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2011 Income Tax Forms 1040ez

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2011 Income Tax Forms 1040ez

2011 income tax forms 1040ez 31. 2011 income tax forms 1040ez   Tax on Unearned Income of Certain Children Table of Contents What's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. 2011 income tax forms 1040ez Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. 2011 income tax forms 1040ez Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. 2011 income tax forms 1040ez Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. 2011 income tax forms 1040ez . 2011 income tax forms 1040ez  For tax years beginning after December 31, 2012, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). 2011 income tax forms 1040ez NIIT is a 3. 2011 income tax forms 1040ez 8% tax on the lesser of the net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. 2011 income tax forms 1040ez Use Form 8960, Net Investment Income Tax, to figure this tax. 2011 income tax forms 1040ez For more information on NIIT, go to www. 2011 income tax forms 1040ez irs. 2011 income tax forms 1040ez gov and enter “Net Investment Income Tax” in the search box. 2011 income tax forms 1040ez Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. 2011 income tax forms 1040ez If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. 2011 income tax forms 1040ez (See Parent's Election To Report Child's Interest and Dividends , later. 2011 income tax forms 1040ez ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2011 income tax forms 1040ez (See Tax for Certain Children Who Have Unearned Income , later. 2011 income tax forms 1040ez ) For these rules, the term “child” includes a legally adopted child and a stepchild. 2011 income tax forms 1040ez These rules apply whether or not the child is a dependent. 2011 income tax forms 1040ez Useful Items - You may want to see: Publication 929 Tax Rules for Children and Dependents Form (and Instructions) 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. 2011 income tax forms 1040ez The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . 2011 income tax forms 1040ez Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. 2011 income tax forms 1040ez Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . 2011 income tax forms 1040ez Parents are married. 2011 income tax forms 1040ez   If the child's parents file separate returns, use the return of the parent with the greater taxable income. 2011 income tax forms 1040ez Parents not living together. 2011 income tax forms 1040ez   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. 2011 income tax forms 1040ez If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. 2011 income tax forms 1040ez   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2. 2011 income tax forms 1040ez Parents are divorced. 2011 income tax forms 1040ez   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. 2011 income tax forms 1040ez Custodial parent remarried. 2011 income tax forms 1040ez   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. 2011 income tax forms 1040ez Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. 2011 income tax forms 1040ez Do not use the return of the noncustodial parent. 2011 income tax forms 1040ez   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. 2011 income tax forms 1040ez If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. 2011 income tax forms 1040ez Parents never married. 2011 income tax forms 1040ez   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. 2011 income tax forms 1040ez If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. 2011 income tax forms 1040ez Widowed parent remarried. 2011 income tax forms 1040ez   If a widow or widower remarries, the new spouse is treated as the child's other parent. 2011 income tax forms 1040ez The rules explained earlier under Custodial parent remarried apply. 2011 income tax forms 1040ez Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. 2011 income tax forms 1040ez If you do, your child will not have to file a return. 2011 income tax forms 1040ez You can make this election only if all the following conditions are met. 2011 income tax forms 1040ez Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. 2011 income tax forms 1040ez Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). 2011 income tax forms 1040ez The child's gross income was less than $10,000. 2011 income tax forms 1040ez The child is required to file a return unless you make this election. 2011 income tax forms 1040ez The child does not file a joint return for the year. 2011 income tax forms 1040ez No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. 2011 income tax forms 1040ez No federal income tax was taken out of your child's income under the backup withholding rules. 2011 income tax forms 1040ez You are the parent whose return must be used when applying the special tax rules for children. 2011 income tax forms 1040ez (See Which Parent's Return To Use , earlier. 2011 income tax forms 1040ez ) These conditions are also shown in Figure 31-A. 2011 income tax forms 1040ez Certain January 1 birthdays. 2011 income tax forms 1040ez   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. 2011 income tax forms 1040ez You cannot make this election for such a child unless the child was a full-time student. 2011 income tax forms 1040ez   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. 2011 income tax forms 1040ez You cannot make this election for such a child. 2011 income tax forms 1040ez Full-time student. 2011 income tax forms 1040ez   A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. 2011 income tax forms 1040ez A school includes a technical, trade, or mechanical school. 2011 income tax forms 1040ez It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 2011 income tax forms 1040ez How to make the election. 2011 income tax forms 1040ez   Make the election by attaching Form 8814 to your Form 1040. 2011 income tax forms 1040ez (If you make this election, you cannot file Form 1040A or Form 1040EZ. 2011 income tax forms 1040ez ) Attach a separate Form 8814 for each child for whom you make the election. 2011 income tax forms 1040ez You can make the election for one or more children and not for others. 2011 income tax forms 1040ez Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. 2011 income tax forms 1040ez Rate may be higher. 2011 income tax forms 1040ez   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. 2011 income tax forms 1040ez This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. 2011 income tax forms 1040ez However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. 2011 income tax forms 1040ez Deductions you cannot take. 2011 income tax forms 1040ez   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. 2011 income tax forms 1040ez The additional standard deduction if the child is blind. 2011 income tax forms 1040ez The deduction for a penalty on an early withdrawal of your child's savings. 2011 income tax forms 1040ez Itemized deductions (such as your child's investment expenses or charitable contributions). 2011 income tax forms 1040ez Reduced deductions or credits. 2011 income tax forms 1040ez   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. 2011 income tax forms 1040ez Deduction for contributions to a traditional individual retirement arrangement (IRA). 2011 income tax forms 1040ez Deduction for student loan interest. 2011 income tax forms 1040ez Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. 2011 income tax forms 1040ez Credit for child and dependent care expenses. 2011 income tax forms 1040ez Child tax credit. 2011 income tax forms 1040ez Education tax credits. 2011 income tax forms 1040ez Earned income credit. 2011 income tax forms 1040ez Penalty for underpayment of estimated tax. 2011 income tax forms 1040ez   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. 2011 income tax forms 1040ez If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. 2011 income tax forms 1040ez See chapter 4 for more information. 2011 income tax forms 1040ez Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. 2011 income tax forms 1040ez Only the amount over $2,000 is added to your income. 2011 income tax forms 1040ez The amount over $2,000 is shown on Form 8814, line 6. 2011 income tax forms 1040ez Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. 2011 income tax forms 1040ez Include the amount from Form 8814, line 12, on Form 1040, line 21. 2011 income tax forms 1040ez Enter “Form 8814” on the dotted line next to line 21. 2011 income tax forms 1040ez If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040, line 21. 2011 income tax forms 1040ez Capital gain distributions and qualified dividends. 2011 income tax forms 1040ez   If your child's dividend income included any capital gain distributions, see Capital gain distributions under Figuring Child's Income in Publication 929, Part 2. 2011 income tax forms 1040ez If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. 2011 income tax forms 1040ez Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. 2011 income tax forms 1040ez This tax is added to the tax figured on your income. 2011 income tax forms 1040ez This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. 2011 income tax forms 1040ez Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. 2011 income tax forms 1040ez Check box a on Form 1040, line 44. 2011 income tax forms 1040ez Figure 31-A. 2011 income tax forms 1040ez Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. 2011 income tax forms 1040ez Figure 31–A. 2011 income tax forms 1040ez Can You Include Your Child's Income On Your Tax Return? Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2011 income tax forms 1040ez If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. 2011 income tax forms 1040ez Attach the completed form to the child's Form 1040 or Form 1040A. 2011 income tax forms 1040ez When Form 8615 must be filed. 2011 income tax forms 1040ez   Form 8615 must be filed for a child if all of the following statements are true. 2011 income tax forms 1040ez The child's investment income was more than $2,000. 2011 income tax forms 1040ez The child is required to file a return for 2013. 2011 income tax forms 1040ez The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. 2011 income tax forms 1040ez At least one of the child's parents was alive at the end of 2013. 2011 income tax forms 1040ez The child does not file a joint return for 2013. 2011 income tax forms 1040ez These conditions are also shown in  Figure 31-B. 2011 income tax forms 1040ez Earned income. 2011 income tax forms 1040ez   Earned income includes salaries, wages, tips, and other payments received for personal services performed. 2011 income tax forms 1040ez It does not include unearned income as defined later in this chapter. 2011 income tax forms 1040ez Support. 2011 income tax forms 1040ez   Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. 2011 income tax forms 1040ez To figure your child's support, count support provided by you, your child, and others. 2011 income tax forms 1040ez However, a scholarship received by your child is not considered support if your child is a full-time student. 2011 income tax forms 1040ez See chapter 3 for details about support. 2011 income tax forms 1040ez Certain January 1 birthdays. 2011 income tax forms 1040ez   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. 2011 income tax forms 1040ez Figure 31-B. 2011 income tax forms 1040ez Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. 2011 income tax forms 1040ez Figure 31-B. 2011 income tax forms 1040ez Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. 2011 income tax forms 1040ez . 2011 income tax forms 1040ez . 2011 income tax forms 1040ez THEN, at the end of 2013, the child is considered to be. 2011 income tax forms 1040ez . 2011 income tax forms 1040ez . 2011 income tax forms 1040ez January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. 2011 income tax forms 1040ez The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. 2011 income tax forms 1040ez  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. 2011 income tax forms 1040ez  ***Do not use Form 8615 for this child. 2011 income tax forms 1040ez Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. 2011 income tax forms 1040ez (If the parents filed a joint return, enter the name and social security number listed first on the joint return. 2011 income tax forms 1040ez ) On line C, check the box for the parent's filing status. 2011 income tax forms 1040ez See Which Parent's Return To Use at the beginning of this chapter for information on which parent's return information must be used on Form 8615. 2011 income tax forms 1040ez Parent with different tax year. 2011 income tax forms 1040ez   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. 2011 income tax forms 1040ez Parent's return information not known timely. 2011 income tax forms 1040ez   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. 2011 income tax forms 1040ez   You can use any reasonable estimate. 2011 income tax forms 1040ez This includes using information from last year's return. 2011 income tax forms 1040ez If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. 2011 income tax forms 1040ez    When you get the correct information, file an amended return on Form 1040X, Amended U. 2011 income tax forms 1040ez S. 2011 income tax forms 1040ez Individual Income Tax Return. 2011 income tax forms 1040ez   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. 2011 income tax forms 1040ez S. 2011 income tax forms 1040ez Individual Income Tax Return. 2011 income tax forms 1040ez Extensions are discussed in chapter 1. 2011 income tax forms 1040ez Step 1. 2011 income tax forms 1040ez Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. 2011 income tax forms 1040ez To do that, use Form 8615, Part I. 2011 income tax forms 1040ez Line 1 (unearned income). 2011 income tax forms 1040ez   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. 2011 income tax forms 1040ez Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. 2011 income tax forms 1040ez Form 1040EZ cannot be used if Form 8615 must be filed. 2011 income tax forms 1040ez   If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. 2011 income tax forms 1040ez   However, if the child has: excluded any foreign earned income, deducted either a loss from self-employment, or deducted a net operating loss from another year, then use the Alternate Worksheet for Form 8615, Line 1, in Publication 929 to figure the amount to enter on Form 8615, line 1. 2011 income tax forms 1040ez Unearned income defined. 2011 income tax forms 1040ez   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. 2011 income tax forms 1040ez It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, the taxable part of social security and pension payments, and certain distributions from trusts. 2011 income tax forms 1040ez Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). 2011 income tax forms 1040ez Nontaxable income. 2011 income tax forms 1040ez   For this purpose, unearned income includes only amounts the child must include in total income. 2011 income tax forms 1040ez Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. 2011 income tax forms 1040ez Income from property received as a gift. 2011 income tax forms 1040ez   A child's unearned income includes all income produced by property belonging to the child. 2011 income tax forms 1040ez This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. 2011 income tax forms 1040ez   A child's unearned income includes income produced by property given as a gift to the child. 2011 income tax forms 1040ez This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez Amanda Black, age 13, received the following income. 2011 income tax forms 1040ez Dividends — $800 Wages — $2,100 Taxable interest — $1,200 Tax-exempt interest — $100 Net capital gains — $100 The dividends were qualified dividends on stock given to her by her grandparents. 2011 income tax forms 1040ez Amanda's unearned income is $2,100. 2011 income tax forms 1040ez This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). 2011 income tax forms 1040ez Her wages are earned (not unearned) income because they are received for work actually done. 2011 income tax forms 1040ez Her tax-exempt interest is not included because it is nontaxable. 2011 income tax forms 1040ez Trust income. 2011 income tax forms 1040ez   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. 2011 income tax forms 1040ez   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. 2011 income tax forms 1040ez Line 2 (deductions). 2011 income tax forms 1040ez   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. 2011 income tax forms 1040ez   If the child does itemize deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29, that are directly connected with the production of unearned income entered on line 1, or $2,000. 2011 income tax forms 1040ez Directly connected. 2011 income tax forms 1040ez   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. 2011 income tax forms 1040ez These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. 2011 income tax forms 1040ez   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). 2011 income tax forms 1040ez Only the amount greater than 2% of the child's adjusted gross income can be deducted. 2011 income tax forms 1040ez See chapter 28 for more information. 2011 income tax forms 1040ez Example 1. 2011 income tax forms 1040ez Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2% limit) that are directly connected with his unearned income. 2011 income tax forms 1040ez His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. 2011 income tax forms 1040ez Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly connected itemized deductions of $300. 2011 income tax forms 1040ez Example 2. 2011 income tax forms 1040ez Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. 2011 income tax forms 1040ez She has no other income. 2011 income tax forms 1040ez She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. 2011 income tax forms 1040ez Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). 2011 income tax forms 1040ez The amount on line 2 is $2,050. 2011 income tax forms 1040ez This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. 2011 income tax forms 1040ez Line 3. 2011 income tax forms 1040ez   Subtract line 2 from line 1 and enter the result on this line. 2011 income tax forms 1040ez If zero or less, do not complete the rest of the form. 2011 income tax forms 1040ez However, you must still attach Form 8615 to the child's tax return. 2011 income tax forms 1040ez Figure the tax on the child's taxable income in the normal manner. 2011 income tax forms 1040ez Line 4 (child's taxable income). 2011 income tax forms 1040ez   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. 2011 income tax forms 1040ez   However, if the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, see the Form 8615 instructions or Pub. 2011 income tax forms 1040ez 929. 2011 income tax forms 1040ez Line 5 (net unearned income). 2011 income tax forms 1040ez   A child's net unearned income cannot be more than his or her taxable income. 2011 income tax forms 1040ez Enter on Form 8615, line 5, the smaller of line 3 or line 4. 2011 income tax forms 1040ez This is the child's net unearned income. 2011 income tax forms 1040ez   If zero or less, do not complete the rest of the form. 2011 income tax forms 1040ez However, you must still attach Form 8615 to the child's tax return. 2011 income tax forms 1040ez Figure the tax on the child's taxable income in the normal manner. 2011 income tax forms 1040ez Step 2. 2011 income tax forms 1040ez Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. 2011 income tax forms 1040ez The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. 2011 income tax forms 1040ez When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. 2011 income tax forms 1040ez For example, do not refigure the medical expense deduction. 2011 income tax forms 1040ez Figure the tentative tax on Form 8615, lines 6 through 13. 2011 income tax forms 1040ez Note. 2011 income tax forms 1040ez If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. 2011 income tax forms 1040ez Line 6 (parent's taxable income). 2011 income tax forms 1040ez   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. 2011 income tax forms 1040ez   If the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) was used to figure the parent's tax, enter the amount from line 3 of that worksheet instead of the parent's taxable income. 2011 income tax forms 1040ez Line 7 (net unearned income of other children). 2011 income tax forms 1040ez   If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. 2011 income tax forms 1040ez Do not include the amount from line 5 of the Form 8615 being completed. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. 2011 income tax forms 1040ez The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon — $800 Jerry — $600 Mike — $1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. 2011 income tax forms 1040ez Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). 2011 income tax forms 1040ez Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). 2011 income tax forms 1040ez Other children's information not available. 2011 income tax forms 1040ez   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. 2011 income tax forms 1040ez See Parent's return information not known timely , earlier. 2011 income tax forms 1040ez Line 11 (tentative tax). 2011 income tax forms 1040ez   Subtract line 10 from line 9 and enter the result on this line. 2011 income tax forms 1040ez This is the tentative tax. 2011 income tax forms 1040ez   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. 2011 income tax forms 1040ez Also skip the discussion for lines 12a and 12b that follows. 2011 income tax forms 1040ez Lines 12a and 12b (dividing the tentative tax). 2011 income tax forms 1040ez   If an amount is entered on line 7, divide the tentative tax shown on line 11 among the children according to each child's share of the total net unearned income. 2011 income tax forms 1040ez This is done on lines 12a, 12b, and 13. 2011 income tax forms 1040ez Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. 2011 income tax forms 1040ez Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. 2011 income tax forms 1040ez The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). 2011 income tax forms 1040ez The decimal on line 12b is  . 2011 income tax forms 1040ez 333, figured as follows and rounded to three places. 2011 income tax forms 1040ez   $800 = . 2011 income tax forms 1040ez 333     $2,400   Step 3. 2011 income tax forms 1040ez Figuring the Child's Tax (Form 8615, Part III) The final step in figuring a child's tax using Form 8615 is to determine the larger of: The total of: The child's share of the tentative tax based on the parent's tax rate, plus The tax on the child's taxable income in excess of net unearned income, figured at the child's tax rate, or The tax on the child's taxable income, figured at the child's tax rate. 2011 income tax forms 1040ez This is the child's tax. 2011 income tax forms 1040ez It is figured on Form 8615, lines 14 through 18. 2011 income tax forms 1040ez Alternative minimum tax. 2011 income tax forms 1040ez   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. 2011 income tax forms 1040ez See Alternative Minimum Tax (AMT) in chapter 30. 2011 income tax forms 1040ez    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. 2011 income tax forms 1040ez For information on special limits that apply to a child who files Form 6251, see Certain Children Under Age 24 in the Instructions for Form 6251. 2011 income tax forms 1040ez Prev  Up  Next   Home   More Online Publications
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The 2011 Income Tax Forms 1040ez

2011 income tax forms 1040ez 8. 2011 income tax forms 1040ez   Business Expenses Table of Contents Introduction Useful Items - You may want to see: Bad DebtsAccrual method. 2011 income tax forms 1040ez Cash method. 2011 income tax forms 1040ez Car and Truck ExpensesOffice in the home. 2011 income tax forms 1040ez Methods for Deducting Car and Truck Expenses Reimbursing Your Employees for Expenses Depreciation Employees' PayFringe benefits. 2011 income tax forms 1040ez InsuranceHow to figure the deduction. 2011 income tax forms 1040ez Interest Legal and Professional FeesTax preparation fees. 2011 income tax forms 1040ez Pension Plans Rent Expense Taxes Travel, Meals, and EntertainmentTransportation. 2011 income tax forms 1040ez Taxi, commuter bus, and limousine. 2011 income tax forms 1040ez Baggage and shipping. 2011 income tax forms 1040ez Car or truck. 2011 income tax forms 1040ez Meals and lodging. 2011 income tax forms 1040ez Cleaning. 2011 income tax forms 1040ez Telephone. 2011 income tax forms 1040ez Tips. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez Business Use of Your HomeExceptions to exclusive use. 2011 income tax forms 1040ez Other Expenses You Can Deduct Expenses You Cannot Deduct Introduction You can deduct the costs of operating your business. 2011 income tax forms 1040ez These costs are known as business expenses. 2011 income tax forms 1040ez These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year. 2011 income tax forms 1040ez To be deductible, a business expense must be both ordinary and necessary. 2011 income tax forms 1040ez An ordinary expense is one that is common and accepted in your field of business. 2011 income tax forms 1040ez A necessary expense is one that is helpful and appropriate for your business. 2011 income tax forms 1040ez An expense does not have to be indispensable to be considered necessary. 2011 income tax forms 1040ez For more information about the general rules for deducting business expenses, see chapter 1 in Publication 535, Business Expenses. 2011 income tax forms 1040ez If you have an expense that is partly for business and partly personal, separate the personal part from the business part. 2011 income tax forms 1040ez The personal part is not deductible. 2011 income tax forms 1040ez Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 946 How To Depreciate Property See chapter 12 for information about getting publications and forms. 2011 income tax forms 1040ez Bad Debts If someone owes you money you cannot collect, you have a bad debt. 2011 income tax forms 1040ez There are two kinds of bad debts, business bad debts and nonbusiness bad debts. 2011 income tax forms 1040ez A business bad debt is generally one that comes from operating your trade or business. 2011 income tax forms 1040ez You may be able to deduct business bad debts as an expense on your business tax return. 2011 income tax forms 1040ez Business bad debt. 2011 income tax forms 1040ez   A business bad debt is a loss from the worthlessness of a debt that was either of the following. 2011 income tax forms 1040ez Created or acquired in your business. 2011 income tax forms 1040ez Closely related to your business when it became partly or totally worthless. 2011 income tax forms 1040ez A debt is closely related to your business if your primary motive for incurring the debt is a business reason. 2011 income tax forms 1040ez   Business bad debts are mainly the result of credit sales to customers. 2011 income tax forms 1040ez They can also be the result of loans to suppliers, clients, employees, or distributors. 2011 income tax forms 1040ez Goods and services customers have not paid for are shown in your books as either accounts receivable or notes receivable. 2011 income tax forms 1040ez If you are unable to collect any part of these accounts or notes receivable, the uncollectible part is a business bad debt. 2011 income tax forms 1040ez    You can take a bad debt deduction for these accounts and notes receivable only if the amount you were owed was included in your gross income either for the year the deduction is claimed or for a prior year. 2011 income tax forms 1040ez Accrual method. 2011 income tax forms 1040ez   If you use an accrual method of accounting, you normally report income as you earn it. 2011 income tax forms 1040ez You can take a bad debt deduction for an uncollectible receivable if you have included the uncollectible amount in income. 2011 income tax forms 1040ez Cash method. 2011 income tax forms 1040ez   If you use the cash method of accounting, you normally report income when you receive payment. 2011 income tax forms 1040ez You cannot take a bad debt deduction for amounts owed to you that you have not received and cannot collect if you never included those amounts in income. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about business bad debts, see chapter 10 in Publication 535. 2011 income tax forms 1040ez Nonbusiness bad debts. 2011 income tax forms 1040ez   All other bad debts are nonbusiness bad debts and are deductible as short-term capital losses on Form 8949 and Schedule D (Form 1040). 2011 income tax forms 1040ez For more information on nonbusiness bad debts, see Publication 550, Investment Income and Expenses. 2011 income tax forms 1040ez Car and Truck Expenses If you use your car or truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle. 2011 income tax forms 1040ez You also may be able to deduct other costs of local transportation and traveling away from home overnight on business. 2011 income tax forms 1040ez You may qualify for a tax credit for qualified plug-in electric vehicles, qualified plug-in electric drive motor vehicles, and alternative motor vehicles you place in service during the year. 2011 income tax forms 1040ez See Form 8936 and Form 8910 for more information. 2011 income tax forms 1040ez Local transportation expenses. 2011 income tax forms 1040ez   Local transportation expenses include the ordinary and necessary costs of all the following. 2011 income tax forms 1040ez Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. 2011 income tax forms 1040ez Tax home is defined later. 2011 income tax forms 1040ez Visiting clients or customers. 2011 income tax forms 1040ez Going to a business meeting away from your regular workplace. 2011 income tax forms 1040ez Getting from your home to a temporary workplace when you have one or more regular places of work. 2011 income tax forms 1040ez These temporary workplaces can be either within the area of your tax home or outside that area. 2011 income tax forms 1040ez Local business transportation does not include expenses you have while traveling away from home overnight. 2011 income tax forms 1040ez Those expenses are deductible as travel expenses and are discussed later under Travel, Meals, and Entertainment. 2011 income tax forms 1040ez However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. 2011 income tax forms 1040ez   Generally, your tax home is your regular place of business, regardless of where you maintain your family home. 2011 income tax forms 1040ez It includes the entire city or general area in which your business or work is located. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez You operate a printing business out of rented office space. 2011 income tax forms 1040ez You use your van to deliver completed jobs to your customers. 2011 income tax forms 1040ez You can deduct the cost of round-trip transportation between your customers and your print shop. 2011 income tax forms 1040ez    You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. 2011 income tax forms 1040ez These costs are personal commuting expenses. 2011 income tax forms 1040ez Office in the home. 2011 income tax forms 1040ez   Your workplace can be your home if you have an office in your home that qualifies as your principal place of business. 2011 income tax forms 1040ez For more information, see Business Use of Your Home, later. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez You are a graphics designer. 2011 income tax forms 1040ez You operate your business out of your home. 2011 income tax forms 1040ez Your home qualifies as your principal place of business. 2011 income tax forms 1040ez You occasionally have to drive to your clients to deliver your completed work. 2011 income tax forms 1040ez You can deduct the cost of the round-trip transportation between your home and your clients. 2011 income tax forms 1040ez Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. 2011 income tax forms 1040ez Standard mileage rate. 2011 income tax forms 1040ez Actual expenses. 2011 income tax forms 1040ez Standard mileage rate. 2011 income tax forms 1040ez   You may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. 2011 income tax forms 1040ez For 2013, the standard mileage rate is 56. 2011 income tax forms 1040ez 5 cents per mile. 2011 income tax forms 1040ez    If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls. 2011 income tax forms 1040ez Choosing the standard mileage rate. 2011 income tax forms 1040ez   If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. 2011 income tax forms 1040ez In later years, you can choose to use either the standard mileage rate or actual expenses. 2011 income tax forms 1040ez   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). 2011 income tax forms 1040ez Standard mileage rate not allowed. 2011 income tax forms 1040ez   You cannot use the standard mileage rate if you: Operate five or more cars at the same time, Claimed a depreciation deduction using any method other than straight line, for example, ACRS or MACRS, Claimed a section 179 deduction on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. 2011 income tax forms 1040ez Parking fees and tolls. 2011 income tax forms 1040ez   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. 2011 income tax forms 1040ez (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. 2011 income tax forms 1040ez ) Actual expenses. 2011 income tax forms 1040ez   If you do not choose to use the standard mileage rate, you may be able to deduct your actual car or truck expenses. 2011 income tax forms 1040ez    If you qualify to use both methods, figure your deduction both ways to see which gives you a larger deduction. 2011 income tax forms 1040ez   Actual car expenses include the costs of the following items. 2011 income tax forms 1040ez Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. 2011 income tax forms 1040ez You can divide your expenses based on the miles driven for each purpose. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez You are the sole proprietor of a flower shop. 2011 income tax forms 1040ez You drove your van 20,000 miles during the year. 2011 income tax forms 1040ez 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use (including commuting miles). 2011 income tax forms 1040ez You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about the rules for claiming car and truck expenses, see Publication 463. 2011 income tax forms 1040ez Reimbursing Your Employees for Expenses You generally can deduct the amount you reimburse your employees for car and truck expenses. 2011 income tax forms 1040ez The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. 2011 income tax forms 1040ez For details, see chapter 11 in Publication 535. 2011 income tax forms 1040ez That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. 2011 income tax forms 1040ez Depreciation If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. 2011 income tax forms 1040ez You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. 2011 income tax forms 1040ez This method of deducting the cost of business property is called depreciation. 2011 income tax forms 1040ez The discussion here is brief. 2011 income tax forms 1040ez You will find more information about depreciation in Publication 946. 2011 income tax forms 1040ez What property can be depreciated?   You can depreciate property if it meets all the following requirements. 2011 income tax forms 1040ez It must be property you own. 2011 income tax forms 1040ez It must be used in business or held to produce income. 2011 income tax forms 1040ez You never can depreciate inventory (explained in chapter 2) because it is not held for use in your business. 2011 income tax forms 1040ez It must have a useful life that extends substantially beyond the year it is placed in service. 2011 income tax forms 1040ez It must have a determinable useful life, which means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. 2011 income tax forms 1040ez You never can depreciate the cost of land because land does not wear out, become obsolete, or get used up. 2011 income tax forms 1040ez It must not be excepted property. 2011 income tax forms 1040ez This includes property placed in service and disposed of in the same year. 2011 income tax forms 1040ez Repairs. 2011 income tax forms 1040ez    You cannot depreciate repairs and replacements that do not increase the value of your property, make it more useful, or lengthen its useful life. 2011 income tax forms 1040ez You can deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. 2011 income tax forms 1040ez Depreciation method. 2011 income tax forms 1040ez   The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). 2011 income tax forms 1040ez MACRS is discussed in detail in Publication 946. 2011 income tax forms 1040ez Section 179 deduction. 2011 income tax forms 1040ez   You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. 2011 income tax forms 1040ez This deduction is known as the “section 179 deduction. 2011 income tax forms 1040ez ” The maximum amount you can elect to deduct during 2013 is generally $500,000 (higher limits apply to certain property). 2011 income tax forms 1040ez See IRC 179(e). 2011 income tax forms 1040ez   This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. 2011 income tax forms 1040ez The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2013 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2013). 2011 income tax forms 1040ez Special rules apply to trucks and vans. 2011 income tax forms 1040ez For more information, see Publication 946. 2011 income tax forms 1040ez It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction. 2011 income tax forms 1040ez    Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. 2011 income tax forms 1040ez For more information, see the Instructions for Form 4562 or Publication 946. 2011 income tax forms 1040ez Listed property. 2011 income tax forms 1040ez   You must follow special rules and recordkeeping requirements when depreciating listed property. 2011 income tax forms 1040ez Listed property is any of the following. 2011 income tax forms 1040ez Most passenger automobiles. 2011 income tax forms 1040ez Most other property used for transportation. 2011 income tax forms 1040ez Any property of a type generally used for entertainment, recreation, or amusement. 2011 income tax forms 1040ez Certain computers and related peripheral equipment. 2011 income tax forms 1040ez   For more information about listed property, see Publication 946. 2011 income tax forms 1040ez Form 4562. 2011 income tax forms 1040ez   Use Form 4562, Depreciation and Amortization, if you are claiming any of the following. 2011 income tax forms 1040ez Depreciation on property placed in service during the current tax year. 2011 income tax forms 1040ez A section 179 deduction. 2011 income tax forms 1040ez Depreciation on any listed property (regardless of when it was placed in service). 2011 income tax forms 1040ez    If you have to use Form 4562, you must file Schedule C. 2011 income tax forms 1040ez You cannot use Schedule C-EZ. 2011 income tax forms 1040ez   Employees' Pay You can generally deduct on Schedule C the pay you give your employees for the services they perform for your business. 2011 income tax forms 1040ez The pay may be in cash, property, or services. 2011 income tax forms 1040ez To be deductible, your employees' pay must be an ordinary and necessary expense and you must pay or incur it in the tax year. 2011 income tax forms 1040ez In addition, the pay must meet both the following tests. 2011 income tax forms 1040ez The pay must be reasonable. 2011 income tax forms 1040ez The pay must be for services performed. 2011 income tax forms 1040ez Chapter 2 in Publication 535 explains and defines these requirements. 2011 income tax forms 1040ez You cannot deduct your own salary or any personal withdrawals you make from your business. 2011 income tax forms 1040ez As a sole proprietor, you are not an employee of the business. 2011 income tax forms 1040ez If you had employees during the year, you must use Schedule C. 2011 income tax forms 1040ez You cannot use Schedule C-EZ. 2011 income tax forms 1040ez Kinds of pay. 2011 income tax forms 1040ez   Some of the ways you may provide pay to your employees are listed below. 2011 income tax forms 1040ez For an explanation of each of these items, see chapter 2 in Publication 535. 2011 income tax forms 1040ez Awards. 2011 income tax forms 1040ez Bonuses. 2011 income tax forms 1040ez Education expenses. 2011 income tax forms 1040ez Fringe benefits (discussed later). 2011 income tax forms 1040ez Loans or advances you do not expect the employee to repay if they are for personal services actually performed. 2011 income tax forms 1040ez Property you transfer to an employee as payment for services. 2011 income tax forms 1040ez Reimbursements for employee business expenses. 2011 income tax forms 1040ez Sick pay. 2011 income tax forms 1040ez Vacation pay. 2011 income tax forms 1040ez Fringe benefits. 2011 income tax forms 1040ez   A fringe benefit is a form of pay for the performance of services. 2011 income tax forms 1040ez The following are examples of fringe benefits. 2011 income tax forms 1040ez Benefits under qualified employee benefit programs. 2011 income tax forms 1040ez Meals and lodging. 2011 income tax forms 1040ez The use of a car. 2011 income tax forms 1040ez Flights on airplanes. 2011 income tax forms 1040ez Discounts on property or services. 2011 income tax forms 1040ez Memberships in country clubs or other social clubs. 2011 income tax forms 1040ez Tickets to entertainment or sporting events. 2011 income tax forms 1040ez   Employee benefit programs include the following. 2011 income tax forms 1040ez Accident and health plans. 2011 income tax forms 1040ez Adoption assistance. 2011 income tax forms 1040ez Cafeteria plans. 2011 income tax forms 1040ez Dependent care assistance. 2011 income tax forms 1040ez Educational assistance. 2011 income tax forms 1040ez Group-term life insurance coverage. 2011 income tax forms 1040ez Welfare benefit funds. 2011 income tax forms 1040ez   You can generally deduct the cost of fringe benefits you provide on your Schedule C in whatever category the cost falls. 2011 income tax forms 1040ez For example, if you allow an employee to use a car or other property you lease, deduct the cost of the lease as a rent or lease expense. 2011 income tax forms 1040ez If you own the property, include your deduction for its cost or other basis as a section 179 deduction or a depreciation deduction. 2011 income tax forms 1040ez    You may be able to exclude all or part of the fringe benefits you provide from your employees' wages. 2011 income tax forms 1040ez For more information about fringe benefits and the exclusion of benefits, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. 2011 income tax forms 1040ez Insurance You can generally deduct premiums you pay for the following kinds of insurance related to your business. 2011 income tax forms 1040ez Fire, theft, flood, or similar insurance. 2011 income tax forms 1040ez Credit insurance that covers losses from business bad debts. 2011 income tax forms 1040ez Group hospitalization and medical insurance for employees, including long-term care insurance. 2011 income tax forms 1040ez Liability insurance. 2011 income tax forms 1040ez Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. 2011 income tax forms 1040ez Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. 2011 income tax forms 1040ez Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. 2011 income tax forms 1040ez Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. 2011 income tax forms 1040ez Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. 2011 income tax forms 1040ez If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. 2011 income tax forms 1040ez If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. 2011 income tax forms 1040ez Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract. 2011 income tax forms 1040ez Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. 2011 income tax forms 1040ez Nondeductible premiums. 2011 income tax forms 1040ez   You cannot deduct premiums on the following kinds of insurance. 2011 income tax forms 1040ez Self-insurance reserve funds. 2011 income tax forms 1040ez You cannot deduct amounts credited to a reserve set up for self-insurance. 2011 income tax forms 1040ez This applies even if you cannot get business insurance coverage for certain business risks. 2011 income tax forms 1040ez However, your actual losses may be deductible. 2011 income tax forms 1040ez For more information, see Publication 547, Casualties, Disasters, and Thefts. 2011 income tax forms 1040ez Loss of earnings. 2011 income tax forms 1040ez You cannot deduct premiums for a policy that pays for your lost earnings due to sickness or disability. 2011 income tax forms 1040ez However, see item (8) in the previous list. 2011 income tax forms 1040ez Certain life insurance and annuities. 2011 income tax forms 1040ez For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. 2011 income tax forms 1040ez You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. 2011 income tax forms 1040ez A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. 2011 income tax forms 1040ez For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. 2011 income tax forms 1040ez The disallowance applies without regard to whom the policy covers. 2011 income tax forms 1040ez Insurance to secure a loan. 2011 income tax forms 1040ez If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. 2011 income tax forms 1040ez Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. 2011 income tax forms 1040ez In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. 2011 income tax forms 1040ez Self-employed health insurance deduction. 2011 income tax forms 1040ez   You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family. 2011 income tax forms 1040ez How to figure the deduction. 2011 income tax forms 1040ez   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. 2011 income tax forms 1040ez However, if any of the following apply, you must use the worksheet in chapter 6 of Publication 535. 2011 income tax forms 1040ez You have more than one source of income subject to self-employment tax. 2011 income tax forms 1040ez You file Form 2555 or Form 2555-EZ (relating to foreign earned income). 2011 income tax forms 1040ez You are using amounts paid for qualified long-term care insurance to figure the deduction. 2011 income tax forms 1040ez Prepayment. 2011 income tax forms 1040ez   You cannot deduct expenses in advance, even if you pay them in advance. 2011 income tax forms 1040ez This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez In 2013, you signed a 3-year insurance contract. 2011 income tax forms 1040ez Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. 2011 income tax forms 1040ez You can deduct in 2014 and 2015 the premium allocable to those years. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about deducting insurance, see chapter 6 in Publication 535. 2011 income tax forms 1040ez Interest You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your business. 2011 income tax forms 1040ez Interest relates to your business if you use the proceeds of the loan for a business expense. 2011 income tax forms 1040ez It does not matter what type of property secures the loan. 2011 income tax forms 1040ez You can deduct interest on a debt only if you meet all of the following requirements. 2011 income tax forms 1040ez You are legally liable for that debt. 2011 income tax forms 1040ez Both you and the lender intend that the debt be repaid. 2011 income tax forms 1040ez You and the lender have a true debtor-creditor relationship. 2011 income tax forms 1040ez You cannot deduct on Schedule C or C-EZ the interest you paid on personal loans. 2011 income tax forms 1040ez If a loan is part business and part personal, you must divide the interest between the personal part and the business part. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez In 2013, you paid $600 interest on a car loan. 2011 income tax forms 1040ez During 2013, you used the car 60% for business and 40% for personal purposes. 2011 income tax forms 1040ez You are claiming actual expenses on the car. 2011 income tax forms 1040ez You can only deduct $360 (60% × $600) for 2013 on Schedule C or C-EZ. 2011 income tax forms 1040ez The remaining interest of $240 is a nondeductible personal expense. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about deducting interest, see chapter 4 in Publication 535. 2011 income tax forms 1040ez That chapter explains the following items. 2011 income tax forms 1040ez Interest you can deduct. 2011 income tax forms 1040ez Interest you cannot deduct. 2011 income tax forms 1040ez How to allocate interest between personal and business use. 2011 income tax forms 1040ez When to deduct interest. 2011 income tax forms 1040ez The rules for a below-market interest rate loan. 2011 income tax forms 1040ez (This is generally a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 2011 income tax forms 1040ez ) Legal and Professional Fees Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible on Schedule C or C-EZ. 2011 income tax forms 1040ez However, you usually cannot deduct legal fees you pay to acquire business assets. 2011 income tax forms 1040ez Add them to the basis of the property. 2011 income tax forms 1040ez If the fees include payments for work of a personal nature (such as making a will), you can take a business deduction only for the part of the fee related to your business. 2011 income tax forms 1040ez The personal part of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. 2011 income tax forms 1040ez For more information, see Publication 529, Miscellaneous Deductions. 2011 income tax forms 1040ez Tax preparation fees. 2011 income tax forms 1040ez   You can deduct on Schedule C or C-EZ the cost of preparing that part of your tax return relating to your business as a sole proprietor or statutory employee. 2011 income tax forms 1040ez You can deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. 2011 income tax forms 1040ez   You can also deduct on Schedule C or C-EZ the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor or statutory employee. 2011 income tax forms 1040ez Pension Plans You can set up and maintain the following small business retirement plans for yourself and your employees. 2011 income tax forms 1040ez SEP (Simplified Employee Pension) plans. 2011 income tax forms 1040ez SIMPLE (Savings Incentive Match Plan for Employees) plans. 2011 income tax forms 1040ez Qualified plans (including Keogh or H. 2011 income tax forms 1040ez R. 2011 income tax forms 1040ez 10 plans). 2011 income tax forms 1040ez SEP, SIMPLE, and qualified plans offer you and your employees a tax favored way to save for retirement. 2011 income tax forms 1040ez You can deduct contributions you make to the plan for your employees on line 19 of Schedule C. 2011 income tax forms 1040ez If you are a sole proprietor, you can deduct contributions you make to the plan for yourself on line 28 of Form 1040. 2011 income tax forms 1040ez You can also deduct trustees' fees if contributions to the plan do not cover them. 2011 income tax forms 1040ez Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. 2011 income tax forms 1040ez You may also be able to claim a tax credit of 50% of the first $1,000 of qualified startup costs if you begin a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. 2011 income tax forms 1040ez Under certain plans, employees can have you contribute limited amounts of their before-tax pay to a plan. 2011 income tax forms 1040ez These amounts (and earnings on them) are generally tax free until your employees receive distributions from the plan. 2011 income tax forms 1040ez For more information on retirement plans for small business, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). 2011 income tax forms 1040ez Publication 590, Individual Retirement Arrangements (IRAs), discusses other tax favored ways to save for retirement. 2011 income tax forms 1040ez Rent Expense Rent is any amount you pay for the use of property you do not own. 2011 income tax forms 1040ez In general, you can deduct rent as a business expense only if the rent is for property you use in your business. 2011 income tax forms 1040ez If you have or will receive equity in or title to the property, you cannot deduct the rent. 2011 income tax forms 1040ez Unreasonable rent. 2011 income tax forms 1040ez   You cannot take a rental deduction for unreasonable rents. 2011 income tax forms 1040ez Ordinarily, the issue of reasonableness arises only if you and the lessor are related. 2011 income tax forms 1040ez Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. 2011 income tax forms 1040ez Rent is not unreasonable just because it is figured as a percentage of gross receipts. 2011 income tax forms 1040ez   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. 2011 income tax forms 1040ez For a list of the other related persons, see section 267 of the Internal Revenue Code. 2011 income tax forms 1040ez Rent on your home. 2011 income tax forms 1040ez   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. 2011 income tax forms 1040ez You must meet the requirements for business use of your home. 2011 income tax forms 1040ez For more information, see Business Use of Your Home , later. 2011 income tax forms 1040ez Rent paid in advance. 2011 income tax forms 1040ez   Generally, rent paid in your business is deductible in the year paid or accrued. 2011 income tax forms 1040ez If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. 2011 income tax forms 1040ez You can deduct the rest of your payment only over the period to which it applies. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about rent, see chapter 3 in Publication 535. 2011 income tax forms 1040ez Taxes You can deduct on Schedule C or C-EZ various federal, state, local, and foreign taxes directly attributable to your business. 2011 income tax forms 1040ez Income taxes. 2011 income tax forms 1040ez   You can deduct on Schedule C or C-EZ a state tax on gross income (as distinguished from net income) directly attributable to your business. 2011 income tax forms 1040ez You can deduct other state and local income taxes on Schedule A (Form 1040) if you itemize your deductions. 2011 income tax forms 1040ez Do not deduct federal income tax. 2011 income tax forms 1040ez Employment taxes. 2011 income tax forms 1040ez   You can deduct the social security, Medicare, and federal unemployment (FUTA) taxes you paid out of your own funds as an employer. 2011 income tax forms 1040ez Employment taxes are discussed briefly in chapter 1. 2011 income tax forms 1040ez You can also deduct payments you made as an employer to a state unemployment compensation fund or to a state disability benefit fund. 2011 income tax forms 1040ez Deduct these payments as taxes. 2011 income tax forms 1040ez Self-employment tax. 2011 income tax forms 1040ez   You can deduct one-half of your self-employment tax on line 27 of Form 1040. 2011 income tax forms 1040ez Self-employment tax is discussed in chapters 1 and 10. 2011 income tax forms 1040ez Personal property tax. 2011 income tax forms 1040ez   You can deduct on Schedule C or C-EZ any tax imposed by a state or local government on personal property used in your business. 2011 income tax forms 1040ez   You can also deduct registration fees for the right to use property within a state or local area. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez May and Julius Winter drove their car 7,000 business miles out of a total of 10,000 miles. 2011 income tax forms 1040ez They had to pay $25 for their annual state license tags and $20 for their city registration sticker. 2011 income tax forms 1040ez They also paid $235 in city personal property tax on the car, for a total of $280. 2011 income tax forms 1040ez They are claiming their actual car expenses. 2011 income tax forms 1040ez Because they used the car 70% for business, they can deduct 70% of the $280, or $196, as a business expense. 2011 income tax forms 1040ez Real estate taxes. 2011 income tax forms 1040ez   You can deduct on Schedule C or C-EZ the real estate taxes you pay on your business property. 2011 income tax forms 1040ez Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. 2011 income tax forms 1040ez The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. 2011 income tax forms 1040ez   For more information about real estate taxes, see chapter 5 in Publication 535. 2011 income tax forms 1040ez That chapter explains special rules for deducting the following items. 2011 income tax forms 1040ez Taxes for local benefits, such as those for sidewalks, streets, water mains, and sewer lines. 2011 income tax forms 1040ez Real estate taxes when you buy or sell property during the year. 2011 income tax forms 1040ez Real estate taxes if you use an accrual method of accounting and choose to accrue real estate tax related to a definite period ratably over that period. 2011 income tax forms 1040ez Sales tax. 2011 income tax forms 1040ez   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. 2011 income tax forms 1040ez If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. 2011 income tax forms 1040ez If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. 2011 income tax forms 1040ez If the property is depreciable, add the sales tax to the basis for depreciation. 2011 income tax forms 1040ez For information on the basis of property, see Publication 551, Basis of Assets. 2011 income tax forms 1040ez    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. 2011 income tax forms 1040ez Do not include these taxes in gross receipts or sales. 2011 income tax forms 1040ez Excise taxes. 2011 income tax forms 1040ez   You can deduct on Schedule C or C-EZ all excise taxes that are ordinary and necessary expenses of carrying on your business. 2011 income tax forms 1040ez Excise taxes are discussed briefly in chapter 1. 2011 income tax forms 1040ez Fuel taxes. 2011 income tax forms 1040ez   Taxes on gasoline, diesel fuel, and other motor fuels you use in your business are usually included as part of the cost of the fuel. 2011 income tax forms 1040ez Do not deduct these taxes as a separate item. 2011 income tax forms 1040ez   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. 2011 income tax forms 1040ez For more information, see Publication 510, Excise Taxes. 2011 income tax forms 1040ez Travel, Meals, and Entertainment This section briefly explains the kinds of travel and entertainment expenses you can deduct on Schedule C or C-EZ. 2011 income tax forms 1040ez Table 8-1. 2011 income tax forms 1040ez When Are Entertainment Expenses Deductible? (Note. 2011 income tax forms 1040ez The following is a summary of the rules for deducting entertainment expenses. 2011 income tax forms 1040ez For more details about these rules, see Publication 463. 2011 income tax forms 1040ez ) General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. 2011 income tax forms 1040ez Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. 2011 income tax forms 1040ez An ordinary expense is one that is common and accepted in your field of business, trade, or profession. 2011 income tax forms 1040ez A necessary expense is one that is helpful and appropriate, although not necessarily required, for your business. 2011 income tax forms 1040ez Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. 2011 income tax forms 1040ez   Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion. 2011 income tax forms 1040ez Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. 2011 income tax forms 1040ez You cannot deduct expenses that are lavish or extravagant under the circumstances. 2011 income tax forms 1040ez You generally can deduct only 50% of your unreimbursed entertainment expenses. 2011 income tax forms 1040ez Travel expenses. 2011 income tax forms 1040ez   These are the ordinary and necessary expenses of traveling away from home for your business. 2011 income tax forms 1040ez You are traveling away from home if both the following conditions are met. 2011 income tax forms 1040ez Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work. 2011 income tax forms 1040ez You need to get sleep or rest to meet the demands of your work while away from home. 2011 income tax forms 1040ez Generally, your tax home is your regular place of business, regardless of where you maintain your family home. 2011 income tax forms 1040ez It includes the entire city or general area in which your business is located. 2011 income tax forms 1040ez See Publication 463 for more information. 2011 income tax forms 1040ez   The following is a brief discussion of the expenses you can deduct. 2011 income tax forms 1040ez Transportation. 2011 income tax forms 1040ez   You can deduct the cost of travel by airplane, train, bus, or car between your home and your business destination. 2011 income tax forms 1040ez Taxi, commuter bus, and limousine. 2011 income tax forms 1040ez   You can deduct fares for these and other types of transportation between the airport or station and your hotel, or between the hotel and your work location away from home. 2011 income tax forms 1040ez Baggage and shipping. 2011 income tax forms 1040ez   You can deduct the cost of sending baggage and sample or display material between your regular and temporary work locations. 2011 income tax forms 1040ez Car or truck. 2011 income tax forms 1040ez   You can deduct the costs of operating and maintaining your vehicle when traveling away from home on business. 2011 income tax forms 1040ez You can deduct actual expenses or the standard mileage rate (discussed earlier under Car and Truck Expenses), as well as business-related tolls and parking. 2011 income tax forms 1040ez If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. 2011 income tax forms 1040ez Meals and lodging. 2011 income tax forms 1040ez   You can deduct the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. 2011 income tax forms 1040ez In most cases, you can deduct only 50% of your meal expenses. 2011 income tax forms 1040ez Cleaning. 2011 income tax forms 1040ez   You can deduct the costs of dry cleaning and laundry while on your business trip. 2011 income tax forms 1040ez Telephone. 2011 income tax forms 1040ez   You can deduct the cost of business calls while on your business trip, including business communication by fax machine or other communication devices. 2011 income tax forms 1040ez Tips. 2011 income tax forms 1040ez   You can deduct the tips you pay for any expense in this list. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information about travel expenses, see Publication 463. 2011 income tax forms 1040ez Entertainment expenses. 2011 income tax forms 1040ez   You may be able to deduct business-related entertainment expenses for entertaining a client, customer, or employee. 2011 income tax forms 1040ez In most cases, you can deduct only 50% of these expenses. 2011 income tax forms 1040ez   The following are examples of entertainment expenses. 2011 income tax forms 1040ez Entertaining guests at nightclubs, athletic clubs, theaters, or sporting events. 2011 income tax forms 1040ez Providing meals, a hotel suite, or a car to business customers or their families. 2011 income tax forms 1040ez To be deductible, the expenses must meet the rules listed in Table 8-1. 2011 income tax forms 1040ez For details about these rules, see Publication 463. 2011 income tax forms 1040ez Reimbursing your employees for expenses. 2011 income tax forms 1040ez   You generally can deduct the amount you reimburse your employees for travel and entertainment expenses. 2011 income tax forms 1040ez The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. 2011 income tax forms 1040ez For details, see chapter 11 in Publication 535. 2011 income tax forms 1040ez That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. 2011 income tax forms 1040ez Business Use of Your Home To deduct expenses related to the part of your home used for business, you must meet specific requirements. 2011 income tax forms 1040ez Even then, your deduction may be limited. 2011 income tax forms 1040ez To qualify to claim expenses for business use of your home, you must meet the following tests. 2011 income tax forms 1040ez Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use , later), Regular, For your business, and The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your business, or A separate structure (not attached to your home) you use in connection with your business. 2011 income tax forms 1040ez Exclusive use. 2011 income tax forms 1040ez   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. 2011 income tax forms 1040ez The area used for business can be a room or other separately identifiable space. 2011 income tax forms 1040ez The space does not need to be marked off by a permanent partition. 2011 income tax forms 1040ez   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. 2011 income tax forms 1040ez Example. 2011 income tax forms 1040ez You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. 2011 income tax forms 1040ez Your family also uses the den for recreation. 2011 income tax forms 1040ez The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. 2011 income tax forms 1040ez Exceptions to exclusive use. 2011 income tax forms 1040ez   You do not have to meet the exclusive use test if you use part of your home in either of the following ways. 2011 income tax forms 1040ez For the storage of inventory or product samples. 2011 income tax forms 1040ez As a daycare facility. 2011 income tax forms 1040ez For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). 2011 income tax forms 1040ez Regular use. 2011 income tax forms 1040ez   To qualify under the regular use test, you must use a specific area of your home for business on a continuing basis. 2011 income tax forms 1040ez You do not meet the test if your business use of the area is only occasional or incidental, even if you do not use that area for any other purpose. 2011 income tax forms 1040ez Principal place of business. 2011 income tax forms 1040ez   You can have more than one business location, including your home, for a single trade or business. 2011 income tax forms 1040ez To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that business. 2011 income tax forms 1040ez To determine your principal place of business, you must consider all the facts and circumstances. 2011 income tax forms 1040ez   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. 2011 income tax forms 1040ez You use it exclusively and regularly for administrative or management activities of your business. 2011 income tax forms 1040ez You have no other fixed location where you conduct substantial administrative or management activities of your business. 2011 income tax forms 1040ez   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. 2011 income tax forms 1040ez The relative importance of the activities performed at each location. 2011 income tax forms 1040ez If the relative importance factor does not determine your principal place of business, you can also consider the time spent at each location. 2011 income tax forms 1040ez   If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. 2011 income tax forms 1040ez However, for other ways to qualify to deduct home office expenses, see Publication 587. 2011 income tax forms 1040ez Deduction limit. 2011 income tax forms 1040ez   If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. 2011 income tax forms 1040ez If your gross income from the business use is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. 2011 income tax forms 1040ez   Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation (with depreciation taken last), allocable to the business is limited to the gross income from the business use of your home minus the sum of the following. 2011 income tax forms 1040ez The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). 2011 income tax forms 1040ez The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. 2011 income tax forms 1040ez Do not include in (2) above your deduction for one-half of your self-employment tax. 2011 income tax forms 1040ez   Use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. 2011 income tax forms 1040ez New simplified method. 2011 income tax forms 1040ez    The IRS now provides a simplified method to determine your expenses for business use of your home. 2011 income tax forms 1040ez The simplified method is an alternative to calculating and substantiating actual expenses. 2011 income tax forms 1040ez In most cases, you will figure your deduction by multiplying $5 by the area of your home used for a qualified business use. 2011 income tax forms 1040ez The area you use to figure your deduction is limited to 300 square feet. 2011 income tax forms 1040ez For more information, see the Instructions for Schedule C. 2011 income tax forms 1040ez More information. 2011 income tax forms 1040ez   For more information on deducting expenses for the business use of your home, see Publication 587. 2011 income tax forms 1040ez Other Expenses You Can Deduct You may also be able to deduct the following expenses. 2011 income tax forms 1040ez See Publication 535 to find out whether you can deduct them. 2011 income tax forms 1040ez Advertising. 2011 income tax forms 1040ez Bank fees. 2011 income tax forms 1040ez Donations to business organizations. 2011 income tax forms 1040ez Education expenses. 2011 income tax forms 1040ez Energy efficient commercial buildings deduction expenses. 2011 income tax forms 1040ez Impairment-related expenses. 2011 income tax forms 1040ez Interview expense allowances. 2011 income tax forms 1040ez Licenses and regulatory fees. 2011 income tax forms 1040ez Moving machinery. 2011 income tax forms 1040ez Outplacement services. 2011 income tax forms 1040ez Penalties and fines you pay for late performance or nonperformance of a contract. 2011 income tax forms 1040ez Repairs that keep your property in a normal efficient operating condition. 2011 income tax forms 1040ez Repayments of income. 2011 income tax forms 1040ez Subscriptions to trade or professional publications. 2011 income tax forms 1040ez Supplies and materials. 2011 income tax forms 1040ez Utilities. 2011 income tax forms 1040ez Expenses You Cannot Deduct You usually cannot deduct the following as business expenses. 2011 income tax forms 1040ez For more information, see Publication 535. 2011 income tax forms 1040ez Bribes and kickbacks. 2011 income tax forms 1040ez Charitable contributions. 2011 income tax forms 1040ez Demolition expenses or losses. 2011 income tax forms 1040ez Dues to business, social, athletic, luncheon, sporting, airline, and hotel clubs. 2011 income tax forms 1040ez Lobbying expenses. 2011 income tax forms 1040ez Penalties and fines you pay to a governmental agency or instrumentality because you broke the law. 2011 income tax forms 1040ez Personal, living, and family expenses. 2011 income tax forms 1040ez Political contributions. 2011 income tax forms 1040ez Repairs that add to the value of your property or significantly increase its life. 2011 income tax forms 1040ez Prev  Up  Next   Home   More Online Publications