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Military Tax Calculator

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Military Tax Calculator

Military tax calculator Publication 17 - Introductory Material Table of Contents What's New Reminders IntroductionIcons. Military tax calculator Ordering forms and publications. Military tax calculator Tax questions. Military tax calculator All material in this publication may be reprinted freely. Military tax calculator A citation to Your Federal Income Tax (2013) would be appropriate. Military tax calculator The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of: Tax laws enacted by Congress, Treasury regulations, and Court decisions. Military tax calculator However, the information given does not cover every situation and is not intended to replace the law or change its meaning. Military tax calculator This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Military tax calculator Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS. Military tax calculator All taxpayers have important rights when working with the IRS. Military tax calculator These rights are described in Your Rights as a Taxpayer in the back of this publication. Military tax calculator What's New This section summarizes important tax changes that took effect in 2013. Military tax calculator Most of these changes are discussed in more detail throughout this publication. Military tax calculator Future developments. Military tax calculator  For the latest information about the tax law topics covered in this publication, including information about any tax legislation, go to www. Military tax calculator irs. Military tax calculator gov/pub17. Military tax calculator Additional Medicare Tax. Military tax calculator  Beginning in 2013, a 0. Military tax calculator 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Military tax calculator See Form 8959 and its instructions. Military tax calculator Net Investment Income Tax. Military tax calculator  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Military tax calculator The NIIT is 3. Military tax calculator 8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over: $125,000 if married filing separately, $250,000 if married filing jointly or qualifying widow(er), or $200,000 if any other filing status. Military tax calculator See Form 8960 and its instructions. Military tax calculator Change in tax rates. Military tax calculator  The highest tax rate is 39. Military tax calculator 6%. Military tax calculator For more information, see the 2013 Tax Computation Worksheet or the 2013 Tax Rate Schedules near the end of this publication. Military tax calculator Tax rate on net capital gain and qualified dividends. Military tax calculator  The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers. Military tax calculator See chapter 16. Military tax calculator Medical and dental expenses. Military tax calculator  You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7. Military tax calculator 5% if either you or your spouse is age 65 or older). Military tax calculator See chapter 21. Military tax calculator Personal exemption amount increased for certain taxpayers. Military tax calculator  Your personal exemption is increased to $3,900. Military tax calculator But the amount is reduced if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Military tax calculator See chapter 3. Military tax calculator Limit on itemized deductions. Military tax calculator  You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Military tax calculator See chapter 29. Military tax calculator Same-sex marriages. Military tax calculator  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Military tax calculator See chapter 2. Military tax calculator If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. Military tax calculator For details on filing amended returns, see chapter 1. Military tax calculator Health flexible spending arrangements (FSAs). Military tax calculator  You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012. Military tax calculator See chapter 5. Military tax calculator Expiring credits. Military tax calculator  The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. Military tax calculator You cannot claim either one on your 2013 return. Military tax calculator See chapter 37. Military tax calculator Ponzi-type investment schemes. Military tax calculator  There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme. Military tax calculator See chapter 25. Military tax calculator Home office deduction simplified method. Military tax calculator  If you can take a home office deduction, you may be able to use a simplified method to figure it. Military tax calculator See Publication 587. Military tax calculator Standard mileage rates. Military tax calculator  The 2013 rate for business use of your car is increased to 56½ cents a mile. Military tax calculator See chapter 26. Military tax calculator The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. Military tax calculator See chapter 21. Military tax calculator The 2013 rate for use of your car to move is increased to 24 cents a mile. Military tax calculator See Publication 521, Moving Expenses. Military tax calculator Reminders Listed below are important reminders and other items that may help you file your 2013 tax return. Military tax calculator Many of these items are explained in more detail later in this publication. Military tax calculator Enter your social security number (SSN). Military tax calculator  Enter your SSN in the space provided on your tax form. Military tax calculator If you filed a joint return for 2012 and are filing a joint return for 2013 with the same spouse, enter your names and SSNs in the same order as on your 2012 return. Military tax calculator See chapter 1. Military tax calculator Secure your tax records from identity theft. Military tax calculator  Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. Military tax calculator An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. Military tax calculator For more information about identity theft and how to reduce your risk from it, see chapter 1. Military tax calculator Taxpayer identification numbers. Military tax calculator  You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. Military tax calculator This applies even if the person was born in 2013. Military tax calculator Generally, this number is the person's social security number (SSN). Military tax calculator See chapter 1. Military tax calculator Foreign source income. Military tax calculator  If you are a U. Military tax calculator S. Military tax calculator citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by U. Military tax calculator S. Military tax calculator law. Military tax calculator This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. Military tax calculator This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties). Military tax calculator If you live outside the United States, you may be able to exclude part or all of your foreign source earned income. Military tax calculator For details, see Publication 54, Tax Guide for U. Military tax calculator S. Military tax calculator Citizens and Resident Aliens Abroad. Military tax calculator Foreign financial assets. Military tax calculator  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. Military tax calculator Check www. Military tax calculator IRS. Military tax calculator gov/form8938 for details. Military tax calculator Automatic 6-month extension to file tax return. Military tax calculator  You can use Form 4868, Application for Automatic Extension of Time To File U. Military tax calculator S. Military tax calculator Individual Income Tax Return, to obtain an automatic 6-month extension of time to file your tax return. Military tax calculator See chapter 1. Military tax calculator Include your phone number on your return. Military tax calculator  To promptly resolve any questions we have in processing your tax return, we would like to be able to call you. Military tax calculator Please enter your daytime telephone number on your tax form next to your signature and occupation. Military tax calculator If you are filing a joint return, you can enter either your or your spouse's daytime phone number. Military tax calculator Payment of taxes. Military tax calculator   You can pay your taxes online, by phone, or by check or money order. Military tax calculator You can make a direct transfer from your bank account or use a credit or debit card. Military tax calculator If you e-file, you can schedule an electronic payment. Military tax calculator See chapter 1. Military tax calculator Faster ways to file your return. Military tax calculator  The IRS offers fast, accurate ways to file your tax return information without filing a paper tax return. Military tax calculator You can use IRS e-file (electronic filing). Military tax calculator See chapter 1. Military tax calculator Free electronic filing. Military tax calculator  You may be able to file your 2013 taxes online for free. Military tax calculator See chapter 1. Military tax calculator Change of address. Military tax calculator  If you change your address, you should notify the IRS. Military tax calculator See Change of Address in chapter 1. Military tax calculator Refund on a late filed return. Military tax calculator  If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund. Military tax calculator See chapter 1. Military tax calculator Frivolous tax returns. Military tax calculator  The IRS has published a list of positions that are identified as frivolous. Military tax calculator The penalty for filing a frivolous tax return is $5,000. Military tax calculator See chapter 1. Military tax calculator Filing erroneous claim for refund or credit. Military tax calculator  You may have to pay a penalty if you file an erroneous claim for refund or credit. Military tax calculator See chapter 1. Military tax calculator Privacy Act and paperwork reduction information. Military tax calculator   The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduction Act of 1980 require that when we ask you for information we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. Military tax calculator A complete statement on this subject can be found in your tax form instructions. Military tax calculator Customer service for taxpayers. Military tax calculator  You can set up a personal appointment at the most convenient Taxpayer Assistance Center, on the most convenient business day. Military tax calculator See How To Get Tax Help in the back of this publication. Military tax calculator Preparer e-file mandate. Military tax calculator  Most paid preparers must e-file returns they prepare and file. Military tax calculator Your preparer may make you aware of this requirement and the options available to you. Military tax calculator Treasury Inspector General for Tax Administration. Military tax calculator   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (call 1-800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). Military tax calculator You can remain anonymous. Military tax calculator Photographs of missing children. Military tax calculator  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Military tax calculator Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Military tax calculator You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Military tax calculator Introduction This publication covers the general rules for filing a federal income tax return. Military tax calculator It supplements the information contained in your tax form instructions. Military tax calculator It explains the tax law to make sure you pay only the tax you owe and no more. Military tax calculator How this publication is arranged. Military tax calculator   This publication closely follows Form 1040, U. Military tax calculator S. Military tax calculator Individual Income Tax Return. Military tax calculator It is divided into six parts which cover different sections of Form 1040. Military tax calculator Each part is further divided into chapters which generally discuss one line of the form. Military tax calculator Do not worry if you file Form 1040A or Form 1040EZ. Military tax calculator Anything included on a line of either of these forms is also included on Form 1040. Military tax calculator   The table of contents inside the front cover and the index in the back of the publication are useful tools to help you find the information you need. Military tax calculator What is in this publication. Military tax calculator   The publication begins with the rules for filing a tax return. Military tax calculator It explains: Who must file a return, Which tax form to use, When the return is due, How to e-file your return, and Other general information. Military tax calculator It will help you identify which filing status you qualify for, whether you can claim any dependents, and whether the income you receive is taxable. Military tax calculator The publication goes on to explain the standard deduction, the kinds of expenses you may be able to deduct, and the various kinds of credits you may be able to take to reduce your tax. Military tax calculator   Throughout the publication are examples showing how the tax law applies in typical situations. Military tax calculator Also throughout the publication are flowcharts and tables that present tax information in an easy-to-understand manner. Military tax calculator   Many of the subjects discussed in this publication are discussed in greater detail in other IRS publications. Military tax calculator References to those other publications are provided for your information. Military tax calculator Icons. Military tax calculator   Small graphic symbols, or icons, are used to draw your attention to special information. Military tax calculator See Table 1 later for an explanation of each icon used in this publication. Military tax calculator What is not covered in this publication. Military tax calculator   Some material that you may find helpful is not included in this publication but can be found in your tax form instruction booklet. Military tax calculator This includes lists of: Where to report certain items shown on information documents, and Recorded tax information topics (TeleTax). Military tax calculator   If you operate your own business or have other self-employment income, such as from babysitting or selling crafts, see the following publications for more information. Military tax calculator Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). Military tax calculator Publication 535, Business Expenses. Military tax calculator Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Military tax calculator Help from the IRS. Military tax calculator   There are many ways you can get help from the IRS. Military tax calculator These are explained under How To Get Tax Help in the back of this publication. Military tax calculator Comments and suggestions. Military tax calculator   We welcome your comments about this publication and your suggestions for future editions. Military tax calculator   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Military tax calculator NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Military tax calculator Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Military tax calculator   You can send your comments from www. Military tax calculator irs. Military tax calculator gov/formspubs/. Military tax calculator Click on “More Information” and then on “Comment on Tax Forms and Publications”. Military tax calculator   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Military tax calculator Ordering forms and publications. Military tax calculator   Visit www. Military tax calculator irs. Military tax calculator gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Military tax calculator Internal Revenue Service 1201 N. Military tax calculator Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Military tax calculator   If you have a tax question, check the information available on IRS. Military tax calculator gov or call 1-800-829-1040. Military tax calculator We cannot answer tax questions sent to either of the above addresses. Military tax calculator IRS mission. Military tax calculator   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Military tax calculator Table 1. Military tax calculator Legend of Icons Icon Explanation Items that may cause you particular problems, or an alert about pending legislation that may be enacted after this publication goes to print. Military tax calculator An Internet site or an email address. Military tax calculator An address you may need. Military tax calculator Items you should keep in your personal records. Military tax calculator Items you may need to figure or a worksheet you may need to complete and keep for your records. Military tax calculator An important phone number. Military tax calculator Helpful information you may need. Military tax calculator Prev  Up  Next   Home   More Online Publications
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Understanding Your CP211D Notice

We denied your request to extend the time to file your Exempt Organization Return for an additional three months because your Form 8868, Application for Extension of Time To File an Exempt Organization Return, Part II, Line 7 didn’t explain the need for additional time OR establish reasons that prevented you from filing by the extended due date.


What you need to do

  • File your required Exempt Organization Return immediately to limit any late filing penalties. If your Exempt Organization Return is filed after the due date of the return (including any extensions), the return is considered late and subject to late filing penalties.
  • We encourage you to use electronic filing – the fastest and easiest way to file.

You may want to

  • Visit www.irs.gov/Charities-&-Non-Profits to learn about approved e-File providers, what types of returns can be filed electronically, and whether you are required to file electronically.

Answers to Common Questions

Q. Where can I go for more information about tax-exempt organizations?

A. For more information on Employee Benefit Plans, see Tax Information for Charities & Other Non-Profits.

Q. Can I get help over the phone?

A. If you have questions and/or need help, you can call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.


Tips for next year

Be sure to sign and mail your Form 8868 with a reason you need an extension on or before the due date of your return.

Page Last Reviewed or Updated: 24-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Military Tax Calculator

Military tax calculator 8. Military tax calculator   Business Expenses Table of Contents Introduction Useful Items - You may want to see: Bad DebtsAccrual method. Military tax calculator Cash method. Military tax calculator Car and Truck ExpensesOffice in the home. Military tax calculator Methods for Deducting Car and Truck Expenses Reimbursing Your Employees for Expenses Depreciation Employees' PayFringe benefits. Military tax calculator InsuranceHow to figure the deduction. Military tax calculator Interest Legal and Professional FeesTax preparation fees. Military tax calculator Pension Plans Rent Expense Taxes Travel, Meals, and EntertainmentTransportation. Military tax calculator Taxi, commuter bus, and limousine. Military tax calculator Baggage and shipping. Military tax calculator Car or truck. Military tax calculator Meals and lodging. Military tax calculator Cleaning. Military tax calculator Telephone. Military tax calculator Tips. Military tax calculator More information. Military tax calculator Business Use of Your HomeExceptions to exclusive use. Military tax calculator Other Expenses You Can Deduct Expenses You Cannot Deduct Introduction You can deduct the costs of operating your business. Military tax calculator These costs are known as business expenses. Military tax calculator These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year. Military tax calculator To be deductible, a business expense must be both ordinary and necessary. Military tax calculator An ordinary expense is one that is common and accepted in your field of business. Military tax calculator A necessary expense is one that is helpful and appropriate for your business. Military tax calculator An expense does not have to be indispensable to be considered necessary. Military tax calculator For more information about the general rules for deducting business expenses, see chapter 1 in Publication 535, Business Expenses. Military tax calculator If you have an expense that is partly for business and partly personal, separate the personal part from the business part. Military tax calculator The personal part is not deductible. Military tax calculator Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 946 How To Depreciate Property See chapter 12 for information about getting publications and forms. Military tax calculator Bad Debts If someone owes you money you cannot collect, you have a bad debt. Military tax calculator There are two kinds of bad debts, business bad debts and nonbusiness bad debts. Military tax calculator A business bad debt is generally one that comes from operating your trade or business. Military tax calculator You may be able to deduct business bad debts as an expense on your business tax return. Military tax calculator Business bad debt. Military tax calculator   A business bad debt is a loss from the worthlessness of a debt that was either of the following. Military tax calculator Created or acquired in your business. Military tax calculator Closely related to your business when it became partly or totally worthless. Military tax calculator A debt is closely related to your business if your primary motive for incurring the debt is a business reason. Military tax calculator   Business bad debts are mainly the result of credit sales to customers. Military tax calculator They can also be the result of loans to suppliers, clients, employees, or distributors. Military tax calculator Goods and services customers have not paid for are shown in your books as either accounts receivable or notes receivable. Military tax calculator If you are unable to collect any part of these accounts or notes receivable, the uncollectible part is a business bad debt. Military tax calculator    You can take a bad debt deduction for these accounts and notes receivable only if the amount you were owed was included in your gross income either for the year the deduction is claimed or for a prior year. Military tax calculator Accrual method. Military tax calculator   If you use an accrual method of accounting, you normally report income as you earn it. Military tax calculator You can take a bad debt deduction for an uncollectible receivable if you have included the uncollectible amount in income. Military tax calculator Cash method. Military tax calculator   If you use the cash method of accounting, you normally report income when you receive payment. Military tax calculator You cannot take a bad debt deduction for amounts owed to you that you have not received and cannot collect if you never included those amounts in income. Military tax calculator More information. Military tax calculator   For more information about business bad debts, see chapter 10 in Publication 535. Military tax calculator Nonbusiness bad debts. Military tax calculator   All other bad debts are nonbusiness bad debts and are deductible as short-term capital losses on Form 8949 and Schedule D (Form 1040). Military tax calculator For more information on nonbusiness bad debts, see Publication 550, Investment Income and Expenses. Military tax calculator Car and Truck Expenses If you use your car or truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle. Military tax calculator You also may be able to deduct other costs of local transportation and traveling away from home overnight on business. Military tax calculator You may qualify for a tax credit for qualified plug-in electric vehicles, qualified plug-in electric drive motor vehicles, and alternative motor vehicles you place in service during the year. Military tax calculator See Form 8936 and Form 8910 for more information. Military tax calculator Local transportation expenses. Military tax calculator   Local transportation expenses include the ordinary and necessary costs of all the following. Military tax calculator Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Military tax calculator Tax home is defined later. Military tax calculator Visiting clients or customers. Military tax calculator Going to a business meeting away from your regular workplace. Military tax calculator Getting from your home to a temporary workplace when you have one or more regular places of work. Military tax calculator These temporary workplaces can be either within the area of your tax home or outside that area. Military tax calculator Local business transportation does not include expenses you have while traveling away from home overnight. Military tax calculator Those expenses are deductible as travel expenses and are discussed later under Travel, Meals, and Entertainment. Military tax calculator However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Military tax calculator   Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Military tax calculator It includes the entire city or general area in which your business or work is located. Military tax calculator Example. Military tax calculator You operate a printing business out of rented office space. Military tax calculator You use your van to deliver completed jobs to your customers. Military tax calculator You can deduct the cost of round-trip transportation between your customers and your print shop. Military tax calculator    You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. Military tax calculator These costs are personal commuting expenses. Military tax calculator Office in the home. Military tax calculator   Your workplace can be your home if you have an office in your home that qualifies as your principal place of business. Military tax calculator For more information, see Business Use of Your Home, later. Military tax calculator Example. Military tax calculator You are a graphics designer. Military tax calculator You operate your business out of your home. Military tax calculator Your home qualifies as your principal place of business. Military tax calculator You occasionally have to drive to your clients to deliver your completed work. Military tax calculator You can deduct the cost of the round-trip transportation between your home and your clients. Military tax calculator Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. Military tax calculator Standard mileage rate. Military tax calculator Actual expenses. Military tax calculator Standard mileage rate. Military tax calculator   You may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Military tax calculator For 2013, the standard mileage rate is 56. Military tax calculator 5 cents per mile. Military tax calculator    If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls. Military tax calculator Choosing the standard mileage rate. Military tax calculator   If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. Military tax calculator In later years, you can choose to use either the standard mileage rate or actual expenses. Military tax calculator   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Military tax calculator Standard mileage rate not allowed. Military tax calculator   You cannot use the standard mileage rate if you: Operate five or more cars at the same time, Claimed a depreciation deduction using any method other than straight line, for example, ACRS or MACRS, Claimed a section 179 deduction on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Military tax calculator Parking fees and tolls. Military tax calculator   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Military tax calculator (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Military tax calculator ) Actual expenses. Military tax calculator   If you do not choose to use the standard mileage rate, you may be able to deduct your actual car or truck expenses. Military tax calculator    If you qualify to use both methods, figure your deduction both ways to see which gives you a larger deduction. Military tax calculator   Actual car expenses include the costs of the following items. Military tax calculator Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Military tax calculator You can divide your expenses based on the miles driven for each purpose. Military tax calculator Example. Military tax calculator You are the sole proprietor of a flower shop. Military tax calculator You drove your van 20,000 miles during the year. Military tax calculator 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use (including commuting miles). Military tax calculator You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Military tax calculator More information. Military tax calculator   For more information about the rules for claiming car and truck expenses, see Publication 463. Military tax calculator Reimbursing Your Employees for Expenses You generally can deduct the amount you reimburse your employees for car and truck expenses. Military tax calculator The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Military tax calculator For details, see chapter 11 in Publication 535. Military tax calculator That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Military tax calculator Depreciation If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Military tax calculator You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. Military tax calculator This method of deducting the cost of business property is called depreciation. Military tax calculator The discussion here is brief. Military tax calculator You will find more information about depreciation in Publication 946. Military tax calculator What property can be depreciated?   You can depreciate property if it meets all the following requirements. Military tax calculator It must be property you own. Military tax calculator It must be used in business or held to produce income. Military tax calculator You never can depreciate inventory (explained in chapter 2) because it is not held for use in your business. Military tax calculator It must have a useful life that extends substantially beyond the year it is placed in service. Military tax calculator It must have a determinable useful life, which means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Military tax calculator You never can depreciate the cost of land because land does not wear out, become obsolete, or get used up. Military tax calculator It must not be excepted property. Military tax calculator This includes property placed in service and disposed of in the same year. Military tax calculator Repairs. Military tax calculator    You cannot depreciate repairs and replacements that do not increase the value of your property, make it more useful, or lengthen its useful life. Military tax calculator You can deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. Military tax calculator Depreciation method. Military tax calculator   The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). Military tax calculator MACRS is discussed in detail in Publication 946. Military tax calculator Section 179 deduction. Military tax calculator   You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Military tax calculator This deduction is known as the “section 179 deduction. Military tax calculator ” The maximum amount you can elect to deduct during 2013 is generally $500,000 (higher limits apply to certain property). Military tax calculator See IRC 179(e). Military tax calculator   This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Military tax calculator The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2013 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2013). Military tax calculator Special rules apply to trucks and vans. Military tax calculator For more information, see Publication 946. Military tax calculator It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction. Military tax calculator    Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. Military tax calculator For more information, see the Instructions for Form 4562 or Publication 946. Military tax calculator Listed property. Military tax calculator   You must follow special rules and recordkeeping requirements when depreciating listed property. Military tax calculator Listed property is any of the following. Military tax calculator Most passenger automobiles. Military tax calculator Most other property used for transportation. Military tax calculator Any property of a type generally used for entertainment, recreation, or amusement. Military tax calculator Certain computers and related peripheral equipment. Military tax calculator   For more information about listed property, see Publication 946. Military tax calculator Form 4562. Military tax calculator   Use Form 4562, Depreciation and Amortization, if you are claiming any of the following. Military tax calculator Depreciation on property placed in service during the current tax year. Military tax calculator A section 179 deduction. Military tax calculator Depreciation on any listed property (regardless of when it was placed in service). Military tax calculator    If you have to use Form 4562, you must file Schedule C. Military tax calculator You cannot use Schedule C-EZ. Military tax calculator   Employees' Pay You can generally deduct on Schedule C the pay you give your employees for the services they perform for your business. Military tax calculator The pay may be in cash, property, or services. Military tax calculator To be deductible, your employees' pay must be an ordinary and necessary expense and you must pay or incur it in the tax year. Military tax calculator In addition, the pay must meet both the following tests. Military tax calculator The pay must be reasonable. Military tax calculator The pay must be for services performed. Military tax calculator Chapter 2 in Publication 535 explains and defines these requirements. Military tax calculator You cannot deduct your own salary or any personal withdrawals you make from your business. Military tax calculator As a sole proprietor, you are not an employee of the business. Military tax calculator If you had employees during the year, you must use Schedule C. Military tax calculator You cannot use Schedule C-EZ. Military tax calculator Kinds of pay. Military tax calculator   Some of the ways you may provide pay to your employees are listed below. Military tax calculator For an explanation of each of these items, see chapter 2 in Publication 535. Military tax calculator Awards. Military tax calculator Bonuses. Military tax calculator Education expenses. Military tax calculator Fringe benefits (discussed later). Military tax calculator Loans or advances you do not expect the employee to repay if they are for personal services actually performed. Military tax calculator Property you transfer to an employee as payment for services. Military tax calculator Reimbursements for employee business expenses. Military tax calculator Sick pay. Military tax calculator Vacation pay. Military tax calculator Fringe benefits. Military tax calculator   A fringe benefit is a form of pay for the performance of services. Military tax calculator The following are examples of fringe benefits. Military tax calculator Benefits under qualified employee benefit programs. Military tax calculator Meals and lodging. Military tax calculator The use of a car. Military tax calculator Flights on airplanes. Military tax calculator Discounts on property or services. Military tax calculator Memberships in country clubs or other social clubs. Military tax calculator Tickets to entertainment or sporting events. Military tax calculator   Employee benefit programs include the following. Military tax calculator Accident and health plans. Military tax calculator Adoption assistance. Military tax calculator Cafeteria plans. Military tax calculator Dependent care assistance. Military tax calculator Educational assistance. Military tax calculator Group-term life insurance coverage. Military tax calculator Welfare benefit funds. Military tax calculator   You can generally deduct the cost of fringe benefits you provide on your Schedule C in whatever category the cost falls. Military tax calculator For example, if you allow an employee to use a car or other property you lease, deduct the cost of the lease as a rent or lease expense. Military tax calculator If you own the property, include your deduction for its cost or other basis as a section 179 deduction or a depreciation deduction. Military tax calculator    You may be able to exclude all or part of the fringe benefits you provide from your employees' wages. Military tax calculator For more information about fringe benefits and the exclusion of benefits, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Military tax calculator Insurance You can generally deduct premiums you pay for the following kinds of insurance related to your business. Military tax calculator Fire, theft, flood, or similar insurance. Military tax calculator Credit insurance that covers losses from business bad debts. Military tax calculator Group hospitalization and medical insurance for employees, including long-term care insurance. Military tax calculator Liability insurance. Military tax calculator Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Military tax calculator Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Military tax calculator Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Military tax calculator Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Military tax calculator Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Military tax calculator If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Military tax calculator If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Military tax calculator Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract. Military tax calculator Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Military tax calculator Nondeductible premiums. Military tax calculator   You cannot deduct premiums on the following kinds of insurance. Military tax calculator Self-insurance reserve funds. Military tax calculator You cannot deduct amounts credited to a reserve set up for self-insurance. Military tax calculator This applies even if you cannot get business insurance coverage for certain business risks. Military tax calculator However, your actual losses may be deductible. Military tax calculator For more information, see Publication 547, Casualties, Disasters, and Thefts. Military tax calculator Loss of earnings. Military tax calculator You cannot deduct premiums for a policy that pays for your lost earnings due to sickness or disability. Military tax calculator However, see item (8) in the previous list. Military tax calculator Certain life insurance and annuities. Military tax calculator For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Military tax calculator You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Military tax calculator A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Military tax calculator For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Military tax calculator The disallowance applies without regard to whom the policy covers. Military tax calculator Insurance to secure a loan. Military tax calculator If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Military tax calculator Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Military tax calculator In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. Military tax calculator Self-employed health insurance deduction. Military tax calculator   You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family. Military tax calculator How to figure the deduction. Military tax calculator   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Military tax calculator However, if any of the following apply, you must use the worksheet in chapter 6 of Publication 535. Military tax calculator You have more than one source of income subject to self-employment tax. Military tax calculator You file Form 2555 or Form 2555-EZ (relating to foreign earned income). Military tax calculator You are using amounts paid for qualified long-term care insurance to figure the deduction. Military tax calculator Prepayment. Military tax calculator   You cannot deduct expenses in advance, even if you pay them in advance. Military tax calculator This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Military tax calculator Example. Military tax calculator In 2013, you signed a 3-year insurance contract. Military tax calculator Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Military tax calculator You can deduct in 2014 and 2015 the premium allocable to those years. Military tax calculator More information. Military tax calculator   For more information about deducting insurance, see chapter 6 in Publication 535. Military tax calculator Interest You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your business. Military tax calculator Interest relates to your business if you use the proceeds of the loan for a business expense. Military tax calculator It does not matter what type of property secures the loan. Military tax calculator You can deduct interest on a debt only if you meet all of the following requirements. Military tax calculator You are legally liable for that debt. Military tax calculator Both you and the lender intend that the debt be repaid. Military tax calculator You and the lender have a true debtor-creditor relationship. Military tax calculator You cannot deduct on Schedule C or C-EZ the interest you paid on personal loans. Military tax calculator If a loan is part business and part personal, you must divide the interest between the personal part and the business part. Military tax calculator Example. Military tax calculator In 2013, you paid $600 interest on a car loan. Military tax calculator During 2013, you used the car 60% for business and 40% for personal purposes. Military tax calculator You are claiming actual expenses on the car. Military tax calculator You can only deduct $360 (60% × $600) for 2013 on Schedule C or C-EZ. Military tax calculator The remaining interest of $240 is a nondeductible personal expense. Military tax calculator More information. Military tax calculator   For more information about deducting interest, see chapter 4 in Publication 535. Military tax calculator That chapter explains the following items. Military tax calculator Interest you can deduct. Military tax calculator Interest you cannot deduct. Military tax calculator How to allocate interest between personal and business use. Military tax calculator When to deduct interest. Military tax calculator The rules for a below-market interest rate loan. Military tax calculator (This is generally a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Military tax calculator ) Legal and Professional Fees Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible on Schedule C or C-EZ. Military tax calculator However, you usually cannot deduct legal fees you pay to acquire business assets. Military tax calculator Add them to the basis of the property. Military tax calculator If the fees include payments for work of a personal nature (such as making a will), you can take a business deduction only for the part of the fee related to your business. Military tax calculator The personal part of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. Military tax calculator For more information, see Publication 529, Miscellaneous Deductions. Military tax calculator Tax preparation fees. Military tax calculator   You can deduct on Schedule C or C-EZ the cost of preparing that part of your tax return relating to your business as a sole proprietor or statutory employee. Military tax calculator You can deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. Military tax calculator   You can also deduct on Schedule C or C-EZ the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor or statutory employee. Military tax calculator Pension Plans You can set up and maintain the following small business retirement plans for yourself and your employees. Military tax calculator SEP (Simplified Employee Pension) plans. Military tax calculator SIMPLE (Savings Incentive Match Plan for Employees) plans. Military tax calculator Qualified plans (including Keogh or H. Military tax calculator R. Military tax calculator 10 plans). Military tax calculator SEP, SIMPLE, and qualified plans offer you and your employees a tax favored way to save for retirement. Military tax calculator You can deduct contributions you make to the plan for your employees on line 19 of Schedule C. Military tax calculator If you are a sole proprietor, you can deduct contributions you make to the plan for yourself on line 28 of Form 1040. Military tax calculator You can also deduct trustees' fees if contributions to the plan do not cover them. Military tax calculator Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. Military tax calculator You may also be able to claim a tax credit of 50% of the first $1,000 of qualified startup costs if you begin a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. Military tax calculator Under certain plans, employees can have you contribute limited amounts of their before-tax pay to a plan. Military tax calculator These amounts (and earnings on them) are generally tax free until your employees receive distributions from the plan. Military tax calculator For more information on retirement plans for small business, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Military tax calculator Publication 590, Individual Retirement Arrangements (IRAs), discusses other tax favored ways to save for retirement. Military tax calculator Rent Expense Rent is any amount you pay for the use of property you do not own. Military tax calculator In general, you can deduct rent as a business expense only if the rent is for property you use in your business. Military tax calculator If you have or will receive equity in or title to the property, you cannot deduct the rent. Military tax calculator Unreasonable rent. Military tax calculator   You cannot take a rental deduction for unreasonable rents. Military tax calculator Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Military tax calculator Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Military tax calculator Rent is not unreasonable just because it is figured as a percentage of gross receipts. Military tax calculator   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Military tax calculator For a list of the other related persons, see section 267 of the Internal Revenue Code. Military tax calculator Rent on your home. Military tax calculator   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Military tax calculator You must meet the requirements for business use of your home. Military tax calculator For more information, see Business Use of Your Home , later. Military tax calculator Rent paid in advance. Military tax calculator   Generally, rent paid in your business is deductible in the year paid or accrued. Military tax calculator If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Military tax calculator You can deduct the rest of your payment only over the period to which it applies. Military tax calculator More information. Military tax calculator   For more information about rent, see chapter 3 in Publication 535. Military tax calculator Taxes You can deduct on Schedule C or C-EZ various federal, state, local, and foreign taxes directly attributable to your business. Military tax calculator Income taxes. Military tax calculator   You can deduct on Schedule C or C-EZ a state tax on gross income (as distinguished from net income) directly attributable to your business. Military tax calculator You can deduct other state and local income taxes on Schedule A (Form 1040) if you itemize your deductions. Military tax calculator Do not deduct federal income tax. Military tax calculator Employment taxes. Military tax calculator   You can deduct the social security, Medicare, and federal unemployment (FUTA) taxes you paid out of your own funds as an employer. Military tax calculator Employment taxes are discussed briefly in chapter 1. Military tax calculator You can also deduct payments you made as an employer to a state unemployment compensation fund or to a state disability benefit fund. Military tax calculator Deduct these payments as taxes. Military tax calculator Self-employment tax. Military tax calculator   You can deduct one-half of your self-employment tax on line 27 of Form 1040. Military tax calculator Self-employment tax is discussed in chapters 1 and 10. Military tax calculator Personal property tax. Military tax calculator   You can deduct on Schedule C or C-EZ any tax imposed by a state or local government on personal property used in your business. Military tax calculator   You can also deduct registration fees for the right to use property within a state or local area. Military tax calculator Example. Military tax calculator May and Julius Winter drove their car 7,000 business miles out of a total of 10,000 miles. Military tax calculator They had to pay $25 for their annual state license tags and $20 for their city registration sticker. Military tax calculator They also paid $235 in city personal property tax on the car, for a total of $280. Military tax calculator They are claiming their actual car expenses. Military tax calculator Because they used the car 70% for business, they can deduct 70% of the $280, or $196, as a business expense. Military tax calculator Real estate taxes. Military tax calculator   You can deduct on Schedule C or C-EZ the real estate taxes you pay on your business property. Military tax calculator Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. Military tax calculator The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Military tax calculator   For more information about real estate taxes, see chapter 5 in Publication 535. Military tax calculator That chapter explains special rules for deducting the following items. Military tax calculator Taxes for local benefits, such as those for sidewalks, streets, water mains, and sewer lines. Military tax calculator Real estate taxes when you buy or sell property during the year. Military tax calculator Real estate taxes if you use an accrual method of accounting and choose to accrue real estate tax related to a definite period ratably over that period. Military tax calculator Sales tax. Military tax calculator   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. Military tax calculator If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. Military tax calculator If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. Military tax calculator If the property is depreciable, add the sales tax to the basis for depreciation. Military tax calculator For information on the basis of property, see Publication 551, Basis of Assets. Military tax calculator    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Military tax calculator Do not include these taxes in gross receipts or sales. Military tax calculator Excise taxes. Military tax calculator   You can deduct on Schedule C or C-EZ all excise taxes that are ordinary and necessary expenses of carrying on your business. Military tax calculator Excise taxes are discussed briefly in chapter 1. Military tax calculator Fuel taxes. Military tax calculator   Taxes on gasoline, diesel fuel, and other motor fuels you use in your business are usually included as part of the cost of the fuel. Military tax calculator Do not deduct these taxes as a separate item. Military tax calculator   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. Military tax calculator For more information, see Publication 510, Excise Taxes. Military tax calculator Travel, Meals, and Entertainment This section briefly explains the kinds of travel and entertainment expenses you can deduct on Schedule C or C-EZ. Military tax calculator Table 8-1. Military tax calculator When Are Entertainment Expenses Deductible? (Note. Military tax calculator The following is a summary of the rules for deducting entertainment expenses. Military tax calculator For more details about these rules, see Publication 463. Military tax calculator ) General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Military tax calculator Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Military tax calculator An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Military tax calculator A necessary expense is one that is helpful and appropriate, although not necessarily required, for your business. Military tax calculator Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Military tax calculator   Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion. Military tax calculator Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Military tax calculator You cannot deduct expenses that are lavish or extravagant under the circumstances. Military tax calculator You generally can deduct only 50% of your unreimbursed entertainment expenses. Military tax calculator Travel expenses. Military tax calculator   These are the ordinary and necessary expenses of traveling away from home for your business. Military tax calculator You are traveling away from home if both the following conditions are met. Military tax calculator Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work. Military tax calculator You need to get sleep or rest to meet the demands of your work while away from home. Military tax calculator Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Military tax calculator It includes the entire city or general area in which your business is located. Military tax calculator See Publication 463 for more information. Military tax calculator   The following is a brief discussion of the expenses you can deduct. Military tax calculator Transportation. Military tax calculator   You can deduct the cost of travel by airplane, train, bus, or car between your home and your business destination. Military tax calculator Taxi, commuter bus, and limousine. Military tax calculator   You can deduct fares for these and other types of transportation between the airport or station and your hotel, or between the hotel and your work location away from home. Military tax calculator Baggage and shipping. Military tax calculator   You can deduct the cost of sending baggage and sample or display material between your regular and temporary work locations. Military tax calculator Car or truck. Military tax calculator   You can deduct the costs of operating and maintaining your vehicle when traveling away from home on business. Military tax calculator You can deduct actual expenses or the standard mileage rate (discussed earlier under Car and Truck Expenses), as well as business-related tolls and parking. Military tax calculator If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Military tax calculator Meals and lodging. Military tax calculator   You can deduct the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Military tax calculator In most cases, you can deduct only 50% of your meal expenses. Military tax calculator Cleaning. Military tax calculator   You can deduct the costs of dry cleaning and laundry while on your business trip. Military tax calculator Telephone. Military tax calculator   You can deduct the cost of business calls while on your business trip, including business communication by fax machine or other communication devices. Military tax calculator Tips. Military tax calculator   You can deduct the tips you pay for any expense in this list. Military tax calculator More information. Military tax calculator   For more information about travel expenses, see Publication 463. Military tax calculator Entertainment expenses. Military tax calculator   You may be able to deduct business-related entertainment expenses for entertaining a client, customer, or employee. Military tax calculator In most cases, you can deduct only 50% of these expenses. Military tax calculator   The following are examples of entertainment expenses. Military tax calculator Entertaining guests at nightclubs, athletic clubs, theaters, or sporting events. Military tax calculator Providing meals, a hotel suite, or a car to business customers or their families. Military tax calculator To be deductible, the expenses must meet the rules listed in Table 8-1. Military tax calculator For details about these rules, see Publication 463. Military tax calculator Reimbursing your employees for expenses. Military tax calculator   You generally can deduct the amount you reimburse your employees for travel and entertainment expenses. Military tax calculator The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Military tax calculator For details, see chapter 11 in Publication 535. Military tax calculator That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Military tax calculator Business Use of Your Home To deduct expenses related to the part of your home used for business, you must meet specific requirements. Military tax calculator Even then, your deduction may be limited. Military tax calculator To qualify to claim expenses for business use of your home, you must meet the following tests. Military tax calculator Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use , later), Regular, For your business, and The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your business, or A separate structure (not attached to your home) you use in connection with your business. Military tax calculator Exclusive use. Military tax calculator   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Military tax calculator The area used for business can be a room or other separately identifiable space. Military tax calculator The space does not need to be marked off by a permanent partition. Military tax calculator   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Military tax calculator Example. Military tax calculator You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Military tax calculator Your family also uses the den for recreation. Military tax calculator The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. Military tax calculator Exceptions to exclusive use. Military tax calculator   You do not have to meet the exclusive use test if you use part of your home in either of the following ways. Military tax calculator For the storage of inventory or product samples. Military tax calculator As a daycare facility. Military tax calculator For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Military tax calculator Regular use. Military tax calculator   To qualify under the regular use test, you must use a specific area of your home for business on a continuing basis. Military tax calculator You do not meet the test if your business use of the area is only occasional or incidental, even if you do not use that area for any other purpose. Military tax calculator Principal place of business. Military tax calculator   You can have more than one business location, including your home, for a single trade or business. Military tax calculator To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that business. Military tax calculator To determine your principal place of business, you must consider all the facts and circumstances. Military tax calculator   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Military tax calculator You use it exclusively and regularly for administrative or management activities of your business. Military tax calculator You have no other fixed location where you conduct substantial administrative or management activities of your business. Military tax calculator   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Military tax calculator The relative importance of the activities performed at each location. Military tax calculator If the relative importance factor does not determine your principal place of business, you can also consider the time spent at each location. Military tax calculator   If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Military tax calculator However, for other ways to qualify to deduct home office expenses, see Publication 587. Military tax calculator Deduction limit. Military tax calculator   If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. Military tax calculator If your gross income from the business use is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. Military tax calculator   Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation (with depreciation taken last), allocable to the business is limited to the gross income from the business use of your home minus the sum of the following. Military tax calculator The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). Military tax calculator The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. Military tax calculator Do not include in (2) above your deduction for one-half of your self-employment tax. Military tax calculator   Use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Military tax calculator New simplified method. Military tax calculator    The IRS now provides a simplified method to determine your expenses for business use of your home. Military tax calculator The simplified method is an alternative to calculating and substantiating actual expenses. Military tax calculator In most cases, you will figure your deduction by multiplying $5 by the area of your home used for a qualified business use. Military tax calculator The area you use to figure your deduction is limited to 300 square feet. Military tax calculator For more information, see the Instructions for Schedule C. Military tax calculator More information. Military tax calculator   For more information on deducting expenses for the business use of your home, see Publication 587. Military tax calculator Other Expenses You Can Deduct You may also be able to deduct the following expenses. Military tax calculator See Publication 535 to find out whether you can deduct them. Military tax calculator Advertising. Military tax calculator Bank fees. Military tax calculator Donations to business organizations. Military tax calculator Education expenses. Military tax calculator Energy efficient commercial buildings deduction expenses. Military tax calculator Impairment-related expenses. Military tax calculator Interview expense allowances. Military tax calculator Licenses and regulatory fees. Military tax calculator Moving machinery. Military tax calculator Outplacement services. Military tax calculator Penalties and fines you pay for late performance or nonperformance of a contract. Military tax calculator Repairs that keep your property in a normal efficient operating condition. Military tax calculator Repayments of income. Military tax calculator Subscriptions to trade or professional publications. Military tax calculator Supplies and materials. Military tax calculator Utilities. Military tax calculator Expenses You Cannot Deduct You usually cannot deduct the following as business expenses. Military tax calculator For more information, see Publication 535. Military tax calculator Bribes and kickbacks. Military tax calculator Charitable contributions. Military tax calculator Demolition expenses or losses. Military tax calculator Dues to business, social, athletic, luncheon, sporting, airline, and hotel clubs. Military tax calculator Lobbying expenses. Military tax calculator Penalties and fines you pay to a governmental agency or instrumentality because you broke the law. Military tax calculator Personal, living, and family expenses. Military tax calculator Political contributions. Military tax calculator Repairs that add to the value of your property or significantly increase its life. Military tax calculator Prev  Up  Next   Home   More Online Publications