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1040ez Instructions 2012

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1040ez Instructions 2012

1040ez instructions 2012 Publication 531 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionOrdering forms and publications. 1040ez instructions 2012 Tax questions. 1040ez instructions 2012 Future Developments For the latest information about developments related to Publication 531, such as legislation enacted after this publication was published, go to www. 1040ez instructions 2012 irs. 1040ez instructions 2012 gov/pub531. 1040ez instructions 2012 What's New Additional Medicare Tax. 1040ez instructions 2012  Beginning in 2013, a 0. 1040ez instructions 2012 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 1040ez instructions 2012 An employer is required to withhold Additional Medicare Tax on any Medicare wages or RRTA compensation it pays to an employee in excess of $200,000 in a calendar year without regard to the employee's filing status. 1040ez instructions 2012 An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. 1040ez instructions 2012 Additional Medicare Tax is only imposed on the employee. 1040ez instructions 2012 There is no employer share of Additional Medicare Tax. 1040ez instructions 2012 All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1040ez instructions 2012 Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold. 1040ez instructions 2012 Similarly, tips are subject to Additional Medicare Tax withholding, if, in combination with other RRTA compensation paid by the employer, they exceed the $200,000 withholding threshold. 1040ez instructions 2012 For more information on Additional Medicare Tax, go to www. 1040ez instructions 2012 irs. 1040ez instructions 2012 gov and enter “Additional Medicare Tax” in the search box. 1040ez instructions 2012 Reminder Photographs of missing children. 1040ez instructions 2012  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 1040ez instructions 2012 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1040ez instructions 2012 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. 1040ez instructions 2012 Introduction This publication is for employees who receive tips. 1040ez instructions 2012 All tips you receive are income and are subject to federal income tax. 1040ez instructions 2012 You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. 1040ez instructions 2012 The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. 1040ez instructions 2012 Reporting your tip income correctly is not difficult. 1040ez instructions 2012 You must do three things. 1040ez instructions 2012 Keep a daily tip record. 1040ez instructions 2012 Report tips to your employer. 1040ez instructions 2012 Report all your tips on your income tax return. 1040ez instructions 2012  This publication will explain these three things and show you what to do on your tax return if you have not done the first two. 1040ez instructions 2012 This publication will also show you how to treat allocated tips. 1040ez instructions 2012 Comments and suggestions. 1040ez instructions 2012   We welcome your comments about this publication and your suggestions for future editions. 1040ez instructions 2012   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 1040ez instructions 2012 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1040ez instructions 2012 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1040ez instructions 2012   You can send your comments from www. 1040ez instructions 2012 irs. 1040ez instructions 2012 gov/formspubs/. 1040ez instructions 2012 Click on “More Information” and then on “Comment on Tax Forms and Publications”. 1040ez instructions 2012   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. 1040ez instructions 2012 Ordering forms and publications. 1040ez instructions 2012   Visit www. 1040ez instructions 2012 irs. 1040ez instructions 2012 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. 1040ez instructions 2012 Internal Revenue Service 1201 N. 1040ez instructions 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 1040ez instructions 2012   If you have a tax question, check the information available on IRS. 1040ez instructions 2012 gov or call 1-800-829-1040. 1040ez instructions 2012 We cannot answer tax questions sent to either of the above addresses. 1040ez instructions 2012 Prev  Up  Next   Home   More Online Publications
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Questions and Answers on 501(c) Organizations

May 15, 2013

The IRS has received a variety of questions related to the exempt organization issues recently raised. Here are some basics on the issue.

1. What are the issues raised in the recent Treasury Inspector General for Tax Administration (“TIGTA”) report?

The issues relate to the application process for organizations seeking tax-exempt status. Part of the IRS’s responsibility is to review applications of organizations seeking tax-exempt status. Section 501(c)(3) organizations are required to get IRS approval. Others, including section 501(c)(4) organizations, are not required to get IRS approval, but often seek it.

2. Do the issues raised in the recent report relate to audits/ examinations?

No, the issues relate to the approval process of organizations that applied to the IRS for recognition of tax-exempt status. 

3. What does the IRS look for in the approval process? 

The IRS’s role is to determine whether organization meets the legal requirements for tax-exempt status. One requirement relates to the amount of political campaign intervention (“political activity”) that tax-exempt organizations may engage in. Section 501(c)(3) organizations are prohibited from engaging in any political activity. Other organizations, including section 501(c)(4) organizations, may only engage in a limited amount of political activity. 

4. Where does an organization send its application for tax-exemption?

All applications are sent to the IRS Determinations Office in Cincinnati. This office receives approximately 70,000 applications for tax-exempt status of all kinds each year. This includes applications from section 501(c)(3) and section 501(c)(4) organizations. This office, which includes fewer than 200 people working directly on applications, is primarily responsible for working determination applications. Determinations staff may consult with tax law specialists in Washington on how the law applies to their case. 

5. Has the IRS seen an increase in the number of applications in which the organization is potentially engaged in political activity?

Yes, the IRS has seen an increase in the number of section 501(c)(4) applications in general. The number of applications has more than doubled in recent years. In addition, the IRS has seen an increase in the number of tax-exempt organization applications in which the organization is potentially engaged in political activity. This includes both section 501(c)(3) and section 501(c)(4) organizations.

6. How did the IRS handle the increase in the number of applications from organizations that appeared to be engaged in political activity?

As done in the past in other situations, such as credit counseling and down payment assistance), the IRS selected cases using identified criteria so that cases needing further review would be worked consistently. This means that cases meeting the selection criteria were centralized and assigned to designated employees developing expertise in the area so that they could be worked in a fair and consistent manner. 

7. How are decisions made regarding what cases should be centralized in this area?

Cases are selected for centralization if there are indications in the application that the organization may engage in political campaign intervention, lobbying, or advocacy. This was done to ensure that the legal requirements related to these activities are applied in a fair and consistent manner. The set of criteria was revised at a later point in order to avoid centralizing pure lobbying organizations that did not require follow-on development. During certain periods (August 2010 to July 2011 and January 2012 to June 2012), specific names, terms and policies (such as Tea Party and Patriot) were inappropriately used as criteria in determining which cases should be centralized. However, case selection during these periods was not limited to these criteria. 

8. What cases were centralized?

The TIGTA report reflects that 300 cases were centralized. Approximately 70 of those cases included the name Tea Party. The remaining cases included organizations of all political views. The current number of centralized cases is approximately 470.

9. Why did IRS employees look at Tea Party organizations?

IRS employees had seen cases of organizations with the name Tea Party in which political activity was an issue that needed to be reviewed for compliance with legal requirements. Because of the increased inventory of applications, this inappropriate criterion was used as a shortcut to centralize similar cases.

10. Would organizations with Tea Party in the name have been centralized if only appropriate selection criteria had been used?

Yes, in most cases the organization would have been centralized based on the information included in the application. The IRS should have focused on this information instead of using a shortcut.

11. Were centralized cases worked differently depending on which selection criteria was used?

No, centralized cases were not worked differently depending on which selection criteria was used.

12. Did mistakes occur in working the centralized cases?

Yes. Applicants whose cases were centralized unfortunately experienced inappropriate delays and over-expansive information requests in some cases. This was caused by ineffective processes and not related to the selection criteria used for the centralization of a case.

13. Is there any evidence of political bias in selecting cases for centralization or in working those cases?

The TIGTA report included no findings of political bias. In addition, the IRS has found no indication of political bias. 

14. How many centralized applications have been approved?

Since centralization, more than 175 applications have been approved to date. As with all applications for tax-exempt status that are approved, the names of organizations whose applications have been approved are publicly available. 

Page Last Reviewed or Updated: 04-Sep-2013

The 1040ez Instructions 2012

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