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Taxes Deduction

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Taxes Deduction

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

The Rehabilitation Services Administration oversees grant programs that help individuals with physical or mental disabilities obtain employment and live more independently.

Contact the Agency or Department

Website: Rehabilitation Services Administration (Education Department)

Address: Office of Special Education and Rehabilitative Services
400 Maryland Ave SW

Washington, DC 20202-7100

Phone Number: (202) 245-7468

Toll-free: (800) 827-5327 (Dept. of Ed. Programs and Directory)

TTY: (800) 437-0833 (Dept. of Ed. Programs and Directory)

The Taxes Deduction

Taxes deduction Publication 908 - Introductory Material Table of Contents Future Developments What's New Reminders Introduction Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 908, such as legislation enacted after it was published, go to www. Taxes deduction irs. Taxes deduction gov/pub908. Taxes deduction What's New Expiration of provision for catch-up contributions for IRC section 401(k) participants whose employer filed bankruptcy. Taxes deduction  The Pension Protection Act of 2006, P. Taxes deduction L. Taxes deduction 109-280, previously allowed additional contributions of up to $7,000 in a traditional or Roth IRA for employees who participated in an IRC section 401(k) plan of an employer that filed bankruptcy in an earlier year. Taxes deduction This provision was not extended for tax years beginning on or after January 1, 2010. Taxes deduction Automatic 6-month extension of time to file a bankruptcy estate return now available for individuals in Chapter 7 or 11 bankruptcy. Taxes deduction  Beginning June 24, 2011, the IRS clarified in T. Taxes deduction D. Taxes deduction 9531 that there is available an automatic 6-month extension of time to file a bankruptcy estate income tax return for individuals in Chapter 7 or Chapter 11 bankruptcy proceedings upon filing a required application. Taxes deduction The previous extension of time to file a bankruptcy estate return was 5 months. Taxes deduction Reminders The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. Taxes deduction  The changes to the U. Taxes deduction S. Taxes deduction Bankruptcy Code enacted by BAPCA are incorporated throughout this publication. Taxes deduction Debtors filing under chapters 7, 11, 12, and 13 of the Bankruptcy Code must file all applicable federal, state, and local tax returns that become due after a case commences. Taxes deduction Failure to file tax returns timely or obtain an extension can cause a bankruptcy case to be converted to another chapter or dismissed. Taxes deduction In chapter 13 cases, the debtor must file all required tax returns for tax periods ending within 4 years of the filing of the bankruptcy petition. Taxes deduction Photographs of missing children. Taxes deduction  The IRS is a proud partner with the National Center for Missing and Exploited Children. Taxes deduction Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxes deduction You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Taxes deduction Introduction This publication is not intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions. Taxes deduction Additionally, this publication is not updated on an annual basis and may not reflect recent developments in bankruptcy or tax law. Taxes deduction If you need more guidance on the bankruptcy or tax laws applicable to your case, you should seek professional advice. Taxes deduction This publication explains the basic federal income tax aspects of bankruptcy. Taxes deduction A fundamental goal of the bankruptcy laws enacted by Congress is to give an honest debtor a financial “fresh start”. Taxes deduction This is accomplished through the bankruptcy discharge, which is a permanent injunction (court ordered prohibition) against the collection of certain debts as a personal liability of the debtor. Taxes deduction Bankruptcy proceedings begin with the filing of either a voluntary petition in the United States Bankruptcy Court, or in certain cases an involuntary petition filed by creditors. Taxes deduction This filing creates the bankruptcy estate. Taxes deduction The bankruptcy estate generally consists of all of the assets the individual or entity owns on the date the bankruptcy petition was filed. Taxes deduction The bankruptcy estate is treated as a separate taxable entity for individuals filing bankruptcy petitions under chapter 7 or 11 of the Bankruptcy Code, discussed later. Taxes deduction The tax obligations of taxable bankruptcy estates are discussed later under Individuals in Chapter 7 or 11. Taxes deduction Generally, when a debt owed to another person or entity is canceled, the amount canceled or forgiven is considered income that is taxed to the person owing the debt. Taxes deduction If a debt is canceled under a bankruptcy proceeding, the amount canceled is not income. Taxes deduction However, the canceled debt reduces other tax benefits to which the debtor would otherwise be entitled. Taxes deduction See Debt Cancellation, later. Taxes deduction Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets 551 Basis of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) SS-4 Application for Employer Identification Number, and separate instructions 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) 1040 U. Taxes deduction S. Taxes deduction Individual Income Tax Return, and separate instructions Schedule SE (Form 1040) Self-Employment Tax 1040X Amended U. Taxes deduction S. Taxes deduction Individual Income Tax Return, and separate instructions 1041 U. Taxes deduction S. Taxes deduction Income Tax Return for Estates and Trusts, and separate instructions 1041-ES Estimated Income Tax for Estates and Trusts 1041-V Payment Voucher 4506 Request for Copy of Tax Return 4506-T Request for Transcript of Tax Return 4852 Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Taxes deduction 4868 Application for Automatic Extension of Time To File U. Taxes deduction S. Taxes deduction Individual Income Tax Return 7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns See How To Get Tax Help, later, for information about getting these publications and forms. Taxes deduction Prev  Up  Next   Home   More Online Publications