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Taxslayer login Publication 547 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Taxslayer login Tax questions. Taxslayer login Useful Items - You may want to see: What's New Section C of Form 4684 for Ponzi-type investment schemes. Taxslayer login Section C of Form 4684 is new for 2013. Taxslayer login You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. Taxslayer login Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Taxslayer login You do not need to complete Appendix A. Taxslayer login For details, see Losses from Ponzi-type investment schemes , later. Taxslayer login Reminders Future developments. Taxslayer login For the latest information about developments related to Publication 547, such as legislation enacted after it was published, go to www. Taxslayer login irs. Taxslayer login gov/pub547. Taxslayer login Photographs of missing children. Taxslayer login The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Taxslayer login Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxslayer login 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. Taxslayer login Introduction This publication explains the tax treatment of casualties, thefts, and losses on deposits. Taxslayer login A casualty occurs when your property is damaged as a result of a disaster such as a storm, fire, car accident, or similar event. Taxslayer login A theft occurs when someone steals your property. Taxslayer login A loss on deposits occurs when your financial institution becomes insolvent or bankrupt. Taxslayer login This publication discusses the following topics. Taxslayer login Definitions of a casualty, theft, and loss on deposits. Taxslayer login How to figure the amount of your gain or loss. Taxslayer login How to treat insurance and other reimbursements you receive. Taxslayer login The deduction limits. Taxslayer login When and how to report a casualty or theft. Taxslayer login The special rules for disaster area losses. Taxslayer login Forms to file. Taxslayer login Generally, when you have a casualty or theft, you have to file Form 4684. Taxslayer login You may also have to file one or more of the following forms. Taxslayer login Schedule A (Form 1040). Taxslayer login Form 1040NR, Schedule A (for nonresident aliens). Taxslayer login Schedule D. Taxslayer login Form 4797. Taxslayer login For details on which form to use, see How To Report Gains and Losses , later. Taxslayer login Condemnations. Taxslayer login For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Dispositions of Assets. Taxslayer login Workbooks for casualties and thefts. Taxslayer login Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property), is available to help you make a list of your stolen or damaged personal-use property and figure your loss. Taxslayer login It includes schedules to help you figure the loss on your home and its contents, and your motor vehicles. Taxslayer login Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook, is available to help you make a list of your stolen or damaged business or income-producing property and figure your loss. Taxslayer login Comments and suggestions. Taxslayer login We welcome your comments about this publication and your suggestions for future editions. Taxslayer login You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Taxslayer login NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Taxslayer login Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxslayer login You can send your comments from www. Taxslayer login irs. Taxslayer login gov/formspubs/. Taxslayer login Click on “More Information” and then on “Comment on Tax Forms and Publications”. Taxslayer login Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Taxslayer login Ordering forms and publications. Taxslayer login Visit www. Taxslayer login irs. Taxslayer login gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Taxslayer login Internal Revenue Service 1201 N. Taxslayer login Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Taxslayer login If you have a tax question, check the information available on IRS. Taxslayer login gov or call 1-800-829-1040. Taxslayer login We cannot answer tax questions sent to either of the above addresses. Taxslayer login Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 551 Basis of Assets 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Form 1040NR, Schedule A Itemized Deductions (for nonresident aliens) Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts 4797 Sales of Business Property See How To Get Tax Help near the end of this publication for information about getting publications and forms. Taxslayer login Prev Up Next Home More Online Publications
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Taxslayer login 28. Taxslayer login 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. Taxslayer login The 2013 rate for business use of a vehicle is 56½ cents per mile. Taxslayer login Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Taxslayer login You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Taxslayer login This chapter covers the following topics. Taxslayer login Deductions subject to the 2% limit. Taxslayer login Deductions not subject to the 2% limit. Taxslayer login Expenses you cannot deduct. Taxslayer login You must keep records to verify your deductions. Taxslayer login You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Taxslayer login For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Taxslayer login 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). Taxslayer login You can claim the amount of expenses that is more than 2% of your adjusted gross income. Taxslayer login You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Taxslayer login Your adjusted gross income is the amount on Form 1040, line 38. Taxslayer login Generally, you apply the 2% limit after you apply any other deduction limit. Taxslayer login 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. Taxslayer login Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Taxslayer login Unreimbursed employee expenses (line 21). Taxslayer login Tax preparation fees (line 22). Taxslayer login Other expenses (line 23). Taxslayer login 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. Taxslayer login An expense is ordinary if it is common and accepted in your trade, business, or profession. Taxslayer login An expense is necessary if it is appropriate and helpful to your business. Taxslayer login An expense does not have to be required to be considered necessary. Taxslayer login Examples of unreimbursed employee expenses are listed next. Taxslayer login The list is followed by discussions of additional unreimbursed employee expenses. Taxslayer login Business bad debt of an employee. Taxslayer login Education that is work related. Taxslayer login (See chapter 27. Taxslayer login ) Legal fees related to your job. Taxslayer login Licenses and regulatory fees. Taxslayer login Malpractice insurance premiums. Taxslayer login Medical examinations required by an employer. Taxslayer login Occupational taxes. Taxslayer login Passport for a business trip. Taxslayer login Subscriptions to professional journals and trade magazines related to your work. Taxslayer login Travel, transportation, entertainment, and gifts related to your work. Taxslayer login (See chapter 26. Taxslayer login ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Taxslayer login 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. Taxslayer login 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. Taxslayer login For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Taxslayer login 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. Taxslayer login Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Taxslayer login Lobbying and political activities. Taxslayer login You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Taxslayer login See Dues used for lobbying under Nondeductible Expenses, later. Taxslayer login 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. Taxslayer login If you file Form 1040A, you can deduct these expenses on line 16. Taxslayer login If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Taxslayer login However, neither spouse can deduct more than $250 of his or her qualified expenses. Taxslayer login 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. Taxslayer login 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. Taxslayer login The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Taxslayer login See Publication 587 for more detailed information and a worksheet. Taxslayer login 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. Taxslayer login 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. Taxslayer login Employment and outplacement agency fees. Taxslayer login You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Taxslayer login Employer pays you back. Taxslayer login 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. Taxslayer login (See Recoveries in chapter 12. Taxslayer login ) Employer pays the employment agency. Taxslayer login 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. Taxslayer login Résumé. Taxslayer login 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. Taxslayer login Travel and transportation expenses. Taxslayer login 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. Taxslayer login You can deduct the travel expenses if the trip is primarily to look for a new job. Taxslayer login 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. Taxslayer login 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. Taxslayer login You can choose to use the standard mileage rate to figure your car expenses. Taxslayer login The 2013 rate for business use of a vehicle is 56½ cents per mile. Taxslayer login See chapter 26 for more information. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login However, you cannot deduct the cost of travel as a form of education. Taxslayer login 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. Taxslayer login You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Taxslayer login For more information about depreciation, see Publication 946. Taxslayer login Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Taxslayer login You can also deduct assessments for benefit payments to unemployed union members. Taxslayer login However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Taxslayer login Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Taxslayer login You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Taxslayer login See Lobbying Expenses under Nondeductible Expenses, later. Taxslayer login Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Taxslayer login You must wear them as a condition of your employment. Taxslayer login The clothes are not suitable for everyday wear. Taxslayer login It is not enough that you wear distinctive clothing. Taxslayer login The clothing must be specifically required by your employer. Taxslayer login Nor is it enough that you do not, in fact, wear your work clothes away from work. Taxslayer login The clothing must not be suitable for taking the place of your regular clothing. Taxslayer login 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. Taxslayer login ). Taxslayer login Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Taxslayer login 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. Taxslayer login Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Taxslayer login Protective clothing. Taxslayer login 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. Taxslayer login 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. Taxslayer login Military uniforms. Taxslayer login You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Taxslayer login 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. Taxslayer login In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Taxslayer login 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. Taxslayer login You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Taxslayer login Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Taxslayer login Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Taxslayer login These fees include the cost of tax preparation software programs and tax publications. Taxslayer login They also include any fee you paid for electronic filing of your return. Taxslayer login Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Taxslayer login 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. Taxslayer login 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. Taxslayer login Some of these other expenses are explained in the following discussions. Taxslayer login If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Taxslayer login Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Taxslayer login 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. Taxslayer login First report the loss in Section B of Form 4684, Casualties and Thefts. Taxslayer login You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Taxslayer login 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. Taxslayer login For other casualty and theft losses, see chapter 25. Taxslayer login 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. Taxslayer login 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. Taxslayer login The fees are deductible in the year paid. Taxslayer login 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). Taxslayer login You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Taxslayer login But if you work as an employee and also use the computer in that work, see Publication 946. Taxslayer login 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. Taxslayer login Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Taxslayer login 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. Taxslayer login For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Taxslayer login 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. Taxslayer login But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Taxslayer login You must add the fee to the cost of the property. Taxslayer login You cannot deduct the fee you pay to a broker to sell securities. Taxslayer login You can use the fee only to figure gain or loss from the sale. Taxslayer login See the Instructions for Form 8949 for information on how to report the fee. Taxslayer login Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Taxslayer login A hobby is not a business because it is not carried on to make a profit. Taxslayer login See Activity not for profit in chapter 12 under Other Income. Taxslayer login Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Taxslayer login Deductions of pass-through entities are passed through to the partners or shareholders. Taxslayer login The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Taxslayer login Example. Taxslayer login You are a member of an investment club that is formed solely to invest in securities. Taxslayer login The club is treated as a partnership. Taxslayer login The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Taxslayer login In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Taxslayer login 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. Taxslayer login Publicly offered mutual funds. Taxslayer login Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Taxslayer login 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. Taxslayer login 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). Taxslayer login This net figure is the amount you report on your return as income. Taxslayer login You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Taxslayer login Information returns. Taxslayer login You should receive information returns from pass-through entities. Taxslayer login Partnerships and S corporations. Taxslayer login 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. Taxslayer login Nonpublicly offered mutual funds. Taxslayer login 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. Taxslayer login You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Taxslayer login See Tax Preparation Fees , earlier. Taxslayer login 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. Taxslayer login 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. Taxslayer login If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Taxslayer login If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Taxslayer login 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. Taxslayer login 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. Taxslayer login You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Taxslayer login Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Taxslayer login 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. Taxslayer login 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. Taxslayer login For more information about IRAs, see chapter 17. Taxslayer login Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Taxslayer login They are not subject to the 2% limit. Taxslayer login Report these items on Schedule A (Form 1040), line 28. Taxslayer login List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Taxslayer login Amortizable premium on taxable bonds. Taxslayer login Casualty and theft losses from income- producing property. Taxslayer login Federal estate tax on income in respect of a decedent. Taxslayer login Gambling losses up to the amount of gambling winnings. Taxslayer login Impairment-related work expenses of persons with disabilities. Taxslayer login Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Taxslayer login Losses from Ponzi-type investment schemes. Taxslayer login See Losses from Ponzi-type investment schemes under Theft in chapter 25. Taxslayer login Repayments of more than $3,000 under a claim of right. Taxslayer login Unrecovered investment in an annuity. Taxslayer login 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. Taxslayer login You can elect to amortize the premium on taxable bonds. Taxslayer login The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Taxslayer login Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Taxslayer login 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. Taxslayer login 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). Taxslayer login First, report the loss in Form 4684, Section B. Taxslayer login You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Taxslayer login 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. Taxslayer login For more information on casualty and theft losses, see chapter 25. Taxslayer login 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. Taxslayer login 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. Taxslayer login See Publication 559 for more information. Taxslayer login 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. Taxslayer login You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Taxslayer login You cannot deduct gambling losses that are more than your winnings. Taxslayer login You cannot reduce your gambling winnings by your gambling losses and report the difference. Taxslayer login 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. Taxslayer login Therefore, your records should show your winnings separately from your losses. Taxslayer login Diary of winnings and losses. Taxslayer login You must keep an accurate diary or similar record of your losses and winnings. Taxslayer login Your diary should contain at least the following information. Taxslayer login The date and type of your specific wager or wagering activity. Taxslayer login The name and address or location of the gambling establishment. Taxslayer login The names of other persons present with you at the gambling establishment. Taxslayer login The amount(s) you won or lost. Taxslayer login See Publication 529 for more information. Taxslayer login 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. Taxslayer login 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. Taxslayer login Self-employed. Taxslayer login 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. Taxslayer login 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. Taxslayer login It is not subject to the passive activity limitations. Taxslayer login 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. Taxslayer login See Repayments in chapter 12 for more information. Taxslayer login 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. Taxslayer login 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. Taxslayer login See chapter 10 for more information about the tax treatment of pensions and annuities. Taxslayer login Nondeductible Expenses Examples of nondeductible expenses are listed next. Taxslayer login The list is followed by discussions of additional nondeductible expenses. Taxslayer login List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Taxslayer login Burial or funeral expenses, including the cost of a cemetery lot. Taxslayer login Capital expenses. Taxslayer login Fees and licenses, such as car licenses, marriage licenses, and dog tags. Taxslayer login Hobby losses, but see Hobby Expenses , earlier. Taxslayer login Home repairs, insurance, and rent. Taxslayer login Illegal bribes and kickbacks. Taxslayer login See Bribes and kickbacks in chapter 11 of Publication 535. Taxslayer login Losses from the sale of your home, furniture, personal car, etc. Taxslayer login Personal disability insurance premiums. Taxslayer login Personal, living, or family expenses. Taxslayer login The value of wages never received or lost vacation time. Taxslayer login Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Taxslayer login See chapter 37. Taxslayer login Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Taxslayer login These include qualification and registration fees for primary elections. Taxslayer login Legal fees. Taxslayer login You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Taxslayer login 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. Taxslayer login Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Taxslayer login This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Taxslayer login 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. Taxslayer login Dues paid to airline, hotel, and luncheon clubs are not deductible. Taxslayer login Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Taxslayer login 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. Taxslayer login Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Taxslayer login This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Taxslayer login Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Taxslayer login 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. Taxslayer login Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Taxslayer login However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Taxslayer login See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Taxslayer login Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Taxslayer login Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Taxslayer login You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Taxslayer login See chapter 18 for information on alimony. Taxslayer login Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Taxslayer login 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. Taxslayer login Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Taxslayer login Dues used for lobbying. Taxslayer login 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. Taxslayer login See Lobbying Expenses in Publication 529 for information on exceptions. Taxslayer login Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Taxslayer login 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. Taxslayer login See chapter 25. Taxslayer login Example. Taxslayer login A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Taxslayer login The diamond falls from the ring and is never found. Taxslayer login The loss of the diamond is a casualty. Taxslayer login Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Taxslayer login See chapter 26 for information on deductible expenses while traveling away from home. Taxslayer login Meals While Working Late You cannot deduct the cost of meals while working late. Taxslayer login 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. Taxslayer login See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Taxslayer login Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Taxslayer login Custody of children. Taxslayer login Breach of promise to marry suit. Taxslayer login Civil or criminal charges resulting from a personal relationship. Taxslayer login Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Taxslayer login Preparation of a title (or defense or perfection of a title). Taxslayer login Preparation of a will. Taxslayer login Property claims or property settlement in a divorce. Taxslayer login You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Taxslayer login Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Taxslayer login Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Taxslayer login Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Taxslayer login Accounting certificate fees paid for the initial right to practice accounting. Taxslayer login Bar exam fees and incidental expenses in securing initial admission to the bar. Taxslayer login Medical and dental license fees paid to get initial licensing. Taxslayer login Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Taxslayer login 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. Taxslayer login 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. Taxslayer login 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. Taxslayer login You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Taxslayer login Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Taxslayer login You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. Taxslayer login 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. Taxslayer login Example. Taxslayer login During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Taxslayer login In earning this income, you had total expenses of $500 during the year. Taxslayer login You cannot identify the amount of each expense item that is for each income item. Taxslayer login 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. Taxslayer login You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Taxslayer login 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. Taxslayer login See chapter 26 for more information on deductible travel expenses. Taxslayer login Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Taxslayer login 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. Taxslayer login 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. Taxslayer login Prev Up Next Home More Online Publications