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Taxact 2009

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Taxact 2009

Taxact 2009 5. Taxact 2009   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Taxact 2009 J-1 visa holders. Taxact 2009 Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Taxact 2009 The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Taxact 2009 Resident aliens should get publications, forms, and instructions for U. Taxact 2009 S. Taxact 2009 citizens, because the information for filing returns for resident aliens is generally the same as for U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Taxact 2009 Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Taxact 2009 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Taxact 2009 S. Taxact 2009 Individual Income Tax Return 1040NR U. Taxact 2009 S. Taxact 2009 Nonresident Alien Income Tax Return 1040NR-EZ U. Taxact 2009 S. Taxact 2009 Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Taxact 2009 Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Taxact 2009 If you have not previously established a fiscal tax year, your tax year is the calendar year. Taxact 2009 A calendar year is 12 consecutive months ending on December 31. Taxact 2009 If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Taxact 2009 S. Taxact 2009 resident for any calendar year, you will be treated as a U. Taxact 2009 S. Taxact 2009 resident for any part of your fiscal year that falls within that calendar year. Taxact 2009 Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Taxact 2009 For an individual, this is a social security number (SSN). Taxact 2009 If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Taxact 2009 An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Taxact 2009 You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Taxact 2009 S. Taxact 2009 trade or business at any time during the year, An alien who has a U. Taxact 2009 S. Taxact 2009 office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Taxact 2009 Social security number (SSN). Taxact 2009   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Taxact 2009 S. Taxact 2009 employment. Taxact 2009   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Taxact 2009 You can also download Form SS-5 from the SSA's website at www. Taxact 2009 socialsecurity. Taxact 2009 gov/ssnumber/ss5. Taxact 2009 htm. Taxact 2009 You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Taxact 2009 Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Taxact 2009 F-1 and M-1 visa holders. Taxact 2009    If you are an F-1 or M-1 student, you must also show your Form I-20. Taxact 2009 For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Taxact 2009 socialsecurity. Taxact 2009 gov/pubs/10181. Taxact 2009 html. Taxact 2009 J-1 visa holders. Taxact 2009   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Taxact 2009 For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Taxact 2009 socialsecurity. Taxact 2009 gov/pubs/10107. Taxact 2009 html. Taxact 2009 Individual taxpayer identification number (ITIN). Taxact 2009   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Taxact 2009 For details on how to do so, see Form W-7 and its instructions. Taxact 2009 Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Taxact 2009 If you already have an ITIN, enter it wherever an SSN is required on your tax return. Taxact 2009   An ITIN is for tax use only. Taxact 2009 It does not entitle you to social security benefits or change your employment or immigration status under U. Taxact 2009 S. Taxact 2009 law. Taxact 2009   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Taxact 2009 Employer identification number (EIN). Taxact 2009   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Taxact 2009 To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Taxact 2009 Filing Status The amount of your tax depends on your filing status. Taxact 2009 Your filing status is important in determining whether you can take certain deductions and credits. Taxact 2009 The rules for determining your filing status are different for resident aliens and nonresident aliens. Taxact 2009 Resident Aliens Resident aliens can use the same filing statuses available to U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 See your form instructions or Publication 501 for more information on filing status. Taxact 2009 Married filing jointly. Taxact 2009   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Taxact 2009 Qualifying widow(er). Taxact 2009   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Taxact 2009 This applies only if you could have filed a joint return with your spouse for the year your spouse died. Taxact 2009 Head of household. Taxact 2009   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Taxact 2009 You must be a resident alien for the entire tax year. Taxact 2009   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Taxact 2009 Note. Taxact 2009   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Taxact 2009 In that case, you will not be entitled to the credit. Taxact 2009 See Publication 596 for more information. Taxact 2009 Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Taxact 2009 If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Taxact 2009 Married nonresident alien. Taxact 2009   Married nonresident aliens who are not married to U. Taxact 2009 S. Taxact 2009 citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 Exceptions. Taxact 2009   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Taxact 2009 However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Taxact 2009 S. Taxact 2009 national. Taxact 2009 See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Taxact 2009 U. Taxact 2009 S. Taxact 2009 national is defined later in this section under Qualifying widow(er) . Taxact 2009   A nonresident alien generally cannot file as married filing jointly. Taxact 2009 However, a nonresident alien who is married to a U. Taxact 2009 S. Taxact 2009 citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Taxact 2009 For information on these choices, see chapter 1. Taxact 2009 If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Taxact 2009 Qualifying widow(er). Taxact 2009   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Taxact 2009 You were a resident of Canada, Mexico, or South Korea, or a U. Taxact 2009 S. Taxact 2009 national (defined later). Taxact 2009 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Taxact 2009 You have a dependent child living with you. Taxact 2009 See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Taxact 2009   A U. Taxact 2009 S. Taxact 2009 national is an individual who, although not a U. Taxact 2009 S. Taxact 2009 citizen, owes his or her allegiance to the United States. Taxact 2009 U. Taxact 2009 S. Taxact 2009 nationals include American Samoans and Northern Mariana Islanders who chose to become U. Taxact 2009 S. Taxact 2009 nationals instead of U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 Head of household. Taxact 2009   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Taxact 2009 However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Taxact 2009 S. Taxact 2009 citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Taxact 2009 Note. Taxact 2009   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Taxact 2009 In that case, your spouse will not be entitled to the credit. Taxact 2009 See Publication 596 for more information. Taxact 2009 Estates and trusts. Taxact 2009   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 Special rules for aliens from certain U. Taxact 2009 S. Taxact 2009 possessions. Taxact 2009   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Taxact 2009 Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Taxact 2009 For resident aliens, this includes income from sources both within and outside the United States. Taxact 2009 For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Taxact 2009 S. Taxact 2009 sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Taxact 2009 Deductions Resident and nonresident aliens can claim similar deductions on their U. Taxact 2009 S. Taxact 2009 tax returns. Taxact 2009 However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 Resident Aliens You can claim the same deductions allowed to U. Taxact 2009 S. Taxact 2009 citizens if you are a resident alien for the entire tax year. Taxact 2009 While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Taxact 2009 You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Taxact 2009 Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Taxact 2009 You generally cannot claim deductions related to income that is not connected with your U. Taxact 2009 S. Taxact 2009 business activities. Taxact 2009 Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Taxact 2009 Ordinary and necessary business expenses. Taxact 2009   You can deduct all ordinary and necessary expenses in the operation of your U. Taxact 2009 S. Taxact 2009 trade or business to the extent they relate to income effectively connected with that trade or business. Taxact 2009 The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Taxact 2009 For information about other business expenses, see Publication 535. Taxact 2009 Losses. Taxact 2009   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Taxact 2009 to the extent that they relate to income that is effectively connected with a trade or business in the United States. Taxact 2009 Educator expenses. Taxact 2009   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Taxact 2009 For more information, see your tax form instructions. Taxact 2009 Individual retirement arrangement (IRA). Taxact 2009   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Taxact 2009 But you must have taxable compensation effectively connected with a U. Taxact 2009 S. Taxact 2009 trade or business to do so. Taxact 2009 A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Taxact 2009 If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Taxact 2009 ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Taxact 2009 But you can still make contributions to a traditional IRA even if you cannot deduct them. Taxact 2009 If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Taxact 2009   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Taxact 2009 Moving expenses. Taxact 2009   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Taxact 2009 You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Taxact 2009 Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Taxact 2009 If you had no former job location, the new job location must be at least 50 miles from your former home. Taxact 2009   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Taxact 2009   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Taxact 2009   For more information on the moving expense deduction, see Publication 521. Taxact 2009 Reimbursements. Taxact 2009   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Taxact 2009 You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Taxact 2009 For more information, see Publication 521. Taxact 2009 Moving expense or travel expense. Taxact 2009   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Taxact 2009 Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Taxact 2009 Self-employed SEP, SIMPLE, and qualified retirement plans. Taxact 2009   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Taxact 2009 To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Taxact 2009 Penalty on early withdrawal of savings. Taxact 2009   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Taxact 2009 Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Taxact 2009 However, if the interest income is effectively connected with your U. Taxact 2009 S. Taxact 2009 trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Taxact 2009 Student loan interest expense. Taxact 2009   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Taxact 2009 Generally, you can claim the deduction if all the following requirements are met. Taxact 2009 Your filing status is any filing status except married filing separately. Taxact 2009 Your modified adjusted gross income is less than $75,000. Taxact 2009 No one else is claiming an exemption for you on his or her 2013 tax return. Taxact 2009 You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Taxact 2009 The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Taxact 2009 The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Taxact 2009 The person for whom the expenses were paid or incurred was an eligible student. Taxact 2009 Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Taxact 2009 For more information, see Publication 970, Tax Benefits for Education. Taxact 2009 Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Taxact 2009 S. Taxact 2009 tax return. Taxact 2009 Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Taxact 2009 S. Taxact 2009 tax purposes and was not the dependent of another taxpayer. Taxact 2009 You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Taxact 2009 You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Taxact 2009 Get Publication 501 for more information. Taxact 2009 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Taxact 2009 See Identification Number, earlier. Taxact 2009 Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Taxact 2009 You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Taxact 2009 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Taxact 2009 See Identification Number, earlier. Taxact 2009 Residents of Mexico or Canada or U. Taxact 2009 S. Taxact 2009 nationals. Taxact 2009   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Taxact 2009 S. Taxact 2009 tax purposes and cannot be claimed as the dependent on another U. Taxact 2009 S. Taxact 2009 taxpayer's return. Taxact 2009 In addition, you can claim exemptions for your dependents who meet certain tests. Taxact 2009 Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Taxact 2009 S. Taxact 2009 citizens to determine who is a dependent and for which dependents exemptions can be claimed. Taxact 2009 See Publication 501 for these rules. Taxact 2009 For purposes of these rules, dependents who are U. Taxact 2009 S. Taxact 2009 nationals meet the citizenship test discussed in Publication 501. Taxact 2009 Residents of South Korea. Taxact 2009   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Taxact 2009 The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Taxact 2009 S. Taxact 2009 source gross income effectively connected with a U. Taxact 2009 S. Taxact 2009 trade or business for the tax year to the alien's entire income from all sources during the tax year. Taxact 2009 Example. Taxact 2009 Mr. Taxact 2009 Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Taxact 2009 During the tax year he receives U. Taxact 2009 S. Taxact 2009 compensation of $18,000. Taxact 2009 He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 Thus, his total income for the year is $24,000. Taxact 2009 Mr. Taxact 2009 Park meets all requirements for claiming exemptions for his spouse and two children. Taxact 2009 The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Taxact 2009   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Taxact 2009   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Taxact 2009 S. Taxact 2009 taxpayer's return. Taxact 2009   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 See Publication 501 for these rules. Taxact 2009   List your spouse and dependents on line 7c of Form 1040NR. Taxact 2009 Enter the total on the appropriate line to the right of line 7c. Taxact 2009 Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Taxact 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 Resident Aliens You can claim the same itemized deductions as U. Taxact 2009 S. Taxact 2009 citizens, using Schedule A of Form 1040. Taxact 2009 These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Taxact 2009 If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Taxact 2009 For further information, see Form 1040 and instructions. Taxact 2009 Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 These deductions include state and local income taxes, charitable contributions to U. Taxact 2009 S. Taxact 2009 organizations, casualty and theft losses, and miscellaneous deductions. Taxact 2009 Use Schedule A of Form 1040NR to claim itemized deductions. Taxact 2009 If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Taxact 2009 If you are claiming any other itemized deduction, you must file Form 1040NR. Taxact 2009 Standard deduction. Taxact 2009   Nonresident aliens cannot claim the standard deduction. Taxact 2009 However, see Students and business apprentices from India , next. Taxact 2009 Students and business apprentices from India. Taxact 2009   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Taxact 2009 You can claim the standard deduction provided you do not claim itemized deductions. Taxact 2009   Use Worksheet 5-1 to figure your standard deduction. Taxact 2009 If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Taxact 2009 State and local income taxes. Taxact 2009   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Taxact 2009 If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Taxact 2009 Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Taxact 2009 See Recoveries in Publication 525 for details on how to figure the amount to include in income. Taxact 2009 Charitable contributions. Taxact 2009   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Taxact 2009 Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Taxact 2009 Certain organizations that promote national or international amateur sports competition are also qualified organizations. Taxact 2009 Foreign organizations. Taxact 2009   Contributions made directly to a foreign organization are not deductible. Taxact 2009 However, you can deduct contributions to a U. Taxact 2009 S. Taxact 2009 organization that transfers funds to a charitable foreign organization if the U. Taxact 2009 S. Taxact 2009 organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Taxact 2009 S. Taxact 2009 organization. Taxact 2009   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Taxact 2009 Worksheet 5-1. Taxact 2009 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Taxact 2009 If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Taxact 2009 You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Taxact 2009 1 Enter the amount shown below for your filing status. Taxact 2009           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Taxact 2009           2 Can you be claimed as a dependent on someone else's U. Taxact 2009 S. Taxact 2009 income tax return?  No. Taxact 2009 Enter the amount from line 1 on line 4. Taxact 2009 Skip line 3 and go to line 5. Taxact 2009   Yes. Taxact 2009 Go to line 3. Taxact 2009         3 Is your earned income* more than $650?           Yes. Taxact 2009 Add $350 to your earned income. Taxact 2009 Enter the total. Taxact 2009           No. Taxact 2009 Enter $1,000 3. Taxact 2009       4 Enter the smaller of line 1 or line 3 4. Taxact 2009   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Taxact 2009 If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Taxact 2009 Otherwise, enter -0- 5. Taxact 2009   6 Add lines 4 and 5. Taxact 2009 Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Taxact 2009 Print “Standard Deduction Allowed Under U. Taxact 2009 S. Taxact 2009 –India Income Tax Treaty” in the space to the left of these lines. Taxact 2009 This is your standard deduction for 2013. Taxact 2009 6. Taxact 2009   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Taxact 2009 It also includes any amount received as a scholarship that you must include in your income. Taxact 2009 Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Taxact 2009 Contributions from which you benefit. Taxact 2009   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Taxact 2009   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Taxact 2009 For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Taxact 2009 Cash contributions. Taxact 2009   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Taxact 2009 The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Taxact 2009   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Taxact 2009 If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Taxact 2009 Noncash contributions. Taxact 2009   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Taxact 2009 See Publication 526 for details. Taxact 2009 For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Taxact 2009 If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Taxact 2009 If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Taxact 2009 If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Taxact 2009 You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Taxact 2009 See Form 8283 and its instructions for details. Taxact 2009 Contributions of appreciated property. Taxact 2009   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Taxact 2009 However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Taxact 2009 Your basis in the property is generally what you paid for it. Taxact 2009 If you need more information about basis, get Publication 551, Basis of Assets. Taxact 2009   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Taxact 2009 For information about these rules, see Publication 526. Taxact 2009 Limit. Taxact 2009   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Taxact 2009 For a discussion of limits on charitable contributions and other information, get Publication 526. Taxact 2009 Casualty and theft losses. Taxact 2009   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 The property can be personal use property or income-producing property not connected with a U. Taxact 2009 S. Taxact 2009 trade or business. Taxact 2009 The property must be located in the United States at the time of the casualty or theft. Taxact 2009 You can deduct theft losses only in the year in which you discover the loss. Taxact 2009   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Taxact 2009 The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Taxact 2009   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Taxact 2009 If you do not, you cannot deduct this loss as a casualty or theft loss. Taxact 2009   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Taxact 2009 Losses from personal use property. Taxact 2009    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Taxact 2009 You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Taxact 2009 Losses from income-producing property. Taxact 2009   These losses are not subject to the limitations that apply to personal use property. Taxact 2009 Use Section B of Form 4684 to figure your deduction for these losses. Taxact 2009 Job expenses and other miscellaneous deductions. Taxact 2009   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Taxact 2009 Generally, the allowable deductions must be related to effectively connected income. Taxact 2009 Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Taxact 2009   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Taxact 2009 For more information on miscellaneous deductions, see the instructions for Form 1040NR. Taxact 2009 Travel expenses. Taxact 2009   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Taxact 2009 Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Taxact 2009 You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Taxact 2009   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Taxact 2009 You cannot deduct travel expenses for other members of your family or party. Taxact 2009 Deductible travel expenses. Taxact 2009   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Taxact 2009 , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Taxact 2009 You generally can deduct only 50% of unreimbursed meal expenses. Taxact 2009 The standard meal allowance rates for high-cost areas are available at www. Taxact 2009 gsa. Taxact 2009 gov/perdiem. Taxact 2009 The rates for other areas are in Publication 463. Taxact 2009   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Taxact 2009 Expenses allocable to U. Taxact 2009 S. Taxact 2009 tax-exempt income. Taxact 2009   You cannot deduct an expense, or part of an expense, that is allocable to U. Taxact 2009 S. Taxact 2009 tax-exempt income, including income exempt by tax treaty. Taxact 2009 Example. Taxact 2009 Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Taxact 2009 S. Taxact 2009 company. Taxact 2009 During her stay in the United States, she received a salary of $8,000 from her Polish employer. Taxact 2009 She received no other U. Taxact 2009 S. Taxact 2009 source income. Taxact 2009 She spent $3,000 on travel expenses, of which $1,000 were for meals. Taxact 2009 None of these expenses were reimbursed. Taxact 2009 Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Taxact 2009 S. Taxact 2009 income tax. Taxact 2009 In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Taxact 2009 She must reduce the remaining $2,500 of travel expenses by 62. Taxact 2009 5% ($1,563) because 62. Taxact 2009 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Taxact 2009 She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Taxact 2009 She completes the remaining lines according to the instructions for Schedule A. Taxact 2009 More information. Taxact 2009   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Taxact 2009 Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Taxact 2009 Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Taxact 2009 S. Taxact 2009 citizens. Taxact 2009 The following items are some of the credits you may be able to claim. Taxact 2009 Foreign tax credit. Taxact 2009   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Taxact 2009 You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Taxact 2009 To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Taxact 2009   For more information, get Publication 514, Foreign Tax Credit for Individuals. Taxact 2009 Child and dependent care credit. Taxact 2009   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Taxact 2009 Generally, you must be able to claim an exemption for your dependent. Taxact 2009   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Taxact 2009 Credit for the elderly or the disabled. Taxact 2009   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Taxact 2009 For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Taxact 2009 Education credits. Taxact 2009   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Taxact 2009 There are two education credits: the American Opportunity Credit and the lifetime learning credit. Taxact 2009 You cannot claim these credits if you are married filing separately. Taxact 2009 Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Taxact 2009 For more information, see Publication 970. Taxact 2009 Retirement savings contributions credit. Taxact 2009   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Taxact 2009 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Taxact 2009 Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Taxact 2009 For more information, see Publication 590. Taxact 2009 Child tax credit. Taxact 2009   You may be able to take this credit if you have a qualifying child. Taxact 2009   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Taxact 2009 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Taxact 2009 Is a U. Taxact 2009 S. Taxact 2009 citizen, a U. Taxact 2009 S. Taxact 2009 national, or a resident alien. Taxact 2009 Did not provide over half of his or her own support for 2013. Taxact 2009 Lived with you more than half of 2013. Taxact 2009 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Taxact 2009 Is claimed as a dependent on your return. Taxact 2009 An adopted child is always treated as your own child. Taxact 2009 An adopted child includes a child lawfully placed with you for legal adoption. Taxact 2009   See your form instructions for additional details. Taxact 2009 Adoption credit. Taxact 2009   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Taxact 2009 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Taxact 2009 To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Taxact 2009 Earned income credit. Taxact 2009   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Taxact 2009 If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Taxact 2009 If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Taxact 2009 If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Taxact 2009 You cannot claim the earned income credit if your filing status is married filing separately. Taxact 2009    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Taxact 2009 You cannot claim the credit using an ITIN. Taxact 2009 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Taxact 2009 An example of a federally funded benefit is Medicaid. Taxact 2009 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Taxact 2009 S. Taxact 2009 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Taxact 2009 Other information. Taxact 2009   There are other eligibility rules that are not discussed here. Taxact 2009 For more information, get Publication 596, Earned Income Credit. Taxact 2009 Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Taxact 2009 You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Taxact 2009 Credits Credits are allowed only if you receive effectively connected income. Taxact 2009 You may be able to claim some of the following credits. Taxact 2009 Foreign tax credit. Taxact 2009   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Taxact 2009 S. Taxact 2009 possession on that income. Taxact 2009   If you do not have foreign source income effectively connected with a U. Taxact 2009 S. Taxact 2009 trade or business, you cannot claim credits against your U. Taxact 2009 S. Taxact 2009 tax for taxes paid or accrued to a foreign country or U. Taxact 2009 S. Taxact 2009 possession. Taxact 2009   You cannot take any credit for taxes imposed by a foreign country or U. Taxact 2009 S. Taxact 2009 possession on your U. Taxact 2009 S. Taxact 2009 source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Taxact 2009   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Taxact 2009 See Publication 514 for more information. Taxact 2009 Child and dependent care credit. Taxact 2009   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Taxact 2009 Generally, you must be able to claim an exemption for your dependent. Taxact 2009   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Taxact 2009 S. Taxact 2009 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Taxact 2009   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Taxact 2009 Earned income generally means wages, salaries, and professional fees for personal services performed. Taxact 2009   For more information, get Publication 503. Taxact 2009 Education credits. Taxact 2009   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Taxact 2009 However, if you are married and choose to file a joint return with a U. Taxact 2009 S. Taxact 2009 citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Taxact 2009 Retirement savings contributions credit. Taxact 2009   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Taxact 2009 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Taxact 2009 Use Form 8880 to figure the credit. Taxact 2009 For more information, see Publication 590. Taxact 2009 Child tax credit. Taxact 2009   You may be able to take this credit if you have a qualifying child. Taxact 2009   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Taxact 2009 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Taxact 2009 Is a U. Taxact 2009 S. Taxact 2009 citizen, a U. Taxact 2009 S. Taxact 2009 national, or a resident alien. Taxact 2009 Did not provide over half of his or her own support for 2013. Taxact 2009 Lived with you more than half of 2013. Taxact 2009 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Taxact 2009 Is claimed as a dependent on your return. Taxact 2009 An adopted child is always treated as your own child. Taxact 2009 An adopted child includes a child lawfully placed with you for legal adoption. Taxact 2009   See your form instructions for additional details. Taxact 2009 Adoption credit. Taxact 2009   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Taxact 2009 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Taxact 2009 To claim the adoption credit, file Form 8839 with your Form 1040NR. Taxact 2009   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Taxact 2009 S. Taxact 2009 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Taxact 2009 Credit for prior year minimum tax. Taxact 2009   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Taxact 2009 Earned income credit. Taxact 2009   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Taxact 2009 However, if you are married and choose to file a joint return with a U. Taxact 2009 S. Taxact 2009 citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Taxact 2009    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Taxact 2009 You cannot claim the credit using an ITIN. Taxact 2009 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Taxact 2009 An example of a federally funded benefit is Medicaid. Taxact 2009 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Taxact 2009 S. Taxact 2009 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Taxact 2009   See Publication 596 for more information on the credit. Taxact 2009 Tax Withheld You can claim the tax withheld during the year as a payment against your U. Taxact 2009 S. Taxact 2009 tax. Taxact 2009 You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Taxact 2009 The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Taxact 2009 Withholding from wages. Taxact 2009   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Taxact 2009 S. Taxact 2009 income tax liability for the same year. Taxact 2009 You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Taxact 2009 Excess social security tax withheld. Taxact 2009   If you have two or more employers, you may be able to claim a credit against your U. Taxact 2009 S. Taxact 2009 income tax liability for social security tax withheld in excess of the maximum required. Taxact 2009 See Social Security and Medicare Taxes in chapter 8 for more information. Taxact 2009 Additional Medicare Tax. Taxact 2009   Your employer is responsible for withholding the 0. Taxact 2009 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Taxact 2009 If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Taxact 2009 Tax paid on undistributed long-term capital gains. Taxact 2009   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Taxact 2009 You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Taxact 2009 Tax withheld at the source. Taxact 2009   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Taxact 2009 Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Taxact 2009 Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Taxact 2009 Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Taxact 2009 Tax withheld on partnership income. Taxact 2009   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Taxact 2009 The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Taxact 2009 A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Taxact 2009 In this case, the partnership will give you a statement on Form 1042-S. Taxact 2009 Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Taxact 2009 Claiming tax withheld on your return. Taxact 2009   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Taxact 2009 The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Taxact 2009 Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Taxact 2009 You should file Form 1040 and report all income from sources both in and outside the United States. Taxact 2009 However, you can exclude the income discussed in the following paragraphs. Taxact 2009 For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Taxact 2009 For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Taxact 2009 There are also limits on what deductions and credits are allowed. Taxact 2009 See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Taxact 2009 Residents of Puerto Rico. Taxact 2009   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Taxact 2009   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Taxact 2009 You must also make your first payment of estimated tax by June 15. Taxact 2009 You cannot file a joint income tax return or make joint payments of estimated tax. Taxact 2009 However, if you are married to a U. Taxact 2009 S. Taxact 2009 citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Taxact 2009   If you earn wages subject to withholding, your U. Taxact 2009 S. Taxact 2009 income tax return is due by April 15. Taxact 2009 Your first payment of estimated tax is also due by April 15. Taxact 2009 For information on withholding and estimated tax, see chapter 8 . Taxact 2009 Residents of American Samoa. Taxact 2009   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Taxact 2009 S. Taxact 2009 government or any of its agencies). Taxact 2009 An employee of the American Samoan government is not considered an employee of the U. Taxact 2009 S. Taxact 2009 government or any of its agencies for purposes of the exclusion. Taxact 2009 For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Taxact 2009 S. Taxact 2009 Possessions. Taxact 2009 Prev  Up  Next   Home   More Online Publications
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The Taxact 2009

Taxact 2009 28. Taxact 2009   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. Taxact 2009  The 2013 rate for business use of a vehicle is 56½ cents per mile. Taxact 2009 Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Taxact 2009 You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Taxact 2009 This chapter covers the following topics. Taxact 2009 Deductions subject to the 2% limit. Taxact 2009 Deductions not subject to the 2% limit. Taxact 2009 Expenses you cannot deduct. Taxact 2009 You must keep records to verify your deductions. Taxact 2009 You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Taxact 2009 For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Taxact 2009 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). Taxact 2009 You can claim the amount of expenses that is more than 2% of your adjusted gross income. Taxact 2009 You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Taxact 2009 Your adjusted gross income is the amount on Form 1040, line 38. Taxact 2009 Generally, you apply the 2% limit after you apply any other deduction limit. Taxact 2009 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. Taxact 2009 Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Taxact 2009 Unreimbursed employee expenses (line 21). Taxact 2009 Tax preparation fees (line 22). Taxact 2009 Other expenses (line 23). Taxact 2009 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. Taxact 2009 An expense is ordinary if it is common and accepted in your trade, business, or profession. Taxact 2009 An expense is necessary if it is appropriate and helpful to your business. Taxact 2009 An expense does not have to be required to be considered necessary. Taxact 2009 Examples of unreimbursed employee expenses are listed next. Taxact 2009 The list is followed by discussions of additional unreimbursed employee expenses. Taxact 2009 Business bad debt of an employee. Taxact 2009 Education that is work related. Taxact 2009 (See chapter 27. Taxact 2009 ) Legal fees related to your job. Taxact 2009 Licenses and regulatory fees. Taxact 2009 Malpractice insurance premiums. Taxact 2009 Medical examinations required by an employer. Taxact 2009 Occupational taxes. Taxact 2009 Passport for a business trip. Taxact 2009 Subscriptions to professional journals and trade magazines related to your work. Taxact 2009 Travel, transportation, entertainment, and gifts related to your work. Taxact 2009 (See chapter 26. Taxact 2009 ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Taxact 2009 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. Taxact 2009 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. Taxact 2009 For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Taxact 2009 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. Taxact 2009 Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Taxact 2009 Lobbying and political activities. Taxact 2009   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Taxact 2009 See Dues used for lobbying under Nondeductible Expenses, later. Taxact 2009 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. Taxact 2009 If you file Form 1040A, you can deduct these expenses on line 16. Taxact 2009 If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Taxact 2009 However, neither spouse can deduct more than $250 of his or her qualified expenses. Taxact 2009 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. Taxact 2009 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. Taxact 2009 The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Taxact 2009 See Publication 587 for more detailed information and a worksheet. Taxact 2009 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. Taxact 2009 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. Taxact 2009 Employment and outplacement agency fees. Taxact 2009   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Taxact 2009 Employer pays you back. Taxact 2009   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. Taxact 2009 (See Recoveries in chapter 12. Taxact 2009 ) Employer pays the employment agency. Taxact 2009   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. Taxact 2009 Résumé. Taxact 2009   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. Taxact 2009 Travel and transportation expenses. Taxact 2009   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. Taxact 2009 You can deduct the travel expenses if the trip is primarily to look for a new job. Taxact 2009 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. Taxact 2009   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. Taxact 2009   You can choose to use the standard mileage rate to figure your car expenses. Taxact 2009 The 2013 rate for business use of a vehicle is 56½ cents per mile. Taxact 2009 See chapter 26 for more information. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 However, you cannot deduct the cost of travel as a form of education. Taxact 2009 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. Taxact 2009 You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Taxact 2009 For more information about depreciation, see Publication 946. Taxact 2009 Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Taxact 2009 You can also deduct assessments for benefit payments to unemployed union members. Taxact 2009 However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Taxact 2009 Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Taxact 2009 You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Taxact 2009 See Lobbying Expenses under Nondeductible Expenses, later. Taxact 2009 Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Taxact 2009 You must wear them as a condition of your employment. Taxact 2009 The clothes are not suitable for everyday wear. Taxact 2009 It is not enough that you wear distinctive clothing. Taxact 2009 The clothing must be specifically required by your employer. Taxact 2009 Nor is it enough that you do not, in fact, wear your work clothes away from work. Taxact 2009 The clothing must not be suitable for taking the place of your regular clothing. Taxact 2009 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. Taxact 2009 ). Taxact 2009 Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Taxact 2009 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. Taxact 2009 Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Taxact 2009 Protective clothing. Taxact 2009   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. Taxact 2009   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. Taxact 2009 Military uniforms. Taxact 2009   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Taxact 2009 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. Taxact 2009 In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Taxact 2009   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. Taxact 2009   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Taxact 2009 Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Taxact 2009 Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Taxact 2009 These fees include the cost of tax preparation software programs and tax publications. Taxact 2009 They also include any fee you paid for electronic filing of your return. Taxact 2009 Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Taxact 2009 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. Taxact 2009 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. Taxact 2009 Some of these other expenses are explained in the following discussions. Taxact 2009 If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Taxact 2009 Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Taxact 2009 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. Taxact 2009 First report the loss in Section B of Form 4684, Casualties and Thefts. Taxact 2009 You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Taxact 2009 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. Taxact 2009 For other casualty and theft losses, see chapter 25. Taxact 2009 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. Taxact 2009 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. Taxact 2009 The fees are deductible in the year paid. Taxact 2009 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). Taxact 2009 You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Taxact 2009 But if you work as an employee and also use the computer in that work, see Publication 946. Taxact 2009 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. Taxact 2009 Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Taxact 2009 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. Taxact 2009 For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Taxact 2009 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. Taxact 2009 But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Taxact 2009 You must add the fee to the cost of the property. Taxact 2009 You cannot deduct the fee you pay to a broker to sell securities. Taxact 2009 You can use the fee only to figure gain or loss from the sale. Taxact 2009 See the Instructions for Form 8949 for information on how to report the fee. Taxact 2009 Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Taxact 2009 A hobby is not a business because it is not carried on to make a profit. Taxact 2009 See Activity not for profit in chapter 12 under Other Income. Taxact 2009 Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Taxact 2009 Deductions of pass-through entities are passed through to the partners or shareholders. Taxact 2009 The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Taxact 2009 Example. Taxact 2009 You are a member of an investment club that is formed solely to invest in securities. Taxact 2009 The club is treated as a partnership. Taxact 2009 The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Taxact 2009 In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Taxact 2009 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. Taxact 2009 Publicly offered mutual funds. Taxact 2009   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Taxact 2009 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. Taxact 2009   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). Taxact 2009 This net figure is the amount you report on your return as income. Taxact 2009 You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Taxact 2009 Information returns. Taxact 2009   You should receive information returns from pass-through entities. Taxact 2009 Partnerships and S corporations. Taxact 2009   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. Taxact 2009 Nonpublicly offered mutual funds. Taxact 2009   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. Taxact 2009 You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Taxact 2009 See Tax Preparation Fees , earlier. Taxact 2009 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. Taxact 2009 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. Taxact 2009 If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Taxact 2009 If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Taxact 2009 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. Taxact 2009 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. Taxact 2009 You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Taxact 2009 Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Taxact 2009 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. Taxact 2009 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. Taxact 2009 For more information about IRAs, see chapter 17. Taxact 2009 Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Taxact 2009 They are not subject to the 2% limit. Taxact 2009 Report these items on Schedule A (Form 1040), line 28. Taxact 2009 List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Taxact 2009 Amortizable premium on taxable bonds. Taxact 2009 Casualty and theft losses from income- producing property. Taxact 2009 Federal estate tax on income in respect of a decedent. Taxact 2009 Gambling losses up to the amount of gambling winnings. Taxact 2009 Impairment-related work expenses of persons with disabilities. Taxact 2009 Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Taxact 2009 Losses from Ponzi-type investment schemes. Taxact 2009 See Losses from Ponzi-type investment schemes under Theft in chapter 25. Taxact 2009 Repayments of more than $3,000 under a claim of right. Taxact 2009 Unrecovered investment in an annuity. Taxact 2009 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. Taxact 2009 You can elect to amortize the premium on taxable bonds. Taxact 2009 The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Taxact 2009 Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Taxact 2009 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. Taxact 2009 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). Taxact 2009 First, report the loss in Form 4684, Section B. Taxact 2009 You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Taxact 2009 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. Taxact 2009 For more information on casualty and theft losses, see chapter 25. Taxact 2009 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. Taxact 2009 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. Taxact 2009 See Publication 559 for more information. Taxact 2009 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. Taxact 2009 You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Taxact 2009 You cannot deduct gambling losses that are more than your winnings. Taxact 2009 You cannot reduce your gambling winnings by your gambling losses and report the difference. Taxact 2009 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. Taxact 2009 Therefore, your records should show your winnings separately from your losses. Taxact 2009 Diary of winnings and losses. Taxact 2009 You must keep an accurate diary or similar record of your losses and winnings. Taxact 2009 Your diary should contain at least the following information. Taxact 2009 The date and type of your specific wager or wagering activity. Taxact 2009 The name and address or location of the gambling establishment. Taxact 2009 The names of other persons present with you at the gambling establishment. Taxact 2009 The amount(s) you won or lost. Taxact 2009 See Publication 529 for more information. Taxact 2009 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. Taxact 2009 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. Taxact 2009 Self-employed. Taxact 2009   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. Taxact 2009 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. Taxact 2009 It is not subject to the passive activity limitations. Taxact 2009 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. Taxact 2009 See Repayments in chapter 12 for more information. Taxact 2009 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. Taxact 2009 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. Taxact 2009 See chapter 10 for more information about the tax treatment of pensions and annuities. Taxact 2009 Nondeductible Expenses Examples of nondeductible expenses are listed next. Taxact 2009 The list is followed by discussions of additional nondeductible expenses. Taxact 2009 List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Taxact 2009 Burial or funeral expenses, including the cost of a cemetery lot. Taxact 2009 Capital expenses. Taxact 2009 Fees and licenses, such as car licenses, marriage licenses, and dog tags. Taxact 2009 Hobby losses, but see Hobby Expenses , earlier. Taxact 2009 Home repairs, insurance, and rent. Taxact 2009 Illegal bribes and kickbacks. Taxact 2009 See Bribes and kickbacks in chapter 11 of Publication 535. Taxact 2009 Losses from the sale of your home, furniture, personal car, etc. Taxact 2009 Personal disability insurance premiums. Taxact 2009 Personal, living, or family expenses. Taxact 2009 The value of wages never received or lost vacation time. Taxact 2009 Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Taxact 2009 See chapter 37. Taxact 2009 Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Taxact 2009 These include qualification and registration fees for primary elections. Taxact 2009 Legal fees. Taxact 2009   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Taxact 2009 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. Taxact 2009 Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Taxact 2009 This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Taxact 2009 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. Taxact 2009 Dues paid to airline, hotel, and luncheon clubs are not deductible. Taxact 2009 Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Taxact 2009 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. Taxact 2009 Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Taxact 2009 This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Taxact 2009 Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Taxact 2009 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. Taxact 2009 Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Taxact 2009 However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Taxact 2009 See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Taxact 2009 Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Taxact 2009 Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Taxact 2009 You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Taxact 2009 See chapter 18 for information on alimony. Taxact 2009 Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Taxact 2009 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. Taxact 2009 Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Taxact 2009 Dues used for lobbying. Taxact 2009   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. Taxact 2009 See Lobbying Expenses in Publication 529 for information on exceptions. Taxact 2009 Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Taxact 2009 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. Taxact 2009 See chapter 25. Taxact 2009 Example. Taxact 2009 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Taxact 2009 The diamond falls from the ring and is never found. Taxact 2009 The loss of the diamond is a casualty. Taxact 2009 Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Taxact 2009 See chapter 26 for information on deductible expenses while traveling away from home. Taxact 2009 Meals While Working Late You cannot deduct the cost of meals while working late. Taxact 2009 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. Taxact 2009 See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Taxact 2009 Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Taxact 2009 Custody of children. Taxact 2009 Breach of promise to marry suit. Taxact 2009 Civil or criminal charges resulting from a personal relationship. Taxact 2009 Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Taxact 2009 Preparation of a title (or defense or perfection of a title). Taxact 2009 Preparation of a will. Taxact 2009 Property claims or property settlement in a divorce. Taxact 2009 You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Taxact 2009 Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Taxact 2009 Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Taxact 2009 Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Taxact 2009 Accounting certificate fees paid for the initial right to practice accounting. Taxact 2009 Bar exam fees and incidental expenses in securing initial admission to the bar. Taxact 2009 Medical and dental license fees paid to get initial licensing. Taxact 2009 Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Taxact 2009 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. Taxact 2009 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. Taxact 2009 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. Taxact 2009 You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Taxact 2009 Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Taxact 2009 You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Taxact 2009 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. Taxact 2009 Example. Taxact 2009 During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Taxact 2009 In earning this income, you had total expenses of $500 during the year. Taxact 2009 You cannot identify the amount of each expense item that is for each income item. Taxact 2009 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. Taxact 2009 You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Taxact 2009 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. Taxact 2009 See chapter 26 for more information on deductible travel expenses. Taxact 2009 Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Taxact 2009 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. Taxact 2009 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. Taxact 2009 Prev  Up  Next   Home   More Online Publications