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Myfreetaxes de com Index A Assistance (see Help) C Casualty and theft losses, Casualty and Theft Losses Clean-up costs, Demolition and Clean-up Costs Copy of tax return, request for, Request for copy of tax return. Myfreetaxes de com Credits: Employee retention, Employee Retention Credit D Demolition costs, Demolition and Clean-up Costs Depreciation: Qualified recovery assistance property, Qualified recovery assistance property. Myfreetaxes de com Special allowance, Special Depreciation Allowance Disaster area: May 4, 2007 storms and tornadoes, Kansas Disaster Area Distributions: Home purchase or construction, Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Qualified recovery assistance, Qualified recovery assistance distribution. Myfreetaxes de com Repayment of, Repayment of Qualified Recovery Assistance Distributions Taxation of, Taxation of Qualified Recovery Assistance Distributions E Eligible retirement plan, Eligible retirement plan. Myfreetaxes de com Employee retention credit, Employee Retention Credit F Free tax services, How To Get Tax Help H Help: How to get, How To Get Tax Help Phone number, How To Get Tax Help Special IRS assistance, How To Get Tax Help Website, How To Get Tax Help I Involuntary conversion (see Replacement period for nonrecognition of gain) IRAs and other retirement plans, IRAs and Other Retirement Plans K Kansas disaster area, Kansas Disaster Area M More information (see Tax help) N Net operating losses, Net Operating Losses P Publications (see Tax help) Q Qualified recovery assistance distribution, Qualified recovery assistance distribution. Myfreetaxes de com Qualified recovery assistance loss, Qualified recovery assistance loss. Myfreetaxes de com R Replacement period for nonrecognition of gain, Replacement Period for Nonrecognition of Gain Retirement plan, eligible, Eligible retirement plan. Myfreetaxes de com Retirement plans, IRAs and Other Retirement Plans S Section 179 deduction, Increased Section 179 Deduction Storms and tornadoes, Storms and Tornadoes T Tax help, How To Get Tax Help (see Help) Tax return: Request for copy, Request for copy of tax return. Myfreetaxes de com Request for transcript, Request for transcript of tax return. Myfreetaxes de com Taxpayer Advocate, Contacting your Taxpayer Advocate. Myfreetaxes de com Theft losses, Casualty and Theft Losses Transcript of tax return, request for, Request for transcript of tax return. Myfreetaxes de com TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Myfreetaxes de com 28. Myfreetaxes de com   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. Myfreetaxes de com  The 2013 rate for business use of a vehicle is 56½ cents per mile. Myfreetaxes de com Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Myfreetaxes de com You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Myfreetaxes de com This chapter covers the following topics. Myfreetaxes de com Deductions subject to the 2% limit. Myfreetaxes de com Deductions not subject to the 2% limit. Myfreetaxes de com Expenses you cannot deduct. Myfreetaxes de com You must keep records to verify your deductions. Myfreetaxes de com You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Myfreetaxes de com For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Myfreetaxes de com Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). Myfreetaxes de com You can claim the amount of expenses that is more than 2% of your adjusted gross income. Myfreetaxes de com You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Myfreetaxes de com Your adjusted gross income is the amount on Form 1040, line 38. Myfreetaxes de com Generally, you apply the 2% limit after you apply any other deduction limit. Myfreetaxes de com For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. Myfreetaxes de com Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Myfreetaxes de com Unreimbursed employee expenses (line 21). Myfreetaxes de com Tax preparation fees (line 22). Myfreetaxes de com Other expenses (line 23). Myfreetaxes de com Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Myfreetaxes de com An expense is ordinary if it is common and accepted in your trade, business, or profession. Myfreetaxes de com An expense is necessary if it is appropriate and helpful to your business. Myfreetaxes de com An expense does not have to be required to be considered necessary. Myfreetaxes de com Examples of unreimbursed employee expenses are listed next. Myfreetaxes de com The list is followed by discussions of additional unreimbursed employee expenses. Myfreetaxes de com Business bad debt of an employee. Myfreetaxes de com Education that is work related. Myfreetaxes de com (See chapter 27. Myfreetaxes de com ) Legal fees related to your job. Myfreetaxes de com Licenses and regulatory fees. Myfreetaxes de com Malpractice insurance premiums. Myfreetaxes de com Medical examinations required by an employer. Myfreetaxes de com Occupational taxes. Myfreetaxes de com Passport for a business trip. Myfreetaxes de com Subscriptions to professional journals and trade magazines related to your work. Myfreetaxes de com Travel, transportation, entertainment, and gifts related to your work. Myfreetaxes de com (See chapter 26. Myfreetaxes de com ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Myfreetaxes de com Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. Myfreetaxes de com 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. Myfreetaxes de com For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Myfreetaxes de com 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. Myfreetaxes de com Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Myfreetaxes de com Lobbying and political activities. Myfreetaxes de com   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Myfreetaxes de com See Dues used for lobbying under Nondeductible Expenses, later. Myfreetaxes de com 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. Myfreetaxes de com If you file Form 1040A, you can deduct these expenses on line 16. Myfreetaxes de com If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Myfreetaxes de com However, neither spouse can deduct more than $250 of his or her qualified expenses. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Myfreetaxes de com See Publication 587 for more detailed information and a worksheet. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com Employment and outplacement agency fees. Myfreetaxes de com   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Myfreetaxes de com Employer pays you back. Myfreetaxes de com   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. Myfreetaxes de com (See Recoveries in chapter 12. Myfreetaxes de com ) Employer pays the employment agency. Myfreetaxes de com   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. Myfreetaxes de com Résumé. Myfreetaxes de com   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. Myfreetaxes de com Travel and transportation expenses. Myfreetaxes de com   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. Myfreetaxes de com You can deduct the travel expenses if the trip is primarily to look for a new job. Myfreetaxes de com 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. Myfreetaxes de com   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. Myfreetaxes de com   You can choose to use the standard mileage rate to figure your car expenses. Myfreetaxes de com The 2013 rate for business use of a vehicle is 56½ cents per mile. Myfreetaxes de com See chapter 26 for more information. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Myfreetaxes de com 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. Myfreetaxes de com However, you cannot deduct the cost of travel as a form of education. Myfreetaxes de com 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. Myfreetaxes de com You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Myfreetaxes de com For more information about depreciation, see Publication 946. Myfreetaxes de com Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Myfreetaxes de com You can also deduct assessments for benefit payments to unemployed union members. Myfreetaxes de com However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Myfreetaxes de com Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Myfreetaxes de com You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Myfreetaxes de com See Lobbying Expenses under Nondeductible Expenses, later. Myfreetaxes de com Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Myfreetaxes de com You must wear them as a condition of your employment. Myfreetaxes de com The clothes are not suitable for everyday wear. Myfreetaxes de com It is not enough that you wear distinctive clothing. Myfreetaxes de com The clothing must be specifically required by your employer. Myfreetaxes de com Nor is it enough that you do not, in fact, wear your work clothes away from work. Myfreetaxes de com The clothing must not be suitable for taking the place of your regular clothing. Myfreetaxes de com 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. Myfreetaxes de com ). Myfreetaxes de com Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Myfreetaxes de com 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. Myfreetaxes de com Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Myfreetaxes de com Protective clothing. Myfreetaxes de com   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. Myfreetaxes de com   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. Myfreetaxes de com Military uniforms. Myfreetaxes de com   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Myfreetaxes de com 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. Myfreetaxes de com In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Myfreetaxes de com   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. Myfreetaxes de com   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Myfreetaxes de com Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Myfreetaxes de com Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Myfreetaxes de com These fees include the cost of tax preparation software programs and tax publications. Myfreetaxes de com They also include any fee you paid for electronic filing of your return. Myfreetaxes de com Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Myfreetaxes de com On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Myfreetaxes de com You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. Myfreetaxes de com Some of these other expenses are explained in the following discussions. Myfreetaxes de com If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Myfreetaxes de com Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Myfreetaxes de com 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. Myfreetaxes de com First report the loss in Section B of Form 4684, Casualties and Thefts. Myfreetaxes de com You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Myfreetaxes de com 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. Myfreetaxes de com For other casualty and theft losses, see chapter 25. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com The fees are deductible in the year paid. Myfreetaxes de com 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). Myfreetaxes de com You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Myfreetaxes de com But if you work as an employee and also use the computer in that work, see Publication 946. Myfreetaxes de com 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. Myfreetaxes de com Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Myfreetaxes de com 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. Myfreetaxes de com For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Myfreetaxes de com 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. Myfreetaxes de com But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Myfreetaxes de com You must add the fee to the cost of the property. Myfreetaxes de com You cannot deduct the fee you pay to a broker to sell securities. Myfreetaxes de com You can use the fee only to figure gain or loss from the sale. Myfreetaxes de com See the Instructions for Form 8949 for information on how to report the fee. Myfreetaxes de com Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Myfreetaxes de com A hobby is not a business because it is not carried on to make a profit. Myfreetaxes de com See Activity not for profit in chapter 12 under Other Income. Myfreetaxes de com Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Myfreetaxes de com Deductions of pass-through entities are passed through to the partners or shareholders. Myfreetaxes de com The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Myfreetaxes de com Example. Myfreetaxes de com You are a member of an investment club that is formed solely to invest in securities. Myfreetaxes de com The club is treated as a partnership. Myfreetaxes de com The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Myfreetaxes de com In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Myfreetaxes de com 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. Myfreetaxes de com Publicly offered mutual funds. Myfreetaxes de com   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Myfreetaxes de com 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. Myfreetaxes de com   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). Myfreetaxes de com This net figure is the amount you report on your return as income. Myfreetaxes de com You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Myfreetaxes de com Information returns. Myfreetaxes de com   You should receive information returns from pass-through entities. Myfreetaxes de com Partnerships and S corporations. Myfreetaxes de com   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. Myfreetaxes de com Nonpublicly offered mutual funds. Myfreetaxes de com   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. Myfreetaxes de com You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Myfreetaxes de com See Tax Preparation Fees , earlier. Myfreetaxes de com Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. Myfreetaxes de com 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. Myfreetaxes de com If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Myfreetaxes de com If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Myfreetaxes de com Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. Myfreetaxes de com 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. Myfreetaxes de com You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Myfreetaxes de com Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Myfreetaxes de com 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. Myfreetaxes de com Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Myfreetaxes de com For more information about IRAs, see chapter 17. Myfreetaxes de com Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Myfreetaxes de com They are not subject to the 2% limit. Myfreetaxes de com Report these items on Schedule A (Form 1040), line 28. Myfreetaxes de com List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Myfreetaxes de com Amortizable premium on taxable bonds. Myfreetaxes de com Casualty and theft losses from income- producing property. Myfreetaxes de com Federal estate tax on income in respect of a decedent. Myfreetaxes de com Gambling losses up to the amount of gambling winnings. Myfreetaxes de com Impairment-related work expenses of persons with disabilities. Myfreetaxes de com Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Myfreetaxes de com Losses from Ponzi-type investment schemes. Myfreetaxes de com See Losses from Ponzi-type investment schemes under Theft in chapter 25. Myfreetaxes de com Repayments of more than $3,000 under a claim of right. Myfreetaxes de com Unrecovered investment in an annuity. Myfreetaxes de com 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. Myfreetaxes de com You can elect to amortize the premium on taxable bonds. Myfreetaxes de com The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Myfreetaxes de com Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Myfreetaxes de com For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. Myfreetaxes de com 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). Myfreetaxes de com First, report the loss in Form 4684, Section B. Myfreetaxes de com You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Myfreetaxes de com 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. Myfreetaxes de com For more information on casualty and theft losses, see chapter 25. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com See Publication 559 for more information. Myfreetaxes de com 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. Myfreetaxes de com You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Myfreetaxes de com You cannot deduct gambling losses that are more than your winnings. Myfreetaxes de com You cannot reduce your gambling winnings by your gambling losses and report the difference. Myfreetaxes de com 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. Myfreetaxes de com Therefore, your records should show your winnings separately from your losses. Myfreetaxes de com Diary of winnings and losses. Myfreetaxes de com You must keep an accurate diary or similar record of your losses and winnings. Myfreetaxes de com Your diary should contain at least the following information. Myfreetaxes de com The date and type of your specific wager or wagering activity. Myfreetaxes de com The name and address or location of the gambling establishment. Myfreetaxes de com The names of other persons present with you at the gambling establishment. Myfreetaxes de com The amount(s) you won or lost. Myfreetaxes de com See Publication 529 for more information. Myfreetaxes de com 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. Myfreetaxes de com Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. Myfreetaxes de com Self-employed. Myfreetaxes de com   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. Myfreetaxes de com 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. Myfreetaxes de com It is not subject to the passive activity limitations. Myfreetaxes de com 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. Myfreetaxes de com See Repayments in chapter 12 for more information. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com See chapter 10 for more information about the tax treatment of pensions and annuities. Myfreetaxes de com Nondeductible Expenses Examples of nondeductible expenses are listed next. Myfreetaxes de com The list is followed by discussions of additional nondeductible expenses. Myfreetaxes de com List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Myfreetaxes de com Burial or funeral expenses, including the cost of a cemetery lot. Myfreetaxes de com Capital expenses. Myfreetaxes de com Fees and licenses, such as car licenses, marriage licenses, and dog tags. Myfreetaxes de com Hobby losses, but see Hobby Expenses , earlier. Myfreetaxes de com Home repairs, insurance, and rent. Myfreetaxes de com Illegal bribes and kickbacks. Myfreetaxes de com See Bribes and kickbacks in chapter 11 of Publication 535. Myfreetaxes de com Losses from the sale of your home, furniture, personal car, etc. Myfreetaxes de com Personal disability insurance premiums. Myfreetaxes de com Personal, living, or family expenses. Myfreetaxes de com The value of wages never received or lost vacation time. Myfreetaxes de com Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Myfreetaxes de com See chapter 37. Myfreetaxes de com Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Myfreetaxes de com These include qualification and registration fees for primary elections. Myfreetaxes de com Legal fees. Myfreetaxes de com   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Myfreetaxes de com 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. Myfreetaxes de com Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Myfreetaxes de com This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Myfreetaxes de com 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. Myfreetaxes de com Dues paid to airline, hotel, and luncheon clubs are not deductible. Myfreetaxes de com Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Myfreetaxes de com 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. Myfreetaxes de com Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Myfreetaxes de com This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Myfreetaxes de com Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Myfreetaxes de com 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. Myfreetaxes de com Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Myfreetaxes de com However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Myfreetaxes de com See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Myfreetaxes de com Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Myfreetaxes de com Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Myfreetaxes de com You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Myfreetaxes de com See chapter 18 for information on alimony. Myfreetaxes de com Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Myfreetaxes de com 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. Myfreetaxes de com Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Myfreetaxes de com Dues used for lobbying. Myfreetaxes de com   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. Myfreetaxes de com See Lobbying Expenses in Publication 529 for information on exceptions. Myfreetaxes de com Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Myfreetaxes de com 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. Myfreetaxes de com See chapter 25. Myfreetaxes de com Example. Myfreetaxes de com A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Myfreetaxes de com The diamond falls from the ring and is never found. Myfreetaxes de com The loss of the diamond is a casualty. Myfreetaxes de com Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Myfreetaxes de com See chapter 26 for information on deductible expenses while traveling away from home. Myfreetaxes de com Meals While Working Late You cannot deduct the cost of meals while working late. Myfreetaxes de com However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. Myfreetaxes de com See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Myfreetaxes de com Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Myfreetaxes de com Custody of children. Myfreetaxes de com Breach of promise to marry suit. Myfreetaxes de com Civil or criminal charges resulting from a personal relationship. Myfreetaxes de com Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Myfreetaxes de com Preparation of a title (or defense or perfection of a title). Myfreetaxes de com Preparation of a will. Myfreetaxes de com Property claims or property settlement in a divorce. Myfreetaxes de com You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Myfreetaxes de com Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Myfreetaxes de com Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Myfreetaxes de com Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Myfreetaxes de com Accounting certificate fees paid for the initial right to practice accounting. Myfreetaxes de com Bar exam fees and incidental expenses in securing initial admission to the bar. Myfreetaxes de com Medical and dental license fees paid to get initial licensing. Myfreetaxes de com Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com 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. Myfreetaxes de com You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Myfreetaxes de com Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Myfreetaxes de com You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Myfreetaxes de com If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. Myfreetaxes de com Example. Myfreetaxes de com During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Myfreetaxes de com In earning this income, you had total expenses of $500 during the year. Myfreetaxes de com You cannot identify the amount of each expense item that is for each income item. Myfreetaxes de com Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. Myfreetaxes de com You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Myfreetaxes de com Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. Myfreetaxes de com See chapter 26 for more information on deductible travel expenses. Myfreetaxes de com Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Myfreetaxes de com However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. Myfreetaxes de com Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. Myfreetaxes de com Prev  Up  Next   Home   More Online Publications