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Www freetaxusa Index A Accelerated death benefits, Accelerated Death Benefits, Accelerated death benefits. Www freetaxusa Archer MSA, HSA, Archer MSA, or Medicare Advantage MSA, HSA, Archer MSA, or a Medicare Advantage MSA. Www freetaxusa Assistance (see Tax help) Astronauts Tax forgiveness, Astronauts B Basis Inherited property, Basis of Inherited Property Joint interest property, Joint interest. Www freetaxusa Qualified joint interest, Qualified joint interest. Www freetaxusa Beneficiary Basis of property, Basis of Inherited Property Character of distributions, Character of Distributions Excess deductions, Excess deductions. Www freetaxusa Income received, Other Items of Income Liability, estate's income tax, Liability of the beneficiary. Www freetaxusa Nonresident alien, Nonresident alien beneficiary. Www freetaxusa Reporting distributions, How and When To Report Successor, Successor beneficiary. Www freetaxusa Treatment of distributions, Distributions to Beneficiaries Unused loss carryovers, Unused loss carryovers. Www freetaxusa Bequest Defined, Bequest Property received, Gifts, Insurance, and Inheritances C Claim, credit or refund, Claim for Credit or Refund Combat zone, Combat Zone Comments, Comments and suggestions. Www freetaxusa Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). Www freetaxusa Credit Child tax, Child tax credit. Www freetaxusa Earned income, Earned income credit. Www freetaxusa Elderly or disabled, Credit for the elderly or the disabled. Www freetaxusa Final return for decedent, Credits General business, General business tax credit. Www freetaxusa D Death benefits Accelerated, Accelerated Death Benefits, Accelerated death benefits. Www freetaxusa Public safety officers, Death benefits. Www freetaxusa Decedent Final return, Final Income Tax Return for Decedent—Form 1040 Income in respect of, Income in Respect of a Decedent Deductions Estate tax, Estate Tax Deduction In respect of decedent, Deductions in Respect of a Decedent Medical expenses, Medical Expenses Standard, Standard Deduction Distributable net income, Distributable net income. Www freetaxusa Distributions Deduction, Income Distribution Deduction Limit on deduction, Tax-exempt income not deductible. Www freetaxusa Not treated as bequests, Distributions not treated as bequests. Www freetaxusa Property, in kind, Property distributed in kind. Www freetaxusa E Education savings account, Coverdell, Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). Www freetaxusa Estate Income tax return, Income Tax Return of an Estate— Form 1041 Insolvent, Insolvent estate. Www freetaxusa Period of administration, Period of Administration Tax deduction, Estate Tax Deduction Termination, Termination of Estate Transfer of unused deductions, Transfer of Unused Deductions to Beneficiaries Estate tax deduction, Estate Tax Deduction Estimated tax, Estimated tax. Www freetaxusa , Transfer of Credit for Estimated Tax Payments Example Comprehensive, Comprehensive Example Decedent's final return, Final Return for Decedent—Form 1040 Estate's tax return, Income Tax Return of an Estate—Form 1041 Exemption Estate's tax return, Exemption Deduction Final return for decedent, Exemptions Expenses Accrued, Accrued expenses. Www freetaxusa Administration, Administration Expenses Deductions in respect of decedent, Deductions in Respect of a Decedent Funeral, Funeral and Medical Expenses Medical, Medical Expenses, Medical and dental expenses of a decedent. Www freetaxusa Extension to file Form 1041, Extension of time to file. Www freetaxusa F Fiduciary relationship, Notice of fiduciary relationship. Www freetaxusa Filing requirements Decedent's final return, Filing Requirements Estate's tax return, Filing Requirements Final return for decedent Credits, Credits Exemption and deductions, Exemptions and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Joint return, Joint Return Name, address, and signature, Name, Address, and Signature Other taxes, Other Taxes Payments, Payments of Tax When and where to file, When and Where To File Who must file, Final Income Tax Return for Decedent—Form 1040 Form 1040NR, Nonresident Alien, Filing Requirements 1041, Income Tax Return of an Estate— Form 1041 1042, Nonresident alien beneficiary. Www freetaxusa 1310, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Www freetaxusa 4810, Form 4810. Www freetaxusa 56, Notice of fiduciary relationship. Www freetaxusa 6251, Form 6251. Www freetaxusa 706, Estate and Gift Taxes SS–4, Identification number. Www freetaxusa Free tax services, Free help with your tax return. Www freetaxusa Funeral expenses, Funeral expenses. Www freetaxusa G Gift, property, Gifts, Insurance, and Inheritances H Help (see Tax help) I Identification number, application, Identification number. Www freetaxusa Income Community, Community Income Distributable net income, Distributable net income. Www freetaxusa Distributed currently, Income That Must Be Distributed Currently Interest and dividend, Interest and Dividend Income (Forms 1099) Partnership, final return, Partnership Income S corporation, S Corporation Income Self-employment, Self-Employment Income Income in respect of decedent, Income in Respect of a Decedent, Inherited IRAs. Www freetaxusa Income tax return of an estate Credits, tax, and payments, Credits, Tax, and Payments Exemption and deductions, Exemption and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Name, address, and signature, Name, Address, and Signature When and where to file, When and Where To File Inherited IRAs, Inherited IRAs. Www freetaxusa Inherited property, Gifts, Insurance, and Inheritances Installment obligations, Installment obligations. Www freetaxusa , Installment obligations. Www freetaxusa Insurance, Insurance J Joint return Revoked by personal representative, Personal representative may revoke joint return election. Www freetaxusa Who can file, Joint Return L Losses Deduction on final return, Deduction for Losses Estate's tax return, Losses M Military or terrorist actions Claim for credit or refund, Claim for Credit or Refund Defined, Military or terrorist action defined. Www freetaxusa Tax forgiveness, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts N Notice of fiduciary relationship Form 56, Notice of fiduciary relationship. Www freetaxusa P Partnership income, Partnership Income, Partnership income. Www freetaxusa Penalty Information returns, Penalty. Www freetaxusa Substantial valuation misstatement, Valuation misstatements. Www freetaxusa Personal representative Defined, Personal Representative Duties, Duties Fees received, Fees Received by Personal Representatives Penalty, Penalty. Www freetaxusa , Penalty. Www freetaxusa Prompt assessment, request, Request for prompt assessment (charge) of tax. Www freetaxusa Public safety officers, death benefits, Death benefits. Www freetaxusa Publications (see Tax help) R Refund File for decedent, Refund Military or terrorist action deaths, Claim for Credit or Refund Release from liability, Request for discharge from personal liability for tax. Www freetaxusa Return Decedent's final, Final Income Tax Return for Decedent—Form 1040 Estate's income tax, Income Tax Return of an Estate— Form 1041 Information, Information Returns Roth IRA, Roth IRAs. Www freetaxusa S Separate shares rule, Separate shares rule. Www freetaxusa Suggestions, Comments and suggestions. Www freetaxusa Survivors Income, Other Items of Income Tax benefits, Tax Benefits for Survivors T Tax Alternative minimum Estate, Alternative minimum tax (AMT). Www freetaxusa Individuals, Alternative minimum tax (AMT). Www freetaxusa Benefits, survivors, Tax Benefits for Survivors Estimated, estate, Estimated tax. Www freetaxusa , Transfer of Credit for Estimated Tax Payments Payments, final return, Payments of Tax Refund of income (claim), Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Www freetaxusa Self-employment, Self-employment tax. Www freetaxusa Transfer of credit, Transfer of Credit for Estimated Tax Payments Tax help, How To Get Tax Help Terrorist action, tax relief, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Terrorist victim, Specified Terrorist Victim TTY/TDD information, How To Get Tax Help V Valuation method Inherited property, Basis of Inherited Property Special-use, Special-use valuation. Www freetaxusa Victims of terrorist attacks, Specified Terrorist Victim W Widows and widowers, tax benefits, Qualifying widows and widowers. Www freetaxusa Prev  Up     Home   More Online Publications
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Www freetaxusa Publication 529 - Main Content Table of Contents Deductions Subject to the 2% LimitUnreimbursed Employee Expenses Tax Preparation Fees Other Expenses Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses How To ReportWho can use Form 2106-EZ. Www freetaxusa Computer used in a home office. Www freetaxusa Example How To Get Tax HelpLow Income Taxpayer Clinics Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). Www freetaxusa You can claim the amount of expenses that is more than 2% of your adjusted gross income. Www freetaxusa You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Www freetaxusa Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. Www freetaxusa Generally, you apply the 2% limit after you apply any other deduction limit. Www freetaxusa For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging ) before you apply the 2% limit. Www freetaxusa Deductions subject to the 2% limit are discussed in the following three categories. Www freetaxusa Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). Www freetaxusa Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). Www freetaxusa Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). Www freetaxusa Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Www freetaxusa You can deduct only 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. Www freetaxusa An expense is ordinary if it is common and accepted in your trade, business, or profession. Www freetaxusa An expense is necessary if it is appropriate and helpful to your business. Www freetaxusa An expense does not have to be required to be considered necessary. Www freetaxusa You may be able to deduct the following items as unreimbursed employee expenses. Www freetaxusa Business bad debt of an employee. Www freetaxusa Business liability insurance premiums. Www freetaxusa Damages paid to a former employer for breach of an employment contract. Www freetaxusa Depreciation on a computer your employer requires you to use in your work. Www freetaxusa Dues to a chamber of commerce if membership helps you do your job. Www freetaxusa Dues to professional societies. Www freetaxusa Educator expenses. Www freetaxusa Home office or part of your home used regularly and exclusively in your work. Www freetaxusa Job search expenses in your present occupation. Www freetaxusa Laboratory breakage fees. Www freetaxusa Legal fees related to your job. Www freetaxusa Licenses and regulatory fees. Www freetaxusa Malpractice insurance premiums. Www freetaxusa Medical examinations required by an employer. Www freetaxusa Occupational taxes. Www freetaxusa Passport for a business trip. Www freetaxusa Repayment of an income aid payment received under an employer's plan. Www freetaxusa Research expenses of a college professor. Www freetaxusa Rural mail carriers' vehicle expenses. Www freetaxusa Subscriptions to professional journals and trade magazines related to your work. Www freetaxusa Tools and supplies used in your work. Www freetaxusa Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. Www freetaxusa Union dues and expenses. Www freetaxusa Work clothes and uniforms if required and not suitable for everyday use. Www freetaxusa Work-related education. Www freetaxusa Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. Www freetaxusa Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. Www freetaxusa A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. Www freetaxusa Example. Www freetaxusa You make a bona fide loan to the corporation you work for. Www freetaxusa It fails to pay you back. Www freetaxusa You had to make the loan in order to keep your job. Www freetaxusa You have a business bad debt as an employee. Www freetaxusa More information. Www freetaxusa   For more information on business bad debts, see chapter 10 in Publication 535. Www freetaxusa For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. Www freetaxusa Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Www freetaxusa Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. Www freetaxusa 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. Www freetaxusa For the convenience of your employer. Www freetaxusa   This means that your use of the computer is for a substantial business reason of your employer. Www freetaxusa You must consider all facts in making this determination. Www freetaxusa Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. Www freetaxusa Required as a condition of your employment. Www freetaxusa   This means that you cannot properly perform your duties without the computer. Www freetaxusa Whether you can properly perform your duties without it depends on all the facts and circumstances. Www freetaxusa It is not necessary that your employer explicitly requires you to use your computer. Www freetaxusa But neither is it enough that your employer merely states that your use of the item is a condition of your employment. Www freetaxusa Example. Www freetaxusa You are an engineer with an engineering firm. Www freetaxusa You occasionally take work home at night rather than work late at the office. Www freetaxusa You own and use a computer that is similar to the one you use at the office to complete your work at home. Www freetaxusa Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. Www freetaxusa Which depreciation method to use. Www freetaxusa   The depreciation method you use depends on whether you meet the more-than-50%-use test. Www freetaxusa More-than-50%-use test met. Www freetaxusa   You meet this test if you use the computer more than 50% in your work. Www freetaxusa If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). Www freetaxusa In addition, you may be able to take the section 179 deduction for the year you place the item in service. Www freetaxusa More-than-50%-use test not met. Www freetaxusa   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). Www freetaxusa You also cannot claim the section 179 deduction. Www freetaxusa (But if you use your computer in a home office, see the exception below. Www freetaxusa ) Investment use. Www freetaxusa   Your use of a computer in connection with investments (described later under Other Expenses ) does not count as use in your work. Www freetaxusa However, you can combine your investment use with your work use in figuring your depreciation deduction. Www freetaxusa Exception for computer used in a home office. Www freetaxusa   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office . Www freetaxusa You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. Www freetaxusa You also may be able to take a section 179 deduction for the year you place the computer in service. Www freetaxusa See Computer used in a home office under How To Report, later. Www freetaxusa More information. Www freetaxusa   For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. Www freetaxusa Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. Www freetaxusa Reporting your depreciation deduction. Www freetaxusa    See How To Report, later, for information about reporting a deduction for depreciation. Www freetaxusa You must keep records to prove your percentage of business and investment use. Www freetaxusa 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. Www freetaxusa Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Www freetaxusa Lobbying and political activities. Www freetaxusa    You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Www freetaxusa See Lobbying Expenses under Nondeductible Expenses, later. Www freetaxusa 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. Www freetaxusa If you file Form 1040A, you can deduct these expenses on line 16. Www freetaxusa If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Www freetaxusa However, neither spouse can deduct more than $250 of his or her qualified expenses. Www freetaxusa Eligible educator. Www freetaxusa   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. Www freetaxusa Qualified expenses. Www freetaxusa   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Www freetaxusa An ordinary expense is one that is common and accepted in your educational field. Www freetaxusa A necessary expense is one that is helpful and appropriate for your profession as an educator. Www freetaxusa An expense does not have to be required to be considered necessary. Www freetaxusa   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Www freetaxusa You must reduce your qualified expenses by the following amounts. Www freetaxusa Excludable U. Www freetaxusa S. Www freetaxusa series EE and I savings bond interest from Form 8815. Www freetaxusa Nontaxable qualified state tuition program earnings. Www freetaxusa Nontaxable earnings from Coverdell education savings accounts. Www freetaxusa Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. Www freetaxusa Educator expenses over limit. Www freetaxusa   If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Www freetaxusa Principal place of business. Www freetaxusa   If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Www freetaxusa   Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. Www freetaxusa You should keep records that will give the information needed to figure the deduction according to these rules. Www freetaxusa Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. Www freetaxusa More information. Www freetaxusa   See Publication 587 for more detailed information and a worksheet for figuring the deduction. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa Employment and outplacement agency fees. Www freetaxusa    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Www freetaxusa Employer pays you back. Www freetaxusa   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. Www freetaxusa See Recoveries in Publication 525. Www freetaxusa Employer pays the employment agency. Www freetaxusa   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. Www freetaxusa Résumé. Www freetaxusa   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. Www freetaxusa Travel and transportation expenses. Www freetaxusa   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. Www freetaxusa You can deduct the travel expenses if the trip is primarily to look for a new job. Www freetaxusa 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. Www freetaxusa   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. Www freetaxusa    You can choose to use the standard mileage rate to figure your car expenses. Www freetaxusa The 2013 rate for business use of a vehicle is 56½ cents per mile. Www freetaxusa See Publication 463 for more information on travel and car expenses. Www freetaxusa Legal Fees You can deduct legal fees related to doing or keeping your job. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Www freetaxusa 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. Www freetaxusa However, you cannot deduct the cost of travel as a form of education. Www freetaxusa Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. Www freetaxusa See chapter 4 of Publication 463 for more information. Www freetaxusa 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. Www freetaxusa You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Www freetaxusa For more information about depreciation, see Publication 946. Www freetaxusa Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. Www freetaxusa Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. Www freetaxusa Travel expenses. Www freetaxusa   Travel expenses are those incurred while traveling away from home for your employer. Www freetaxusa You can deduct travel expenses paid or incurred in connection with a temporary work assignment. Www freetaxusa Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. Www freetaxusa   Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc. Www freetaxusa ), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. Www freetaxusa   Travel expenses are discussed more fully in chapter 1 of Publication 463. Www freetaxusa Temporary work assignment. Www freetaxusa    If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. Www freetaxusa Indefinite work assignment. Www freetaxusa   If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. Www freetaxusa If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. Www freetaxusa Federal crime investigation and prosecution. Www freetaxusa   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. Www freetaxusa This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. Www freetaxusa   To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. Www freetaxusa Armed Forces reservists traveling more than 100 miles from home. Www freetaxusa   If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Www freetaxusa The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Www freetaxusa The balance, if any, is reported on Schedule A. Www freetaxusa   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. Www freetaxusa   For more information on travel expenses, see Publication 463. Www freetaxusa Local transportation expenses. Www freetaxusa   Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. Www freetaxusa They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. Www freetaxusa   You can choose to use the standard mileage rate to figure your car expenses. Www freetaxusa The 2013 rate for business use of a vehicle is 56½ cents per mile. Www freetaxusa    In general, the costs of commuting between your residence and your place of business are nondeductible. Www freetaxusa Work at two places in a day. Www freetaxusa   If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. Www freetaxusa Temporary work location. Www freetaxusa   You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. Www freetaxusa The work location is outside the metropolitan area where you live and normally work. Www freetaxusa You have at least one regular work location (other than your home) for the same trade or business. Www freetaxusa (If this applies, the distance between your home and the temporary work location does not matter. Www freetaxusa )   For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. Www freetaxusa It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. Www freetaxusa If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. Www freetaxusa For more information, see chapter 1 of Publication 463. Www freetaxusa Home office. Www freetaxusa   You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. Www freetaxusa (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter. Www freetaxusa ) See Home Office , earlier, for a discussion on the use of your home as your principal place of business. Www freetaxusa Meals and entertainment. Www freetaxusa   Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. Www freetaxusa However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. Www freetaxusa   You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. Www freetaxusa You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. Www freetaxusa Meals when subject to “hours of service” limits. Www freetaxusa   You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. Www freetaxusa You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. Www freetaxusa Gift expenses. Www freetaxusa   You can generally deduct up to $25 of business gifts you give to any one individual during the year. Www freetaxusa The following items do not count toward the $25 limit. Www freetaxusa Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. Www freetaxusa Signs, racks, and promotional materials to be displayed on the business premises of the recipient. Www freetaxusa Local lodging. Www freetaxusa   If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. Www freetaxusa   If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. Www freetaxusa Additional information. Www freetaxusa    See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. Www freetaxusa Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Www freetaxusa You can also deduct assessments for benefit payments to unemployed union members. Www freetaxusa However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Www freetaxusa Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. Www freetaxusa You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Www freetaxusa See Lobbying Expenses under Nondeductible Expenses, later. Www freetaxusa Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Www freetaxusa You must wear them as a condition of your employment. Www freetaxusa The clothes are not suitable for everyday wear. Www freetaxusa It is not enough that you wear distinctive clothing. Www freetaxusa The clothing must be specifically required by your employer. Www freetaxusa Nor is it enough that you do not, in fact, wear your work clothes away from work. Www freetaxusa The clothing must not be suitable for taking the place of your regular clothing. Www freetaxusa 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. Www freetaxusa ). Www freetaxusa Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Www freetaxusa 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. Www freetaxusa Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Www freetaxusa Protective clothing. Www freetaxusa   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. Www freetaxusa   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. Www freetaxusa Military uniforms. Www freetaxusa   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Www freetaxusa 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. Www freetaxusa In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Www freetaxusa   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. Www freetaxusa   If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. Www freetaxusa However, you can deduct the cost of insignia, shoulder boards, and related items. Www freetaxusa    You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Www freetaxusa Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. Www freetaxusa It maintains or improves skills required in your present work. Www freetaxusa It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. Www freetaxusa You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. Www freetaxusa If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. Www freetaxusa If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. Www freetaxusa Travel as education. Www freetaxusa   You cannot deduct the cost of travel that in itself constitutes a form of education. Www freetaxusa For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. Www freetaxusa More information. Www freetaxusa    See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. Www freetaxusa Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Www freetaxusa Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Www freetaxusa Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. Www freetaxusa Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Www freetaxusa These fees include the cost of tax preparation software programs and tax publications. Www freetaxusa They also include any fee you paid for electronic filing of your return. Www freetaxusa See Tax preparation fees under How To Report, later. Www freetaxusa Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. Www freetaxusa On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary 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. Www freetaxusa You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. Www freetaxusa These other expenses include the following items. Www freetaxusa Appraisal fees for a casualty loss or charitable contribution. Www freetaxusa Casualty and theft losses from property used in performing services as an employee. Www freetaxusa Clerical help and office rent in caring for investments. Www freetaxusa Depreciation on home computers used for investments. Www freetaxusa Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. Www freetaxusa Fees to collect interest and dividends. Www freetaxusa Hobby expenses, but generally not more than hobby income. Www freetaxusa Indirect miscellaneous deductions from pass-through entities. Www freetaxusa Investment fees and expenses. Www freetaxusa Legal fees related to producing or collecting taxable income or getting tax advice. Www freetaxusa Loss on deposits in an insolvent or bankrupt financial institution. Www freetaxusa Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. Www freetaxusa Repayments of income. Www freetaxusa Repayments of social security benefits. Www freetaxusa Safe deposit box rental, except for storing jewelry and other personal effects. Www freetaxusa Service charges on dividend reinvestment plans. Www freetaxusa Tax advice fees. Www freetaxusa Trustee's fees for your IRA, if separately billed and paid. Www freetaxusa If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses. Www freetaxusa Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Www freetaxusa 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. Www freetaxusa First report the loss in Section B of Form 4684, Casualties and Thefts. Www freetaxusa You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Www freetaxusa 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. Www freetaxusa For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa The fees are deductible on the return for the year in which you paid them. Www freetaxusa For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. Www freetaxusa 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). Www freetaxusa You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Www freetaxusa But if you work as an employee and also use the computer in that work, see Depreciation on Computers under Unreimbursed Employee Expenses, earlier. Www freetaxusa For more information on depreciation, see Publication 946. Www freetaxusa 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. Www freetaxusa Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Www freetaxusa 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. Www freetaxusa For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Www freetaxusa 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. Www freetaxusa But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Www freetaxusa You must add the fee to the cost of the property. Www freetaxusa You cannot deduct the fee you pay to a broker to sell securities. Www freetaxusa You can use the fee only to figure gain or loss from the sale. Www freetaxusa See the instructions for Schedule D (Form 1040) for information on how to report the fee. Www freetaxusa Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Www freetaxusa A hobby is not a business because it is not carried on to make a profit. Www freetaxusa See Not-for-Profit Activities in chapter 1 of Publication 535. Www freetaxusa Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Www freetaxusa Deductions of pass-through entities are passed through to the partners or shareholders. Www freetaxusa The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Www freetaxusa Example. Www freetaxusa You are a member of an investment club that is formed solely to invest in securities. Www freetaxusa The club is treated as a partnership. Www freetaxusa The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Www freetaxusa In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Www freetaxusa 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. Www freetaxusa Publicly offered mutual funds. Www freetaxusa   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Www freetaxusa 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. Www freetaxusa   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). Www freetaxusa This net figure is the amount you report on your return as income. Www freetaxusa You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Www freetaxusa Information returns. Www freetaxusa   You should receive information returns from pass-through entities. Www freetaxusa Partnerships and S corporations. Www freetaxusa   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. Www freetaxusa Nonpublicly offered mutual funds. Www freetaxusa   These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. Www freetaxusa You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). Www freetaxusa See Tax Preparation Fees, earlier. Www freetaxusa Unlawful discrimination claims. Www freetaxusa   You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U. Www freetaxusa S. Www freetaxusa Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. Www freetaxusa However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. Www freetaxusa See Publication 525 for more information. Www freetaxusa Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Www freetaxusa If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. Www freetaxusa If elected, the casualty loss is subject to certain deduction limitations. Www freetaxusa The election is made on Form 4684. Www freetaxusa Once you make this choice, you cannot change it without IRS approval. Www freetaxusa If none of the deposit is federally insured, you can deduct the loss in either of the following ways. Www freetaxusa As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). Www freetaxusa Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. Www freetaxusa This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. Www freetaxusa As a casualty loss. Www freetaxusa Report it on Form 4684 first and then on Schedule A (Form 1040). Www freetaxusa See Publication 547 for details. Www freetaxusa As a nonbusiness bad debt. Www freetaxusa Report it on Schedule D (Form 1040). Www freetaxusa If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. Www freetaxusa Exception. Www freetaxusa   You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. Www freetaxusa For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. Www freetaxusa Actual loss different from estimated loss. Www freetaxusa   If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. Www freetaxusa See Recoveries in Publication 525. Www freetaxusa If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. Www freetaxusa Choice not made. Www freetaxusa   If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. Www freetaxusa See Nonbusiness Bad Debts in chapter 4 of Publication 550. Www freetaxusa Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. Www freetaxusa For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Www freetaxusa 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. Www freetaxusa If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Www freetaxusa If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Www freetaxusa Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. Www freetaxusa The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. Www freetaxusa The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. Www freetaxusa It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). Www freetaxusa If the deduction is more than $3,000, you will have to use a special computation to figure your tax. Www freetaxusa See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional information. Www freetaxusa 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. Www freetaxusa You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Www freetaxusa Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Www freetaxusa 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. Www freetaxusa Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Www freetaxusa Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Www freetaxusa They are not subject to the 2% limit. Www freetaxusa Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Www freetaxusa List of Deductions Amortizable premium on taxable bonds. Www freetaxusa Casualty and theft losses from income-producing property. Www freetaxusa Federal estate tax on income in respect of a decedent. Www freetaxusa Gambling losses up to the amount of gambling winnings. Www freetaxusa Impairment-related work expenses of persons with disabilities. Www freetaxusa Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Www freetaxusa Losses from Ponzi-type investment schemes. Www freetaxusa Repayments of more than $3,000 under a claim of right. Www freetaxusa Unrecovered investment in an annuity. Www freetaxusa 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. Www freetaxusa You can elect to amortize the premium on taxable bonds. Www freetaxusa The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Www freetaxusa Pre-1998 election to amortize bond premium. Www freetaxusa   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Www freetaxusa Bonds acquired after October 22, 1986, and before 1988. Www freetaxusa   The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. Www freetaxusa Bonds acquired before October 23, 1986. Www freetaxusa   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. Www freetaxusa Deduction for excess premium. Www freetaxusa   On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. Www freetaxusa If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. Www freetaxusa However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. Www freetaxusa If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. Www freetaxusa    Pre-1998 choice to amortize bond premium. Www freetaxusa If you made the choice to amortize the premium on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your interest income only for bonds acquired during 1998 and later years. Www freetaxusa More information. Www freetaxusa    For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. Www freetaxusa 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). Www freetaxusa First report the loss in Section B of Form 4684. Www freetaxusa You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Www freetaxusa 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. Www freetaxusa For more information on casualty and theft losses, see Publication 547. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa See Publication 559 for information about figuring the amount of this deduction. Www freetaxusa 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. Www freetaxusa You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Www freetaxusa You cannot deduct gambling losses that are more than your winnings. Www freetaxusa Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). Www freetaxusa You cannot reduce your gambling winnings by your gambling losses and report the difference. Www freetaxusa 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. Www freetaxusa Therefore, your records should show your winnings separately from your losses. Www freetaxusa Diary of winnings and losses. Www freetaxusa You must keep an accurate diary or similar record of your losses and winnings. Www freetaxusa Your diary should contain at least the following information. Www freetaxusa The date and type of your specific wager or wagering activity. Www freetaxusa The name and address or location of the gambling establishment. Www freetaxusa The names of other persons present with you at the gambling establishment. Www freetaxusa The amount(s) you won or lost. Www freetaxusa Proof of winnings and losses. Www freetaxusa   In addition to your diary, you should also have other documentation. Www freetaxusa You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. Www freetaxusa   For specific wagering transactions, you can use the following items to support your winnings and losses. Www freetaxusa    These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. Www freetaxusa They are not all-inclusive. Www freetaxusa Your tax liability depends on your particular facts and circumstances. Www freetaxusa Keno. Www freetaxusa   Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. Www freetaxusa Slot machines. Www freetaxusa   A record of the machine number and all winnings by date and time the machine was played. Www freetaxusa Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc. Www freetaxusa ). Www freetaxusa   The number of the table at which you were playing. Www freetaxusa Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. Www freetaxusa Bingo. Www freetaxusa   A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Www freetaxusa Supplemental records include any receipts from the casino, parlor, etc. Www freetaxusa Racing (horse, harness, dog, etc. Www freetaxusa ). Www freetaxusa   A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Www freetaxusa Supplemental records include unredeemed tickets and payment records from the racetrack. Www freetaxusa Lotteries. Www freetaxusa   A record of ticket purchases, dates, winnings, and losses. Www freetaxusa Supplemental records include unredeemed tickets, payment slips, and winnings statements. Www freetaxusa 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. Www freetaxusa Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. Www freetaxusa Example. Www freetaxusa You are blind. Www freetaxusa You must use a reader to do your work. Www freetaxusa You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Www freetaxusa The reader's services are only for your work. Www freetaxusa You can deduct your expenses for the reader as impairment-related work expenses. Www freetaxusa Self-employed. Www freetaxusa   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. Www freetaxusa See Impairment-related work expenses. Www freetaxusa , later under How To Report. Www freetaxusa 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, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U. Www freetaxusa S. Www freetaxusa trade or business). Www freetaxusa It is not subject to the passive activity limitations. Www freetaxusa Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. Www freetaxusa See Publication 463 for more information. Www freetaxusa Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. Www freetaxusa If you are an employee, complete Form 2106 or Form 2106-EZ. Www freetaxusa See Publication 463 for more information. Www freetaxusa Losses From Ponzi-type Investment Schemes These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. Www freetaxusa You figure the deductible loss in Section B of Form 4684. Www freetaxusa However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. Www freetaxusa Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Www freetaxusa You do not need to complete Appendix A. Www freetaxusa See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. Www freetaxusa 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. Www freetaxusa See Repayments in Publication 525 for more information. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. Www freetaxusa Nondeductible Expenses You cannot deduct the following expenses. Www freetaxusa List of Nondeductible Expenses Adoption expenses. Www freetaxusa Broker's commissions. Www freetaxusa Burial or funeral expenses, including the cost of a cemetery lot. Www freetaxusa Campaign expenses. Www freetaxusa Capital expenses. Www freetaxusa Check-writing fees. Www freetaxusa Club dues. Www freetaxusa Commuting expenses. Www freetaxusa Fees and licenses, such as car licenses, marriage licenses, and dog tags. Www freetaxusa Fines and penalties, such as parking tickets. Www freetaxusa Health spa expenses. Www freetaxusa Hobby losses—but see Hobby Expenses, earlier. Www freetaxusa Home repairs, insurance, and rent. Www freetaxusa Home security system. Www freetaxusa Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535. Www freetaxusa Investment-related seminars. Www freetaxusa Life insurance premiums paid by the insured. Www freetaxusa Lobbying expenses. Www freetaxusa Losses from the sale of your home, furniture, personal car, etc. Www freetaxusa Lost or misplaced cash or property. Www freetaxusa Lunches with co-workers. Www freetaxusa Meals while working late. Www freetaxusa Medical expenses as business expenses other than medical examinations required by your employer. Www freetaxusa Personal disability insurance premiums. Www freetaxusa Personal legal expenses. Www freetaxusa Personal, living, or family expenses. Www freetaxusa Political contributions. Www freetaxusa Professional accreditation fees. Www freetaxusa Professional reputation, expenses to improve. Www freetaxusa Relief fund contributions. Www freetaxusa Residential telephone line. Www freetaxusa Stockholders' meeting, expenses of attending. Www freetaxusa Tax-exempt income, expenses of earning or collecting. Www freetaxusa The value of wages never received or lost vacation time. Www freetaxusa Travel expenses for another individual. Www freetaxusa Voluntary unemployment benefit fund contributions. Www freetaxusa Wristwatches. Www freetaxusa Adoption Expenses You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. Www freetaxusa For details, see Form 8839, Qualified Adoption Expenses. Www freetaxusa Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. Www freetaxusa Instead, these fees must be added to the taxpayer's cost of the securities. Www freetaxusa Commissions paid on the sale are deductible as business expenses only by dealers. Www freetaxusa Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Www freetaxusa These include qualification and registration fees for primary elections. Www freetaxusa Legal fees. Www freetaxusa   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Www freetaxusa Capital Expenses You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. Www freetaxusa If you use such property in your work, you may be able to take a depreciation deduction. Www freetaxusa See Publication 946. Www freetaxusa If the property is a car used in your work, also see Publication 463. Www freetaxusa 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. Www freetaxusa Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Www freetaxusa This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Www freetaxusa 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. Www freetaxusa Dues paid to airline, hotel, and luncheon clubs are not deductible. Www freetaxusa Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Www freetaxusa 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. Www freetaxusa Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Www freetaxusa This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Www freetaxusa Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Www freetaxusa 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. Www freetaxusa Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Www freetaxusa However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Www freetaxusa See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. Www freetaxusa Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Www freetaxusa Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Www freetaxusa You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Www freetaxusa See Publication 504, Divorced or Separated Individuals, for information on alimony. Www freetaxusa Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Www freetaxusa 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. Www freetaxusa Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Www freetaxusa Covered executive branch official. Www freetaxusa   A covered executive branch official, for the purpose of (4) above, is any of the following officials. Www freetaxusa The President. Www freetaxusa The Vice President. Www freetaxusa Any officer or employee of the White House Office of the Executive Office of the President, and the two most senior level officers of each of the other agencies in the Executive Office. Www freetaxusa Any individual serving in a position in Level I of the Executive Schedule under section 5312 of Title 5, United States Code, any other individual designated by the President as having Cabinet-level status, and any immediate deputy of one of these individuals. Www freetaxusa Dues used for lobbying. Www freetaxusa   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. Www freetaxusa Exceptions. Www freetaxusa   You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business. Www freetaxusa You can deduct expenses for attempting to influence the legislation of any local council or similar governing body (local legislation). Www freetaxusa An Indian tribal government is considered a local council or similar governing body. Www freetaxusa You can deduct in-house expenses for influencing legislation or communicating directly with a covered executive branch official if the expenses for the tax year are not more than $2,000 (not counting overhead expenses). Www freetaxusa If you are a professional lobbyist, you can deduct the expenses you incur in the trade or business of lobbying on behalf of another person. Www freetaxusa Payments by the other person to you for lobbying activities cannot be deducted. Www freetaxusa Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Www freetaxusa 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. Www freetaxusa See Publication 547. Www freetaxusa Example. Www freetaxusa A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Www freetaxusa The diamond falls from the ring and is never found. Www freetaxusa The loss of the diamond is a casualty. Www freetaxusa Lunches With Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Www freetaxusa See Publication 463 for information on deductible expenses while traveling away from home. Www freetaxusa Meals While Working Late You cannot deduct the cost of meals while working late. Www freetaxusa However, you may be able to claim a deduction if the cost of the meals is a deductible entertainment expense, or if you are traveling away from home. Www freetaxusa See Publication 463 for information on deductible entertainment expenses and expenses while traveling away from home. Www freetaxusa Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Www freetaxusa Custody of children. Www freetaxusa Breach of promise to marry suit. Www freetaxusa Civil or criminal charges resulting from a personal relationship. Www freetaxusa Damages for personal injury (except certain whistleblower claims and unlawful discrimination claims). Www freetaxusa For more information about unlawful discrimination claims, see Deductions Subject to the 2% Limit, earlier. Www freetaxusa Preparation of a title (or defense or perfection of a title). Www freetaxusa Preparation of a will. Www freetaxusa Property claims or property settlement in a divorce. Www freetaxusa You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Www freetaxusa Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Www freetaxusa Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Www freetaxusa Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Www freetaxusa Accounting certificate fees paid for the initial right to practice accounting. Www freetaxusa Bar exam fees and incidental expenses in securing initial admission to the bar. Www freetaxusa Medical and dental license fees paid to get initial licensing. Www freetaxusa Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa 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. Www freetaxusa You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Www freetaxusa Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Www freetaxusa You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. Www freetaxusa If you have expenses to p