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Free electronic tax filing Publication 534 - Introductory Material Table of Contents Important Change for 1995 Introduction How To Use This Publication Important Change for 1995 Major changes to Publications 534 and 946. Free electronic tax filing  This publication, as well as Publication 946,How To Depreciate Property, has been changed. Free electronic tax filing Publication 534 has been shortened. Free electronic tax filing It no longer contains general information on MACRS and the section 179 deduction. Free electronic tax filing It contains a discussion of the accelerated cost recovery system (ACRS), the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property. Free electronic tax filing We expanded Publication 946 by adding material taken from Publication 534. Free electronic tax filing We added more detail to the discussions of the section 179 deduction, the modified accelerated cost recovery system (MACRS), and listed property. Free electronic tax filing We replaced the partialMACRS Percentage Tables with the complete ones from Publication 534. Free electronic tax filing We also added the Table of Class Lives and Recovery Periods from Publication 534. Free electronic tax filing We made these changes to eliminate most of the duplication that existed in the two publications. Free electronic tax filing This will save money and make it easier for you to decide which publication you need. Free electronic tax filing Use this publication to figure depreciation on property you placed in service before 1987; use Publication 946 to figure depreciation on property you placed in service after 1986. Free electronic tax filing Introduction The law allows you to recover your cost in business or income-producing property through yearly tax deductions. Free electronic tax filing You do this by depreciating your property, that is, by deducting some of your cost on your tax return each year. Free electronic tax filing You can depreciate both tangible property, such as a car, building, or machinery, and certain intangible property, such as a copyright or a patent. Free electronic tax filing The amount you can deduct depends on: How much the property cost, When you began using it, How long it will take to recover your cost, and Which of several depreciation methods you use. Free electronic tax filing Depreciation defined. Free electronic tax filing   Depreciation is a loss in the value of property over the time the property is being used. Free electronic tax filing Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. Free electronic tax filing You can get back your cost of certain property, such as equipment you use in your business or property used for the production of income by taking deductions for depreciation. Free electronic tax filing Black's Law Dictionary Amortization. Free electronic tax filing   Amortization is similar to depreciation. Free electronic tax filing Using amortization, you can recover your cost or basis in certain property proportionately over a specific number of years or months. Free electronic tax filing Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution control facilities. Free electronic tax filing You can find information on amortization inchapter 12 of Publication 535, Business Expenses. Free electronic tax filing Alternative minimum tax. Free electronic tax filing   If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable for the alternative minimum tax. Free electronic tax filing Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight line method. Free electronic tax filing For more information, you may wish to see the following: Form 6251, Alternative Minimum Tax-Individuals, and Publication 542, Tax Information on Corporations. Free electronic tax filing Ordering publications and forms. Free electronic tax filing   To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). Free electronic tax filing You can also write to the IRS Forms Distribution Center nearest you. Free electronic tax filing Check your income tax package for the address. Free electronic tax filing   If you have access to a personal computer and a modem, you can also get many forms and publications electronically. Free electronic tax filing See How To Get Forms and Publications in your income tax package for details. Free electronic tax filing Telephone help. Free electronic tax filing   You can call the IRS with your tax question Monday through Friday during regular business hours. Free electronic tax filing Check your telephone book for the local number or you can call1-800-829-1040. Free electronic tax filing Telephone help for hearing-impaired persons. Free electronic tax filing   If you have access to TDD equipment, you can call 1-800-829-4059 with your tax question or to order forms and publications. Free electronic tax filing See your tax package for the hours of operation. Free electronic tax filing How To Use This Publication This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property placed in service before 1987. Free electronic tax filing It is divided into three chapters and contains an appendix. Free electronic tax filing Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS). Free electronic tax filing Chapter 2 explains the rules for depreciating property first used before 1981. Free electronic tax filing Chapter 3 explains the rules for listed property. Free electronic tax filing Also this chapter defines listed property. Free electronic tax filing The appendix contains the ACRS Percentage Tables. Free electronic tax filing Prev  Up  Next   Home   More Online Publications
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Free electronic tax filing Publication 529 - Main Content Table of Contents Deductions Subject to the 2% LimitUnreimbursed Employee Expenses Tax Preparation Fees Other Expenses Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses How To ReportWho can use Form 2106-EZ. Free electronic tax filing Computer used in a home office. Free electronic tax filing Example How To Get Tax HelpLow Income Taxpayer Clinics Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). Free electronic tax filing You can claim the amount of expenses that is more than 2% of your adjusted gross income. Free electronic tax filing You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Free electronic tax filing Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. Free electronic tax filing Generally, you apply the 2% limit after you apply any other deduction limit. Free electronic tax filing For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging ) before you apply the 2% limit. Free electronic tax filing Deductions subject to the 2% limit are discussed in the following three categories. Free electronic tax filing Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). Free electronic tax filing Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). Free electronic tax filing Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). Free electronic tax filing Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Free electronic tax filing You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Free electronic tax filing An expense is ordinary if it is common and accepted in your trade, business, or profession. Free electronic tax filing An expense is necessary if it is appropriate and helpful to your business. Free electronic tax filing An expense does not have to be required to be considered necessary. Free electronic tax filing You may be able to deduct the following items as unreimbursed employee expenses. Free electronic tax filing Business bad debt of an employee. Free electronic tax filing Business liability insurance premiums. Free electronic tax filing Damages paid to a former employer for breach of an employment contract. Free electronic tax filing Depreciation on a computer your employer requires you to use in your work. Free electronic tax filing Dues to a chamber of commerce if membership helps you do your job. Free electronic tax filing Dues to professional societies. Free electronic tax filing Educator expenses. Free electronic tax filing Home office or part of your home used regularly and exclusively in your work. Free electronic tax filing Job search expenses in your present occupation. Free electronic tax filing Laboratory breakage fees. Free electronic tax filing Legal fees related to your job. Free electronic tax filing Licenses and regulatory fees. Free electronic tax filing Malpractice insurance premiums. Free electronic tax filing Medical examinations required by an employer. Free electronic tax filing Occupational taxes. Free electronic tax filing Passport for a business trip. Free electronic tax filing Repayment of an income aid payment received under an employer's plan. Free electronic tax filing Research expenses of a college professor. Free electronic tax filing Rural mail carriers' vehicle expenses. Free electronic tax filing Subscriptions to professional journals and trade magazines related to your work. Free electronic tax filing Tools and supplies used in your work. Free electronic tax filing Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. Free electronic tax filing Union dues and expenses. Free electronic tax filing Work clothes and uniforms if required and not suitable for everyday use. Free electronic tax filing Work-related education. Free electronic tax filing Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. Free electronic tax filing Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. Free electronic tax filing A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. Free electronic tax filing Example. Free electronic tax filing You make a bona fide loan to the corporation you work for. Free electronic tax filing It fails to pay you back. Free electronic tax filing You had to make the loan in order to keep your job. Free electronic tax filing You have a business bad debt as an employee. Free electronic tax filing More information. Free electronic tax filing   For more information on business bad debts, see chapter 10 in Publication 535. Free electronic tax filing For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. Free electronic tax filing Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Free electronic tax filing Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. Free electronic tax filing 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. Free electronic tax filing For the convenience of your employer. Free electronic tax filing   This means that your use of the computer is for a substantial business reason of your employer. Free electronic tax filing You must consider all facts in making this determination. Free electronic tax filing Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. Free electronic tax filing Required as a condition of your employment. Free electronic tax filing   This means that you cannot properly perform your duties without the computer. Free electronic tax filing Whether you can properly perform your duties without it depends on all the facts and circumstances. Free electronic tax filing It is not necessary that your employer explicitly requires you to use your computer. Free electronic tax filing But neither is it enough that your employer merely states that your use of the item is a condition of your employment. Free electronic tax filing Example. Free electronic tax filing You are an engineer with an engineering firm. Free electronic tax filing You occasionally take work home at night rather than work late at the office. Free electronic tax filing You own and use a computer that is similar to the one you use at the office to complete your work at home. Free electronic tax filing Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. Free electronic tax filing Which depreciation method to use. Free electronic tax filing   The depreciation method you use depends on whether you meet the more-than-50%-use test. Free electronic tax filing More-than-50%-use test met. Free electronic tax filing   You meet this test if you use the computer more than 50% in your work. Free electronic tax filing If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). Free electronic tax filing In addition, you may be able to take the section 179 deduction for the year you place the item in service. Free electronic tax filing More-than-50%-use test not met. Free electronic tax filing   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). Free electronic tax filing You also cannot claim the section 179 deduction. Free electronic tax filing (But if you use your computer in a home office, see the exception below. Free electronic tax filing ) Investment use. Free electronic tax filing   Your use of a computer in connection with investments (described later under Other Expenses ) does not count as use in your work. Free electronic tax filing However, you can combine your investment use with your work use in figuring your depreciation deduction. Free electronic tax filing Exception for computer used in a home office. Free electronic tax filing   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office . Free electronic tax filing You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. Free electronic tax filing You also may be able to take a section 179 deduction for the year you place the computer in service. Free electronic tax filing See Computer used in a home office under How To Report, later. Free electronic tax filing More information. Free electronic tax filing   For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. Free electronic tax filing Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. Free electronic tax filing Reporting your depreciation deduction. Free electronic tax filing    See How To Report, later, for information about reporting a deduction for depreciation. Free electronic tax filing You must keep records to prove your percentage of business and investment use. Free electronic tax filing 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. Free electronic tax filing Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Free electronic tax filing Lobbying and political activities. Free electronic tax filing    You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Free electronic tax filing See Lobbying Expenses under Nondeductible Expenses, later. Free electronic tax filing 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. Free electronic tax filing If you file Form 1040A, you can deduct these expenses on line 16. Free electronic tax filing If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Free electronic tax filing However, neither spouse can deduct more than $250 of his or her qualified expenses. Free electronic tax filing Eligible educator. Free electronic tax filing   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. Free electronic tax filing Qualified expenses. Free electronic tax filing   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Free electronic tax filing An ordinary expense is one that is common and accepted in your educational field. Free electronic tax filing A necessary expense is one that is helpful and appropriate for your profession as an educator. Free electronic tax filing An expense does not have to be required to be considered necessary. Free electronic tax filing   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Free electronic tax filing You must reduce your qualified expenses by the following amounts. Free electronic tax filing Excludable U. Free electronic tax filing S. Free electronic tax filing series EE and I savings bond interest from Form 8815. Free electronic tax filing Nontaxable qualified state tuition program earnings. Free electronic tax filing Nontaxable earnings from Coverdell education savings accounts. Free electronic tax filing Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. Free electronic tax filing Educator expenses over limit. Free electronic tax filing   If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Free electronic tax filing Principal place of business. Free electronic tax filing   If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Free electronic tax filing   Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. Free electronic tax filing You should keep records that will give the information needed to figure the deduction according to these rules. Free electronic tax filing Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. Free electronic tax filing More information. Free electronic tax filing   See Publication 587 for more detailed information and a worksheet for figuring the deduction. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing Employment and outplacement agency fees. Free electronic tax filing    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Free electronic tax filing Employer pays you back. Free electronic tax filing   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. Free electronic tax filing See Recoveries in Publication 525. Free electronic tax filing Employer pays the employment agency. Free electronic tax filing   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. Free electronic tax filing Résumé. Free electronic tax filing   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. Free electronic tax filing Travel and transportation expenses. Free electronic tax filing   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. Free electronic tax filing You can deduct the travel expenses if the trip is primarily to look for a new job. Free electronic tax filing 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. Free electronic tax filing   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. Free electronic tax filing    You can choose to use the standard mileage rate to figure your car expenses. Free electronic tax filing The 2013 rate for business use of a vehicle is 56½ cents per mile. Free electronic tax filing See Publication 463 for more information on travel and car expenses. Free electronic tax filing Legal Fees You can deduct legal fees related to doing or keeping your job. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Free electronic tax filing 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. Free electronic tax filing However, you cannot deduct the cost of travel as a form of education. Free electronic tax filing Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. Free electronic tax filing See chapter 4 of Publication 463 for more information. Free electronic tax filing 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. Free electronic tax filing You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Free electronic tax filing For more information about depreciation, see Publication 946. Free electronic tax filing Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. Free electronic tax filing Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. Free electronic tax filing Travel expenses. Free electronic tax filing   Travel expenses are those incurred while traveling away from home for your employer. Free electronic tax filing You can deduct travel expenses paid or incurred in connection with a temporary work assignment. Free electronic tax filing Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. Free electronic tax filing   Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc. Free electronic tax filing ), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. Free electronic tax filing   Travel expenses are discussed more fully in chapter 1 of Publication 463. Free electronic tax filing Temporary work assignment. Free electronic tax filing    If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. Free electronic tax filing Indefinite work assignment. Free electronic tax filing   If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. Free electronic tax filing If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. Free electronic tax filing Federal crime investigation and prosecution. Free electronic tax filing   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. Free electronic tax filing This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. Free electronic tax filing   To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. Free electronic tax filing Armed Forces reservists traveling more than 100 miles from home. Free electronic tax filing   If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Free electronic tax filing The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Free electronic tax filing The balance, if any, is reported on Schedule A. Free electronic tax filing   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. Free electronic tax filing   For more information on travel expenses, see Publication 463. Free electronic tax filing Local transportation expenses. Free electronic tax filing   Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. Free electronic tax filing They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. Free electronic tax filing   You can choose to use the standard mileage rate to figure your car expenses. Free electronic tax filing The 2013 rate for business use of a vehicle is 56½ cents per mile. Free electronic tax filing    In general, the costs of commuting between your residence and your place of business are nondeductible. Free electronic tax filing Work at two places in a day. Free electronic tax filing   If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. Free electronic tax filing Temporary work location. Free electronic tax filing   You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. Free electronic tax filing The work location is outside the metropolitan area where you live and normally work. Free electronic tax filing You have at least one regular work location (other than your home) for the same trade or business. Free electronic tax filing (If this applies, the distance between your home and the temporary work location does not matter. Free electronic tax filing )   For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. Free electronic tax filing It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. Free electronic tax filing If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. Free electronic tax filing For more information, see chapter 1 of Publication 463. Free electronic tax filing Home office. Free electronic tax filing   You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. Free electronic tax filing (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter. Free electronic tax filing ) See Home Office , earlier, for a discussion on the use of your home as your principal place of business. Free electronic tax filing Meals and entertainment. Free electronic tax filing   Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. Free electronic tax filing However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. Free electronic tax filing   You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. Free electronic tax filing You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. Free electronic tax filing Meals when subject to “hours of service” limits. Free electronic tax filing   You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. Free electronic tax filing You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. Free electronic tax filing Gift expenses. Free electronic tax filing   You can generally deduct up to $25 of business gifts you give to any one individual during the year. Free electronic tax filing The following items do not count toward the $25 limit. Free electronic tax filing Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. Free electronic tax filing Signs, racks, and promotional materials to be displayed on the business premises of the recipient. Free electronic tax filing Local lodging. Free electronic tax filing   If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. Free electronic tax filing   If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. Free electronic tax filing Additional information. Free electronic tax filing    See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. Free electronic tax filing Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Free electronic tax filing You can also deduct assessments for benefit payments to unemployed union members. Free electronic tax filing However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Free electronic tax filing Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. Free electronic tax filing You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Free electronic tax filing See Lobbying Expenses under Nondeductible Expenses, later. Free electronic tax filing Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Free electronic tax filing You must wear them as a condition of your employment. Free electronic tax filing The clothes are not suitable for everyday wear. Free electronic tax filing It is not enough that you wear distinctive clothing. Free electronic tax filing The clothing must be specifically required by your employer. Free electronic tax filing Nor is it enough that you do not, in fact, wear your work clothes away from work. Free electronic tax filing The clothing must not be suitable for taking the place of your regular clothing. Free electronic tax filing 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. Free electronic tax filing ). Free electronic tax filing Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Free electronic tax filing 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. Free electronic tax filing Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Free electronic tax filing Protective clothing. Free electronic tax filing   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. Free electronic tax filing   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. Free electronic tax filing Military uniforms. Free electronic tax filing   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Free electronic tax filing 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. Free electronic tax filing In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Free electronic tax filing   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. Free electronic tax filing   If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. Free electronic tax filing However, you can deduct the cost of insignia, shoulder boards, and related items. Free electronic tax filing    You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Free electronic tax filing Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. Free electronic tax filing It maintains or improves skills required in your present work. Free electronic tax filing It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. Free electronic tax filing You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. Free electronic tax filing If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. Free electronic tax filing If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. Free electronic tax filing Travel as education. Free electronic tax filing   You cannot deduct the cost of travel that in itself constitutes a form of education. Free electronic tax filing For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. Free electronic tax filing More information. Free electronic tax filing    See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. Free electronic tax filing Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Free electronic tax filing Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Free electronic tax filing Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. Free electronic tax filing Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Free electronic tax filing These fees include the cost of tax preparation software programs and tax publications. Free electronic tax filing They also include any fee you paid for electronic filing of your return. Free electronic tax filing See Tax preparation fees under How To Report, later. Free electronic tax filing Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. Free electronic tax filing On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Free electronic tax filing You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. Free electronic tax filing These other expenses include the following items. Free electronic tax filing Appraisal fees for a casualty loss or charitable contribution. Free electronic tax filing Casualty and theft losses from property used in performing services as an employee. Free electronic tax filing Clerical help and office rent in caring for investments. Free electronic tax filing Depreciation on home computers used for investments. Free electronic tax filing Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. Free electronic tax filing Fees to collect interest and dividends. Free electronic tax filing Hobby expenses, but generally not more than hobby income. Free electronic tax filing Indirect miscellaneous deductions from pass-through entities. Free electronic tax filing Investment fees and expenses. Free electronic tax filing Legal fees related to producing or collecting taxable income or getting tax advice. Free electronic tax filing Loss on deposits in an insolvent or bankrupt financial institution. Free electronic tax filing Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. Free electronic tax filing Repayments of income. Free electronic tax filing Repayments of social security benefits. Free electronic tax filing Safe deposit box rental, except for storing jewelry and other personal effects. Free electronic tax filing Service charges on dividend reinvestment plans. Free electronic tax filing Tax advice fees. Free electronic tax filing Trustee's fees for your IRA, if separately billed and paid. Free electronic tax filing If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses. Free electronic tax filing Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Free electronic tax filing 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. Free electronic tax filing First report the loss in Section B of Form 4684, Casualties and Thefts. Free electronic tax filing You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Free electronic tax filing 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. Free electronic tax filing For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing The fees are deductible on the return for the year in which you paid them. Free electronic tax filing For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. Free electronic tax filing 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). Free electronic tax filing You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Free electronic tax filing But if you work as an employee and also use the computer in that work, see Depreciation on Computers under Unreimbursed Employee Expenses, earlier. Free electronic tax filing For more information on depreciation, see Publication 946. Free electronic tax filing 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. Free electronic tax filing Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Free electronic tax filing 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. Free electronic tax filing For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Free electronic tax filing 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. Free electronic tax filing But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Free electronic tax filing You must add the fee to the cost of the property. Free electronic tax filing You cannot deduct the fee you pay to a broker to sell securities. Free electronic tax filing You can use the fee only to figure gain or loss from the sale. Free electronic tax filing See the instructions for Schedule D (Form 1040) for information on how to report the fee. Free electronic tax filing Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Free electronic tax filing A hobby is not a business because it is not carried on to make a profit. Free electronic tax filing See Not-for-Profit Activities in chapter 1 of Publication 535. Free electronic tax filing Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Free electronic tax filing Deductions of pass-through entities are passed through to the partners or shareholders. Free electronic tax filing The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Free electronic tax filing Example. Free electronic tax filing You are a member of an investment club that is formed solely to invest in securities. Free electronic tax filing The club is treated as a partnership. Free electronic tax filing The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Free electronic tax filing In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Free electronic tax filing 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. Free electronic tax filing Publicly offered mutual funds. Free electronic tax filing   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Free electronic tax filing 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. Free electronic tax filing   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). Free electronic tax filing This net figure is the amount you report on your return as income. Free electronic tax filing You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Free electronic tax filing Information returns. Free electronic tax filing   You should receive information returns from pass-through entities. Free electronic tax filing Partnerships and S corporations. Free electronic tax filing   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. Free electronic tax filing Nonpublicly offered mutual funds. Free electronic tax filing   These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. Free electronic tax filing You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). Free electronic tax filing See Tax Preparation Fees, earlier. Free electronic tax filing Unlawful discrimination claims. Free electronic tax filing   You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U. Free electronic tax filing S. Free electronic tax filing Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. Free electronic tax filing However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. Free electronic tax filing See Publication 525 for more information. Free electronic tax filing Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Free electronic tax filing If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. Free electronic tax filing If elected, the casualty loss is subject to certain deduction limitations. Free electronic tax filing The election is made on Form 4684. Free electronic tax filing Once you make this choice, you cannot change it without IRS approval. Free electronic tax filing If none of the deposit is federally insured, you can deduct the loss in either of the following ways. Free electronic tax filing As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). Free electronic tax filing Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. Free electronic tax filing This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. Free electronic tax filing As a casualty loss. Free electronic tax filing Report it on Form 4684 first and then on Schedule A (Form 1040). Free electronic tax filing See Publication 547 for details. Free electronic tax filing As a nonbusiness bad debt. Free electronic tax filing Report it on Schedule D (Form 1040). Free electronic tax filing If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. Free electronic tax filing Exception. Free electronic tax filing   You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. Free electronic tax filing For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. Free electronic tax filing Actual loss different from estimated loss. Free electronic tax filing   If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. Free electronic tax filing See Recoveries in Publication 525. Free electronic tax filing If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. Free electronic tax filing Choice not made. Free electronic tax filing   If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. Free electronic tax filing See Nonbusiness Bad Debts in chapter 4 of Publication 550. Free electronic tax filing Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. Free electronic tax filing For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Free electronic tax filing 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. Free electronic tax filing If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Free electronic tax filing If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Free electronic tax filing Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. Free electronic tax filing The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. Free electronic tax filing The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. Free electronic tax filing It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). Free electronic tax filing If the deduction is more than $3,000, you will have to use a special computation to figure your tax. Free electronic tax filing See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional information. Free electronic tax filing 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. Free electronic tax filing You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Free electronic tax filing Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Free electronic tax filing 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. Free electronic tax filing Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Free electronic tax filing Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Free electronic tax filing They are not subject to the 2% limit. Free electronic tax filing Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Free electronic tax filing List of Deductions Amortizable premium on taxable bonds. Free electronic tax filing Casualty and theft losses from income-producing property. Free electronic tax filing Federal estate tax on income in respect of a decedent. Free electronic tax filing Gambling losses up to the amount of gambling winnings. Free electronic tax filing Impairment-related work expenses of persons with disabilities. Free electronic tax filing Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Free electronic tax filing Losses from Ponzi-type investment schemes. Free electronic tax filing Repayments of more than $3,000 under a claim of right. Free electronic tax filing Unrecovered investment in an annuity. Free electronic tax filing 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. Free electronic tax filing You can elect to amortize the premium on taxable bonds. Free electronic tax filing The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Free electronic tax filing Pre-1998 election to amortize bond premium. Free electronic tax filing   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Free electronic tax filing Bonds acquired after October 22, 1986, and before 1988. Free electronic tax filing   The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. Free electronic tax filing Bonds acquired before October 23, 1986. Free electronic tax filing   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. Free electronic tax filing Deduction for excess premium. Free electronic tax filing   On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. Free electronic tax filing If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. Free electronic tax filing However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. Free electronic tax filing If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. Free electronic tax filing    Pre-1998 choice to amortize bond premium. Free electronic tax filing If you made the choice to amortize the premium on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your interest income only for bonds acquired during 1998 and later years. Free electronic tax filing More information. Free electronic tax filing    For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. Free electronic tax filing 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). Free electronic tax filing First report the loss in Section B of Form 4684. Free electronic tax filing You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Free electronic tax filing 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. Free electronic tax filing For more information on casualty and theft losses, see Publication 547. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing See Publication 559 for information about figuring the amount of this deduction. Free electronic tax filing 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. Free electronic tax filing You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Free electronic tax filing You cannot deduct gambling losses that are more than your winnings. Free electronic tax filing Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). Free electronic tax filing You cannot reduce your gambling winnings by your gambling losses and report the difference. Free electronic tax filing 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. Free electronic tax filing Therefore, your records should show your winnings separately from your losses. Free electronic tax filing Diary of winnings and losses. Free electronic tax filing You must keep an accurate diary or similar record of your losses and winnings. Free electronic tax filing Your diary should contain at least the following information. Free electronic tax filing The date and type of your specific wager or wagering activity. Free electronic tax filing The name and address or location of the gambling establishment. Free electronic tax filing The names of other persons present with you at the gambling establishment. Free electronic tax filing The amount(s) you won or lost. Free electronic tax filing Proof of winnings and losses. Free electronic tax filing   In addition to your diary, you should also have other documentation. Free electronic tax filing You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. Free electronic tax filing   For specific wagering transactions, you can use the following items to support your winnings and losses. Free electronic tax filing    These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. Free electronic tax filing They are not all-inclusive. Free electronic tax filing Your tax liability depends on your particular facts and circumstances. Free electronic tax filing Keno. Free electronic tax filing   Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. Free electronic tax filing Slot machines. Free electronic tax filing   A record of the machine number and all winnings by date and time the machine was played. Free electronic tax filing Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc. Free electronic tax filing ). Free electronic tax filing   The number of the table at which you were playing. Free electronic tax filing Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. Free electronic tax filing Bingo. Free electronic tax filing   A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Free electronic tax filing Supplemental records include any receipts from the casino, parlor, etc. Free electronic tax filing Racing (horse, harness, dog, etc. Free electronic tax filing ). Free electronic tax filing   A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Free electronic tax filing Supplemental records include unredeemed tickets and payment records from the racetrack. Free electronic tax filing Lotteries. Free electronic tax filing   A record of ticket purchases, dates, winnings, and losses. Free electronic tax filing Supplemental records include unredeemed tickets, payment slips, and winnings statements. Free electronic tax filing 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. Free electronic tax filing Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. Free electronic tax filing Example. Free electronic tax filing You are blind. Free electronic tax filing You must use a reader to do your work. Free electronic tax filing You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Free electronic tax filing The reader's services are only for your work. Free electronic tax filing You can deduct your expenses for the reader as impairment-related work expenses. Free electronic tax filing Self-employed. Free electronic tax filing   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. Free electronic tax filing See Impairment-related work expenses. Free electronic tax filing , later under How To Report. Free electronic tax filing Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U. Free electronic tax filing S. Free electronic tax filing trade or business). Free electronic tax filing It is not subject to the passive activity limitations. Free electronic tax filing Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. Free electronic tax filing See Publication 463 for more information. Free electronic tax filing Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. Free electronic tax filing If you are an employee, complete Form 2106 or Form 2106-EZ. Free electronic tax filing See Publication 463 for more information. Free electronic tax filing Losses From Ponzi-type Investment Schemes These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. Free electronic tax filing You figure the deductible loss in Section B of Form 4684. Free electronic tax filing However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. Free electronic tax filing Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Free electronic tax filing You do not need to complete Appendix A. Free electronic tax filing See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. Free electronic tax filing 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. Free electronic tax filing See Repayments in Publication 525 for more information. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. Free electronic tax filing Nondeductible Expenses You cannot deduct the following expenses. Free electronic tax filing List of Nondeductible Expenses Adoption expenses. Free electronic tax filing Broker's commissions. Free electronic tax filing Burial or funeral expenses, including the cost of a cemetery lot. Free electronic tax filing Campaign expenses. Free electronic tax filing Capital expenses. Free electronic tax filing Check-writing fees. Free electronic tax filing Club dues. Free electronic tax filing Commuting expenses. Free electronic tax filing Fees and licenses, such as car licenses, marriage licenses, and dog tags. Free electronic tax filing Fines and penalties, such as parking tickets. Free electronic tax filing Health spa expenses. Free electronic tax filing Hobby losses—but see Hobby Expenses, earlier. Free electronic tax filing Home repairs, insurance, and rent. Free electronic tax filing Home security system. Free electronic tax filing Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535. Free electronic tax filing Investment-related seminars. Free electronic tax filing Life insurance premiums paid by the insured. Free electronic tax filing Lobbying expenses. Free electronic tax filing Losses from the sale of your home, furniture, personal car, etc. Free electronic tax filing Lost or misplaced cash or property. Free electronic tax filing Lunches with co-workers. Free electronic tax filing Meals while working late. Free electronic tax filing Medical expenses as business expenses other than medical examinations required by your employer. Free electronic tax filing Personal disability insurance premiums. Free electronic tax filing Personal legal expenses. Free electronic tax filing Personal, living, or family expenses. Free electronic tax filing Political contributions. Free electronic tax filing Professional accreditation fees. Free electronic tax filing Professional reputation, expenses to improve. Free electronic tax filing Relief fund contributions. Free electronic tax filing Residential telephone line. Free electronic tax filing Stockholders' meeting, expenses of attending. Free electronic tax filing Tax-exempt income, expenses of earning or collecting. Free electronic tax filing The value of wages never received or lost vacation time. Free electronic tax filing Travel expenses for another individual. Free electronic tax filing Voluntary unemployment benefit fund contributions. Free electronic tax filing Wristwatches. Free electronic tax filing Adoption Expenses You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. Free electronic tax filing For details, see Form 8839, Qualified Adoption Expenses. Free electronic tax filing Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. Free electronic tax filing Instead, these fees must be added to the taxpayer's cost of the securities. Free electronic tax filing Commissions paid on the sale are deductible as business expenses only by dealers. Free electronic tax filing Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Free electronic tax filing These include qualification and registration fees for primary elections. Free electronic tax filing Legal fees. Free electronic tax filing   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Free electronic tax filing Capital Expenses You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. Free electronic tax filing If you use such property in your work, you may be able to take a depreciation deduction. Free electronic tax filing See Publication 946. Free electronic tax filing If the property is a car used in your work, also see Publication 463. Free electronic tax filing 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. Free electronic tax filing Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Free electronic tax filing This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Free electronic tax filing 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. Free electronic tax filing Dues paid to airline, hotel, and luncheon clubs are not deductible. Free electronic tax filing Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Free electronic tax filing 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. Free electronic tax filing Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Free electronic tax filing This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Free electronic tax filing Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Free electronic tax filing 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. Free electronic tax filing Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Free electronic tax filing However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Free electronic tax filing See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. Free electronic tax filing Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Free electronic tax filing Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Free electronic tax filing You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Free electronic tax filing See Publication 504, Divorced or Separated Individuals, for information on alimony. Free electronic tax filing Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Free electronic tax filing 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. Free electronic tax filing Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Free electronic tax filing Covered executive branch official. Free electronic tax filing   A covered executive branch official, for the purpose of (4) above, is any of the following officials. Free electronic tax filing The President. Free electronic tax filing The Vice President. Free electronic tax filing Any officer or employee of the White House Office of the Executive Office of the President, and the two most senior level officers of each of the other agencies in the Executive Office. Free electronic tax filing Any individual serving in a position in Level I of the Executive Schedule under section 5312 of Title 5, United States Code, any other individual designated by the President as having Cabinet-level status, and any immediate deputy of one of these individuals. Free electronic tax filing Dues used for lobbying. Free electronic tax filing   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. Free electronic tax filing Exceptions. Free electronic tax filing   You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business. Free electronic tax filing You can deduct expenses for attempting to influence the legislation of any local council or similar governing body (local legislation). Free electronic tax filing An Indian tribal government is considered a local council or similar governing body. Free electronic tax filing You can deduct in-house expenses for influencing legislation or communicating directly with a covered executive branch official if the expenses for the tax year are not more than $2,000 (not counting overhead expenses). Free electronic tax filing If you are a professional lobbyist, you can deduct the expenses you incur in the trade or business of lobbying on behalf of another person. Free electronic tax filing Payments by the other person to you for lobbying activities cannot be deducted. Free electronic tax filing Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Free electronic tax filing 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. Free electronic tax filing See Publication 547. Free electronic tax filing Example. Free electronic tax filing A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Free electronic tax filing The diamond falls from the ring and is never found. Free electronic tax filing The loss of the diamond is a casualty. Free electronic tax filing Lunches With Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Free electronic tax filing See Publication 463 for information on deductible expenses while traveling away from home. Free electronic tax filing Meals While Working Late You cannot deduct the cost of meals while working late. Free electronic tax filing However, you may be able to claim a deduction if the cost of the meals is a deductible entertainment expense, or if you are traveling away from home. Free electronic tax filing See Publication 463 for information on deductible entertainment expenses and expenses while traveling away from home. Free electronic tax filing Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Free electronic tax filing Custody of children. Free electronic tax filing Breach of promise to marry suit. Free electronic tax filing Civil or criminal charges resulting from a personal relationship. Free electronic tax filing Damages for personal injury (except certain whistleblower claims and unlawful discrimination claims). Free electronic tax filing For more information about unlawful discrimination claims, see Deductions Subject to the 2% Limit, earlier. Free electronic tax filing Preparation of a title (or defense or perfection of a title). Free electronic tax filing Preparation of a will. Free electronic tax filing Property claims or property settlement in a divorce. Free electronic tax filing You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Free electronic tax filing Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Free electronic tax filing Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Free electronic tax filing Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Free electronic tax filing Accounting certificate fees paid for the initial right to practice accounting. Free electronic tax filing Bar exam fees and incidental expenses in securing initial admission to the bar. Free electronic tax filing Medical and dental license fees paid to get initial licensing. Free electronic tax filing Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing 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. Free electronic tax filing You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Free electronic tax filing Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Free electronic tax filing You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. Free electronic tax filing If you have expenses to p