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2011 Irs Forms 1040

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2011 Irs Forms 1040

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

2011 irs forms 1040 2. 2011 irs forms 1040   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. 2011 irs forms 1040 How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. 2011 irs forms 1040 Deferral percentage. 2011 irs forms 1040 Employee compensation. 2011 irs forms 1040 Compensation of self-employed individuals. 2011 irs forms 1040 Choice not to treat deferrals as compensation. 2011 irs forms 1040 Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. 2011 irs forms 1040 Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. 2011 irs forms 1040 S. 2011 irs forms 1040 Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. 2011 irs forms 1040 Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. 2011 irs forms 1040 A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. 2011 irs forms 1040 SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). 2011 irs forms 1040 A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). 2011 irs forms 1040 Eligible employee. 2011 irs forms 1040   An eligible employee is an individual who meets all the following requirements. 2011 irs forms 1040 Has reached age 21. 2011 irs forms 1040 Has worked for you in at least 3 of the last 5 years. 2011 irs forms 1040 Has received at least $550 in compensation from you in 2013. 2011 irs forms 1040 This amount remains the same in 2014. 2011 irs forms 1040    You can use less restrictive participation requirements than those listed, but not more restrictive ones. 2011 irs forms 1040 Excludable employees. 2011 irs forms 1040   The following employees can be excluded from coverage under a SEP. 2011 irs forms 1040 Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. 2011 irs forms 1040 Nonresident alien employees who have received no U. 2011 irs forms 1040 S. 2011 irs forms 1040 source wages, salaries, or other personal services compensation from you. 2011 irs forms 1040 For more information about nonresident aliens, see Publication 519, U. 2011 irs forms 1040 S. 2011 irs forms 1040 Tax Guide for Aliens. 2011 irs forms 1040 Setting Up a SEP There are three basic steps in setting up a SEP. 2011 irs forms 1040 You must execute a formal written agreement to provide benefits to all eligible employees. 2011 irs forms 1040 You must give each eligible employee certain information about the SEP. 2011 irs forms 1040 A SEP-IRA must be set up by or for each eligible employee. 2011 irs forms 1040 Many financial institutions will help you set up a SEP. 2011 irs forms 1040 Formal written agreement. 2011 irs forms 1040   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. 2011 irs forms 1040 You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. 2011 irs forms 1040 However, see When not to use Form 5305-SEP, below. 2011 irs forms 1040   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. 2011 irs forms 1040 Keep the original form. 2011 irs forms 1040 Do not file it with the IRS. 2011 irs forms 1040 Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. 2011 irs forms 1040 See the Form 5305-SEP instructions for details. 2011 irs forms 1040 If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. 2011 irs forms 1040 When not to use Form 5305-SEP. 2011 irs forms 1040   You cannot use Form 5305-SEP if any of the following apply. 2011 irs forms 1040 You currently maintain any other qualified retirement plan other than another SEP. 2011 irs forms 1040 You have any eligible employees for whom IRAs have not been set up. 2011 irs forms 1040 You use the services of leased employees, who are not your common-law employees (as described in chapter 1). 2011 irs forms 1040 You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. 2011 irs forms 1040 An affiliated service group described in section 414(m). 2011 irs forms 1040 A controlled group of corporations described in section 414(b). 2011 irs forms 1040 Trades or businesses under common control described in section 414(c). 2011 irs forms 1040 You do not pay the cost of the SEP contributions. 2011 irs forms 1040 Information you must give to employees. 2011 irs forms 1040   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. 2011 irs forms 1040 An IRS model SEP is not considered adopted until you give each employee this information. 2011 irs forms 1040 Setting up the employee's SEP-IRA. 2011 irs forms 1040   A SEP-IRA must be set up by or for each eligible employee. 2011 irs forms 1040 SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. 2011 irs forms 1040 You send SEP contributions to the financial institution where the SEP-IRA is maintained. 2011 irs forms 1040 Deadline for setting up a SEP. 2011 irs forms 1040   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. 2011 irs forms 1040 Credit for startup costs. 2011 irs forms 1040   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. 2011 irs forms 1040 For more information, see Credit for startup costs under Reminders, earlier. 2011 irs forms 1040 How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. 2011 irs forms 1040 If you are self-employed, you can contribute to your own SEP-IRA. 2011 irs forms 1040 Contributions must be in the form of money (cash, check, or money order). 2011 irs forms 1040 You cannot contribute property. 2011 irs forms 1040 However, participants may be able to transfer or roll over certain property from one retirement plan to another. 2011 irs forms 1040 See Publication 590 for more information about rollovers. 2011 irs forms 1040 You do not have to make contributions every year. 2011 irs forms 1040 But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). 2011 irs forms 1040 When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. 2011 irs forms 1040 Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. 2011 irs forms 1040 A SEP-IRA cannot be a Roth IRA. 2011 irs forms 1040 Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. 2011 irs forms 1040 Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. 2011 irs forms 1040 If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. 2011 irs forms 1040 Participants age 70½ or over must take required minimum distributions. 2011 irs forms 1040 Time limit for making contributions. 2011 irs forms 1040   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. 2011 irs forms 1040 Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. 2011 irs forms 1040 Compensation generally does not include your contributions to the SEP. 2011 irs forms 1040 The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. 2011 irs forms 1040 Example. 2011 irs forms 1040 Your employee, Mary Plant, earned $21,000 for 2013. 2011 irs forms 1040 The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). 2011 irs forms 1040 Contributions for yourself. 2011 irs forms 1040   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. 2011 irs forms 1040 However, special rules apply when figuring your maximum deductible contribution. 2011 irs forms 1040 See Deduction Limit for Self-Employed Individuals , later. 2011 irs forms 1040 Annual compensation limit. 2011 irs forms 1040   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. 2011 irs forms 1040 However, $51,000 is the maximum contribution for an eligible employee. 2011 irs forms 1040 These limits are $260,000 and $52,000, respectively, in 2014. 2011 irs forms 1040 Example. 2011 irs forms 1040 Your employee, Susan Green, earned $210,000 for 2013. 2011 irs forms 1040 Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. 2011 irs forms 1040 More than one plan. 2011 irs forms 1040   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. 2011 irs forms 1040 When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. 2011 irs forms 1040 Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. 2011 irs forms 1040 Tax treatment of excess contributions. 2011 irs forms 1040   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. 2011 irs forms 1040 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). 2011 irs forms 1040 $51,000. 2011 irs forms 1040 Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. 2011 irs forms 1040 For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. 2011 irs forms 1040 Reporting on Form W-2. 2011 irs forms 1040   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). 2011 irs forms 1040 Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. 2011 irs forms 1040 If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. 2011 irs forms 1040 Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. 2011 irs forms 1040 Your contributions (including any excess contributions carryover). 2011 irs forms 1040 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. 2011 irs forms 1040 In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. 2011 irs forms 1040 Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. 2011 irs forms 1040 When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. 2011 irs forms 1040 The deduction for the deductible part of your self-employment tax. 2011 irs forms 1040 The deduction for contributions to your own SEP-IRA. 2011 irs forms 1040 The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. 2011 irs forms 1040 For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. 2011 irs forms 1040 To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. 2011 irs forms 1040 Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. 2011 irs forms 1040 Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. 2011 irs forms 1040 However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. 2011 irs forms 1040 If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. 2011 irs forms 1040 Excise tax. 2011 irs forms 1040   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. 2011 irs forms 1040 For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. 2011 irs forms 1040 When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. 2011 irs forms 1040 If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. 2011 irs forms 1040 If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. 2011 irs forms 1040 Example. 2011 irs forms 1040 You are a fiscal year taxpayer whose tax year ends June 30. 2011 irs forms 1040 You maintain a SEP on a calendar year basis. 2011 irs forms 1040 You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. 2011 irs forms 1040 Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. 2011 irs forms 1040 For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. 2011 irs forms 1040 S. 2011 irs forms 1040 Return of Partnership Income; and corporations deduct them on Form 1120, U. 2011 irs forms 1040 S. 2011 irs forms 1040 Corporation Income Tax Return, or Form 1120S, U. 2011 irs forms 1040 S. 2011 irs forms 1040 Income Tax Return for an S Corporation. 2011 irs forms 1040 Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. 2011 irs forms 1040 (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2011 irs forms 1040 , you receive from the partnership. 2011 irs forms 1040 ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. 2011 irs forms 1040 Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. 2011 irs forms 1040 (See the Caution, next. 2011 irs forms 1040 ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. 2011 irs forms 1040 This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. 2011 irs forms 1040 You are not allowed to set up a SARSEP after 1996. 2011 irs forms 1040 However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. 2011 irs forms 1040 If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. 2011 irs forms 1040 Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. 2011 irs forms 1040 At least 50% of your employees eligible to participate choose to make elective deferrals. 2011 irs forms 1040 You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. 2011 irs forms 1040 The elective deferrals of your highly compensated employees meet the SARSEP ADP test. 2011 irs forms 1040 SARSEP ADP test. 2011 irs forms 1040   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. 2011 irs forms 1040 A highly compensated employee is defined in chapter 1. 2011 irs forms 1040 Deferral percentage. 2011 irs forms 1040   The deferral percentage for an employee for a year is figured as follows. 2011 irs forms 1040   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. 2011 irs forms 1040 Employee compensation. 2011 irs forms 1040   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. 2011 irs forms 1040 Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. 2011 irs forms 1040 See Compensation in chapter 1. 2011 irs forms 1040 Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. 2011 irs forms 1040 Compensation of self-employed individuals. 2011 irs forms 1040   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. 2011 irs forms 1040   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. 2011 irs forms 1040 Choice not to treat deferrals as compensation. 2011 irs forms 1040   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. 2011 irs forms 1040 Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. 2011 irs forms 1040 25% of the participant's compensation (limited to $255,000 of the participant's compensation). 2011 irs forms 1040 $17,500. 2011 irs forms 1040 The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. 2011 irs forms 1040 Cash or deferred arrangement (section 401(k) plan). 2011 irs forms 1040 Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). 2011 irs forms 1040 SIMPLE IRA plan. 2011 irs forms 1040 In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. 2011 irs forms 1040 Catch-up contributions. 2011 irs forms 1040   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. 2011 irs forms 1040 The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. 2011 irs forms 1040 Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). 2011 irs forms 1040 However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. 2011 irs forms 1040 The catch-up contribution limit. 2011 irs forms 1040 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. 2011 irs forms 1040   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). 2011 irs forms 1040 Overall limit on SEP contributions. 2011 irs forms 1040   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). 2011 irs forms 1040 The same rule applies to contributions you make to your own SEP-IRA. 2011 irs forms 1040 See Contribution Limits , earlier. 2011 irs forms 1040 Figuring the elective deferral. 2011 irs forms 1040   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. 2011 irs forms 1040 Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. 2011 irs forms 1040 However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. 2011 irs forms 1040 Excess deferrals. 2011 irs forms 1040   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. 2011 irs forms 1040 For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. 2011 irs forms 1040 The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. 2011 irs forms 1040 See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. 2011 irs forms 1040 Excess SEP contributions. 2011 irs forms 1040   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. 2011 irs forms 1040 You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. 2011 irs forms 1040 If you do not notify them within this time period, you must pay a 10% tax on the excess. 2011 irs forms 1040 For an explanation of the notification requirements, see Rev. 2011 irs forms 1040 Proc. 2011 irs forms 1040 91-44, 1991-2 C. 2011 irs forms 1040 B. 2011 irs forms 1040 733. 2011 irs forms 1040 If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. 2011 irs forms 1040 Reporting on Form W-2. 2011 irs forms 1040   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. 2011 irs forms 1040 You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. 2011 irs forms 1040 You must also include them in box 12. 2011 irs forms 1040 Mark the “Retirement plan” checkbox in box 13. 2011 irs forms 1040 For more information, see the Form W-2 instructions. 2011 irs forms 1040 Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. 2011 irs forms 1040 Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. 2011 irs forms 1040 Distributions are subject to IRA rules. 2011 irs forms 1040 Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. 2011 irs forms 1040 For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. 2011 irs forms 1040 Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. 2011 irs forms 1040 Making excess contributions. 2011 irs forms 1040 Making early withdrawals. 2011 irs forms 1040 Not making required withdrawals. 2011 irs forms 1040 For information about these taxes, see chapter 1 in Publication 590. 2011 irs forms 1040 Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. 2011 irs forms 1040 Prohibited transaction. 2011 irs forms 1040   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. 2011 irs forms 1040 In that case, the SEP-IRA will no longer qualify as an IRA. 2011 irs forms 1040 For a list of prohibited transactions, see Prohibited Transactions in chapter 4. 2011 irs forms 1040 Effects on employee. 2011 irs forms 1040   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. 2011 irs forms 1040 The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. 2011 irs forms 1040 Also, the employee may have to pay the additional tax for making early withdrawals. 2011 irs forms 1040 Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. 2011 irs forms 1040 See Setting Up a SEP , earlier. 2011 irs forms 1040 Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. 2011 irs forms 1040 You must also give them notice of any excess contributions. 2011 irs forms 1040 For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). 2011 irs forms 1040 Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. 2011 irs forms 1040 For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. 2011 irs forms 1040 Prev  Up  Next   Home   More Online Publications