarp tax aide locations Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Aarp tax aide locations The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. Aarp tax aide locations For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Aarp tax aide locations Fees to Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. Aarp tax aide locations But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Aarp tax aide locations You must add the fee to the cost of the property. Aarp tax aide locations You cannot deduct the fee you pay to a broker to sell securities. Aarp tax aide locations You can use the fee only to figure gain or loss from the sale. Aarp tax aide locations See the Instructions for Form 8949 for information on how to report the fee. Aarp tax aide locations Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Aarp tax aide locations A hobby is not a business because it is not carried on to make a profit. Aarp tax aide locations See Activity not for profit in chapter 12 under Other Income. Aarp tax aide locations Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Aarp tax aide locations Deductions of pass-through entities are passed through to the partners or shareholders. Aarp tax aide locations The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Aarp tax aide locations Example. Aarp tax aide locations You are a member of an investment club that is formed solely to invest in securities. Aarp tax aide locations The club is treated as a partnership. Aarp tax aide locations The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Aarp tax aide locations In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Aarp tax aide locations However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. Aarp tax aide locations Publicly offered mutual funds. Aarp tax aide locations   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Aarp tax aide locations A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. Aarp tax aide locations   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). Aarp tax aide locations This net figure is the amount you report on your return as income. Aarp tax aide locations You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Aarp tax aide locations Information returns. Aarp tax aide locations   You should receive information returns from pass-through entities. Aarp tax aide locations Partnerships and S corporations. Aarp tax aide locations   These entities issue Schedule K-1, which lists the items and amounts you must report and identifies the tax return schedules and lines to use. Aarp tax aide locations Nonpublicly offered mutual funds. Aarp tax aide locations   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. Aarp tax aide locations You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Aarp tax aide locations Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. Aarp tax aide locations Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. Aarp tax aide locations You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce, if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. Aarp tax aide locations You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F), on the appropriate schedule. Aarp tax aide locations You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Aarp tax aide locations See Tax Preparation Fees , earlier. Aarp tax aide locations Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. Aarp tax aide locations Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. Aarp tax aide locations If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Aarp tax aide locations If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Aarp tax aide locations Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. Aarp tax aide locations Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. Aarp tax aide locations You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Aarp tax aide locations Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Aarp tax aide locations These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. Aarp tax aide locations Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Aarp tax aide locations For more information about IRAs, see chapter 17. Aarp tax aide locations Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Aarp tax aide locations They are not subject to the 2% limit. Aarp tax aide locations Report these items on Schedule A (Form 1040), line 28. Aarp tax aide locations List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Aarp tax aide locations Amortizable premium on taxable bonds. Aarp tax aide locations Casualty and theft losses from income- producing property. Aarp tax aide locations Federal estate tax on income in respect of a decedent. Aarp tax aide locations Gambling losses up to the amount of gambling winnings. Aarp tax aide locations Impairment-related work expenses of persons with disabilities. Aarp tax aide locations Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Aarp tax aide locations Losses from Ponzi-type investment schemes. Aarp tax aide locations See Losses from Ponzi-type investment schemes under Theft in chapter 25. Aarp tax aide locations Repayments of more than $3,000 under a claim of right. Aarp tax aide locations Unrecovered investment in an annuity. Aarp tax aide locations Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. Aarp tax aide locations You can elect to amortize the premium on taxable bonds. Aarp tax aide locations The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Aarp tax aide locations Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Aarp tax aide locations For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. Aarp tax aide locations Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). Aarp tax aide locations First, report the loss in Form 4684, Section B. Aarp tax aide locations You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Aarp tax aide locations To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. Aarp tax aide locations For more information on casualty and theft losses, see chapter 25. Aarp tax aide locations Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. Aarp tax aide locations Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. Aarp tax aide locations See Publication 559 for more information. Aarp tax aide locations Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. Aarp tax aide locations You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Aarp tax aide locations You cannot deduct gambling losses that are more than your winnings. Aarp tax aide locations You cannot reduce your gambling winnings by your gambling losses and report the difference. Aarp tax aide locations You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Aarp tax aide locations Therefore, your records should show your winnings separately from your losses. Aarp tax aide locations Diary of winnings and losses. Aarp tax aide locations You must keep an accurate diary or similar record of your losses and winnings. Aarp tax aide locations Your diary should contain at least the following information. Aarp tax aide locations The date and type of your specific wager or wagering activity. Aarp tax aide locations The name and address or location of the gambling establishment. Aarp tax aide locations The names of other persons present with you at the gambling establishment. Aarp tax aide locations The amount(s) you won or lost. Aarp tax aide locations See Publication 529 for more information. Aarp tax aide locations Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. Aarp tax aide locations Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. Aarp tax aide locations Self-employed. Aarp tax aide locations   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. Aarp tax aide locations Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28. Aarp tax aide locations It is not subject to the passive activity limitations. Aarp tax aide locations Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. Aarp tax aide locations See Repayments in chapter 12 for more information. Aarp tax aide locations Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. Aarp tax aide locations If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. Aarp tax aide locations See chapter 10 for more information about the tax treatment of pensions and annuities. Aarp tax aide locations Nondeductible Expenses Examples of nondeductible expenses are listed next. Aarp tax aide locations The list is followed by discussions of additional nondeductible expenses. Aarp tax aide locations List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Aarp tax aide locations Burial or funeral expenses, including the cost of a cemetery lot. Aarp tax aide locations Capital expenses. Aarp tax aide locations Fees and licenses, such as car licenses, marriage licenses, and dog tags. Aarp tax aide locations Hobby losses, but see Hobby Expenses , earlier. Aarp tax aide locations Home repairs, insurance, and rent. Aarp tax aide locations Illegal bribes and kickbacks. Aarp tax aide locations See Bribes and kickbacks in chapter 11 of Publication 535. Aarp tax aide locations Losses from the sale of your home, furniture, personal car, etc. Aarp tax aide locations Personal disability insurance premiums. Aarp tax aide locations Personal, living, or family expenses. Aarp tax aide locations The value of wages never received or lost vacation time. Aarp tax aide locations Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Aarp tax aide locations See chapter 37. Aarp tax aide locations Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Aarp tax aide locations These include qualification and registration fees for primary elections. Aarp tax aide locations Legal fees. Aarp tax aide locations   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Aarp tax aide locations Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. Aarp tax aide locations Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Aarp tax aide locations This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Aarp tax aide locations You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. Aarp tax aide locations Dues paid to airline, hotel, and luncheon clubs are not deductible. Aarp tax aide locations Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Aarp tax aide locations If you haul tools, instruments, or other items, in your car to and from work, you can deduct only the additional cost of hauling the items such as the rent on a trailer to carry the items. Aarp tax aide locations Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Aarp tax aide locations This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Aarp tax aide locations Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Aarp tax aide locations Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. Aarp tax aide locations Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Aarp tax aide locations However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Aarp tax aide locations See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Aarp tax aide locations Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Aarp tax aide locations Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Aarp tax aide locations You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Aarp tax aide locations See chapter 18 for information on alimony. Aarp tax aide locations Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Aarp tax aide locations These include expenses to: Influence legislation, Participate or intervene in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. Aarp tax aide locations Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Aarp tax aide locations Dues used for lobbying. Aarp tax aide locations   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. Aarp tax aide locations See Lobbying Expenses in Publication 529 for information on exceptions. Aarp tax aide locations Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Aarp tax aide locations However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Aarp tax aide locations See chapter 25. Aarp tax aide locations Example. Aarp tax aide locations A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Aarp tax aide locations The diamond falls from the ring and is never found. Aarp tax aide locations The loss of the diamond is a casualty. Aarp tax aide locations Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Aarp tax aide locations See chapter 26 for information on deductible expenses while traveling away from home. Aarp tax aide locations Meals While Working Late You cannot deduct the cost of meals while working late. Aarp tax aide locations However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. Aarp tax aide locations See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Aarp tax aide locations Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Aarp tax aide locations Custody of children. Aarp tax aide locations Breach of promise to marry suit. Aarp tax aide locations Civil or criminal charges resulting from a personal relationship. Aarp tax aide locations Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Aarp tax aide locations Preparation of a title (or defense or perfection of a title). Aarp tax aide locations Preparation of a will. Aarp tax aide locations Property claims or property settlement in a divorce. Aarp tax aide locations You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Aarp tax aide locations Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Aarp tax aide locations Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Aarp tax aide locations Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Aarp tax aide locations Accounting certificate fees paid for the initial right to practice accounting. Aarp tax aide locations Bar exam fees and incidental expenses in securing initial admission to the bar. Aarp tax aide locations Medical and dental license fees paid to get initial licensing. Aarp tax aide locations Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Aarp tax aide locations Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. Aarp tax aide locations Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. Aarp tax aide locations Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. Aarp tax aide locations You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Aarp tax aide locations Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Aarp tax aide locations You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Aarp tax aide locations If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. Aarp tax aide locations Example. Aarp tax aide locations During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Aarp tax aide locations In earning this income, you had total expenses of $500 during the year. Aarp tax aide locations You cannot identify the amount of each expense item that is for each income item. Aarp tax aide locations Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. Aarp tax aide locations You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Aarp tax aide locations Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. Aarp tax aide locations See chapter 26 for more information on deductible travel expenses. Aarp tax aide locations Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Aarp tax aide locations However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. Aarp tax aide locations Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. Aarp tax aide locations Prev  Up  Next   Home   More Online Publications