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Compare State Income Taxes

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Compare State Income Taxes

Compare state income taxes Publication 517 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Compare state income taxes Tax questions. Compare state income taxes Useful Items - You may want to see: What's New SE tax rate. Compare state income taxes  For 2013 and 2014, the Old Age, Survivors, and Disability Insurance (OASDI) portion of the SE tax is 12. Compare state income taxes 4%. Compare state income taxes The Medicare (HI) portion of the SE tax remains 2. Compare state income taxes 9%. Compare state income taxes As a result, the SE tax rate returns to 15. Compare state income taxes 3%. Compare state income taxes For more information, see the Instructions for Schedule SE (Form 1040). Compare state income taxes Earnings subject to social security. Compare state income taxes  For 2013, the maximum wages and self-employment income subject to social security tax increases from $110,100 to $113,700. Compare state income taxes For 2014, the maximum wages and self-employment income subject to social security tax is $117,000. Compare state income taxes Additional Medicare Tax. Compare state income taxes  Beginning in 2013, a 0. Compare state income taxes 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Compare state income taxes For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Compare state income taxes Modified AGI limit for traditional IRA contributions increased. Compare state income taxes  For 2013, you may be able to take an IRA deduction if you were covered by a retirement plan at work and your modified AGI is: Less than $115,000 if married filing jointly or qualifying widow(er), Less than $69,000 if single or head of household, or Less than $10,000 if married filing separately. Compare state income taxes If you file a joint return and either you or your spouse was not covered by a retirement plan at work, you may be able to take an IRA deduction if your modified AGI is less than $188,000. Compare state income taxes Modified AGI limit for Roth IRA contributions increased. Compare state income taxes  For 2013, you may be able to contribute to your Roth IRA if your modified AGI is: Less than $188,000 if married filing jointly or qualifying widow(er), Less than $127,000 if single, head of household, or married filing separately and you did not live with your spouse at any time during the year, or Less than $10,000 if married filing separately and you lived with your spouse at any time during the year. Compare state income taxes Earned income credit (EIC). Compare state income taxes  For 2013, the maximum amount of income you can earn and still claim the EIC has increased. Compare state income taxes You may be able to take the EIC if you earned less than $46,227 ($51,567 for married filing jointly) and you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) and you have two qualifying children; $37,870 ($43,210 for married filing jointly) and you have one qualifying child; and $14,340 ($19,680 for married filing jointly) and you do not have any qualifying children. Compare state income taxes Reminders Future developments. Compare state income taxes . Compare state income taxes   For the latest information about developments related to Publication 517, such as legislation enacted after it was published, go to www. Compare state income taxes irs. Compare state income taxes gov/pub517. Compare state income taxes Photographs of missing children. Compare state income taxes  The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children. Compare state income taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Compare state income taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Compare state income taxes Introduction Three federal taxes are paid on wages and self-employment income—income tax, social security tax, and Medicare tax. Compare state income taxes Social security and Medicare taxes are collected under one of two systems. Compare state income taxes Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. Compare state income taxes Under the Federal Insurance Contributions Act (FICA), the employee and the employer each pay half of the social security and Medicare taxes. Compare state income taxes No earnings are subject to both systems. Compare state income taxes Table 1. Compare state income taxes Are Your Ministerial Earnings* Covered Under FICA or SECA? Find the class to which you belong in the left column and read across the table to find if you are covered under FICA or SECA. Compare state income taxes Do not rely on this table alone. Compare state income taxes Also read the discussion for the class in the following pages. Compare state income taxes Class Covered under FICA? Covered under SECA? Minister NO. Compare state income taxes Your ministerial earnings are exempt. Compare state income taxes YES, if you do not have an approved exemption from the IRS. Compare state income taxes   NO, if you have an approved exemption. Compare state income taxes Member of a religious order who has not taken a vow of poverty NO. Compare state income taxes Your ministerial earnings are exempt. Compare state income taxes YES, if you do not have an approved exemption from the IRS. Compare state income taxes   NO, if you have an approved exemption. Compare state income taxes Member of a religious order who has taken a vow of poverty YES, if: Your order elected FICA coverage for its members, or You worked outside the order and the work was not required by, or done on behalf of, the order. Compare state income taxes   NO, if neither of the above applies. Compare state income taxes NO. Compare state income taxes Your ministerial earnings are exempt. Compare state income taxes Christian Science practitioner or reader NO. Compare state income taxes Your ministerial earnings are exempt. Compare state income taxes YES, if you do not have an approved exemption from the IRS. Compare state income taxes   NO, if you have an approved exemption. Compare state income taxes Religious worker (church employee) YES, if your employer did not elect to exclude you. Compare state income taxes    NO, if your employer elected to exclude you. Compare state income taxes YES, if your employer elected to exclude you from FICA. Compare state income taxes   NO, if you are covered under FICA. Compare state income taxes Member of a recognized religious sect YES, if you are an employee and do not have an approved exemption from the IRS. Compare state income taxes    NO, if you have an approved exemption. Compare state income taxes YES, if you are self-employed and do not have an approved exemption from the IRS. Compare state income taxes   NO, if you have an approved exemption. Compare state income taxes * Ministerial earnings are the self-employment earnings that result from ministerial services, defined and discussed later. Compare state income taxes In addition, all wages and self-employment income that are subject to Medicare tax are subject to a 0. Compare state income taxes 9% Additional Medicare Tax if they are paid in excess of the applicable threshold for an individual's filing status. Compare state income taxes Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Compare state income taxes Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Compare state income taxes A self-employment loss is not considered for purposes of this tax. Compare state income taxes RRTA compensation is separately compared to the threshold. Compare state income taxes There is no employer match for Additional Medicare Tax. Compare state income taxes For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Compare state income taxes This publication contains information for the following classes of taxpayers. Compare state income taxes Ministers. Compare state income taxes Members of a religious order. Compare state income taxes Christian Science practitioners and readers. Compare state income taxes Religious workers (church employees). Compare state income taxes Members of a recognized religious sect. Compare state income taxes Note. Compare state income taxes Unless otherwise noted, in this publication references to members of the clergy include ministers, members of a religious order (but not members of a recognized religious sect), and Christian Science practitioners and readers. Compare state income taxes This publication covers the following topics about the collection of social security and Medicare taxes from members of the clergy, religious workers, and members of a recognized religious sect. Compare state income taxes Which earnings are taxed under FICA and which under SECA. Compare state income taxes See Table 1 above. Compare state income taxes How a member of the clergy can apply for an exemption from self-employment tax. Compare state income taxes How a member of a recognized religious sect can apply for an exemption from both self-employment tax and FICA taxes. Compare state income taxes How a member of the clergy or religious worker figures net earnings from self-employment. Compare state income taxes This publication also covers certain income tax rules of interest to ministers and members of a religious order. Compare state income taxes A Comprehensive Example shows filled-in forms for a minister who has income taxed under SECA, other income taxed under FICA, and income tax reporting of items specific to a minister. Compare state income taxes In the back of Publication 517 is a set of worksheets that you can use to figure the amount of your taxable ministerial income and allowable deductions. Compare state income taxes You will find these worksheets right after the Comprehensive Example . Compare state income taxes Note. Compare state income taxes In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion. Compare state income taxes Comments and suggestions. Compare state income taxes   We welcome your comments about this publication and your suggestions for future editions. Compare state income taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Compare state income taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Compare state income taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Compare state income taxes   You can send your comments from www. Compare state income taxes irs. Compare state income taxes gov/formspubs/. Compare state income taxes Click on “More Information” and then on “Give us feedback”. Compare state income taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Compare state income taxes Ordering forms and publications. Compare state income taxes   Visit www. Compare state income taxes irs. Compare state income taxes gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Compare state income taxes Internal Revenue Service 1201 N. Compare state income taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Compare state income taxes   If you have a tax question, check the information available on IRS. Compare state income taxes gov or call 1-800-829-1040. Compare state income taxes We cannot answer tax questions sent to either of the above addresses. Compare state income taxes Useful Items - You may want to see: Publication 54 Tax Guide for U. Compare state income taxes S. Compare state income taxes Citizens and Resident Aliens Abroad 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) Form (and Instructions) SS-8 Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding SS-16 Certificate of Election of Coverage Under the Federal Insurance Contributions Act Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship) Schedule C-EZ (Form 1040) Net Profit From Business (Sole Proprietorship) Schedule SE (Form 1040) Self-Employment Tax 1040-ES Estimated Tax for Individuals 1040X Amended U. Compare state income taxes S. Compare state income taxes Individual Income Tax Return 4029 Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes 8959 Additional Medicare Tax Ordering publications and forms. Compare state income taxes   See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Compare state income taxes Prev  Up  Next   Home   More Online Publications
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Compare state income taxes 28. Compare state income taxes   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. Compare state income taxes  The 2013 rate for business use of a vehicle is 56½ cents per mile. Compare state income taxes Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Compare state income taxes You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Compare state income taxes This chapter covers the following topics. Compare state income taxes Deductions subject to the 2% limit. Compare state income taxes Deductions not subject to the 2% limit. Compare state income taxes Expenses you cannot deduct. Compare state income taxes You must keep records to verify your deductions. Compare state income taxes You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Compare state income taxes For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Compare state income taxes Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). Compare state income taxes You can claim the amount of expenses that is more than 2% of your adjusted gross income. Compare state income taxes You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Compare state income taxes Your adjusted gross income is the amount on Form 1040, line 38. Compare state income taxes Generally, you apply the 2% limit after you apply any other deduction limit. Compare state income taxes For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. Compare state income taxes Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Compare state income taxes Unreimbursed employee expenses (line 21). Compare state income taxes Tax preparation fees (line 22). Compare state income taxes Other expenses (line 23). Compare state income taxes Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. Compare state income taxes An expense is ordinary if it is common and accepted in your trade, business, or profession. Compare state income taxes An expense is necessary if it is appropriate and helpful to your business. Compare state income taxes An expense does not have to be required to be considered necessary. Compare state income taxes Examples of unreimbursed employee expenses are listed next. Compare state income taxes The list is followed by discussions of additional unreimbursed employee expenses. Compare state income taxes Business bad debt of an employee. Compare state income taxes Education that is work related. Compare state income taxes (See chapter 27. Compare state income taxes ) Legal fees related to your job. Compare state income taxes Licenses and regulatory fees. Compare state income taxes Malpractice insurance premiums. Compare state income taxes Medical examinations required by an employer. Compare state income taxes Occupational taxes. Compare state income taxes Passport for a business trip. Compare state income taxes Subscriptions to professional journals and trade magazines related to your work. Compare state income taxes Travel, transportation, entertainment, and gifts related to your work. Compare state income taxes (See chapter 26. Compare state income taxes ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Compare state income taxes Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. Compare state income taxes 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. Compare state income taxes For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Compare state income taxes 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. Compare state income taxes Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Compare state income taxes Lobbying and political activities. Compare state income taxes   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Compare state income taxes See Dues used for lobbying under Nondeductible Expenses, later. Compare state income taxes 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. Compare state income taxes If you file Form 1040A, you can deduct these expenses on line 16. Compare state income taxes If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Compare state income taxes However, neither spouse can deduct more than $250 of his or her qualified expenses. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Compare state income taxes See Publication 587 for more detailed information and a worksheet. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes Employment and outplacement agency fees. Compare state income taxes   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Compare state income taxes Employer pays you back. Compare state income taxes   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. Compare state income taxes (See Recoveries in chapter 12. Compare state income taxes ) Employer pays the employment agency. Compare state income taxes   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. Compare state income taxes Résumé. Compare state income taxes   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. Compare state income taxes Travel and transportation expenses. Compare state income taxes   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. Compare state income taxes You can deduct the travel expenses if the trip is primarily to look for a new job. Compare state income taxes 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. Compare state income taxes   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. Compare state income taxes   You can choose to use the standard mileage rate to figure your car expenses. Compare state income taxes The 2013 rate for business use of a vehicle is 56½ cents per mile. Compare state income taxes See chapter 26 for more information. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. Compare state income taxes 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. Compare state income taxes However, you cannot deduct the cost of travel as a form of education. Compare state income taxes 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. Compare state income taxes You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Compare state income taxes For more information about depreciation, see Publication 946. Compare state income taxes Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Compare state income taxes You can also deduct assessments for benefit payments to unemployed union members. Compare state income taxes However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Compare state income taxes Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Compare state income taxes You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Compare state income taxes See Lobbying Expenses under Nondeductible Expenses, later. Compare state income taxes Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Compare state income taxes You must wear them as a condition of your employment. Compare state income taxes The clothes are not suitable for everyday wear. Compare state income taxes It is not enough that you wear distinctive clothing. Compare state income taxes The clothing must be specifically required by your employer. Compare state income taxes Nor is it enough that you do not, in fact, wear your work clothes away from work. Compare state income taxes The clothing must not be suitable for taking the place of your regular clothing. Compare state income taxes 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. Compare state income taxes ). Compare state income taxes Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Compare state income taxes 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. Compare state income taxes Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Compare state income taxes Protective clothing. Compare state income taxes   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. Compare state income taxes   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. Compare state income taxes Military uniforms. Compare state income taxes   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Compare state income taxes 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. Compare state income taxes In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Compare state income taxes   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. Compare state income taxes   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Compare state income taxes Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Compare state income taxes Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Compare state income taxes These fees include the cost of tax preparation software programs and tax publications. Compare state income taxes They also include any fee you paid for electronic filing of your return. Compare state income taxes Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Compare state income taxes On Schedule A (Form 1040), line 23, you can deduct expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. Compare state income taxes You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. Compare state income taxes Some of these other expenses are explained in the following discussions. Compare state income taxes If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Compare state income taxes Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Compare state income taxes 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. Compare state income taxes First report the loss in Section B of Form 4684, Casualties and Thefts. Compare state income taxes You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Compare state income taxes 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. Compare state income taxes For other casualty and theft losses, see chapter 25. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes The fees are deductible in the year paid. Compare state income taxes 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). Compare state income taxes You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Compare state income taxes But if you work as an employee and also use the computer in that work, see Publication 946. Compare state income taxes 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. Compare state income taxes Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Compare state income taxes 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. Compare state income taxes For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Compare state income taxes 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. Compare state income taxes But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Compare state income taxes You must add the fee to the cost of the property. Compare state income taxes You cannot deduct the fee you pay to a broker to sell securities. Compare state income taxes You can use the fee only to figure gain or loss from the sale. Compare state income taxes See the Instructions for Form 8949 for information on how to report the fee. Compare state income taxes Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Compare state income taxes A hobby is not a business because it is not carried on to make a profit. Compare state income taxes See Activity not for profit in chapter 12 under Other Income. Compare state income taxes Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Compare state income taxes Deductions of pass-through entities are passed through to the partners or shareholders. Compare state income taxes The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Compare state income taxes Example. Compare state income taxes You are a member of an investment club that is formed solely to invest in securities. Compare state income taxes The club is treated as a partnership. Compare state income taxes The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Compare state income taxes In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Compare state income taxes 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. Compare state income taxes Publicly offered mutual funds. Compare state income taxes   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Compare state income taxes 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. Compare state income taxes   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). Compare state income taxes This net figure is the amount you report on your return as income. Compare state income taxes You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Compare state income taxes Information returns. Compare state income taxes   You should receive information returns from pass-through entities. Compare state income taxes Partnerships and S corporations. Compare state income taxes   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. Compare state income taxes Nonpublicly offered mutual funds. Compare state income taxes   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. Compare state income taxes You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Compare state income taxes See Tax Preparation Fees , earlier. Compare state income taxes Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. Compare state income taxes 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. Compare state income taxes If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Compare state income taxes If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Compare state income taxes Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. Compare state income taxes 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. Compare state income taxes You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Compare state income taxes Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Compare state income taxes 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. Compare state income taxes Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Compare state income taxes For more information about IRAs, see chapter 17. Compare state income taxes Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Compare state income taxes They are not subject to the 2% limit. Compare state income taxes Report these items on Schedule A (Form 1040), line 28. Compare state income taxes List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Compare state income taxes Amortizable premium on taxable bonds. Compare state income taxes Casualty and theft losses from income- producing property. Compare state income taxes Federal estate tax on income in respect of a decedent. Compare state income taxes Gambling losses up to the amount of gambling winnings. Compare state income taxes Impairment-related work expenses of persons with disabilities. Compare state income taxes Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Compare state income taxes Losses from Ponzi-type investment schemes. Compare state income taxes See Losses from Ponzi-type investment schemes under Theft in chapter 25. Compare state income taxes Repayments of more than $3,000 under a claim of right. Compare state income taxes Unrecovered investment in an annuity. Compare state income taxes 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. Compare state income taxes You can elect to amortize the premium on taxable bonds. Compare state income taxes The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Compare state income taxes Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Compare state income taxes For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. Compare state income taxes 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). Compare state income taxes First, report the loss in Form 4684, Section B. Compare state income taxes You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Compare state income taxes 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. Compare state income taxes For more information on casualty and theft losses, see chapter 25. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes See Publication 559 for more information. Compare state income taxes 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. Compare state income taxes You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Compare state income taxes You cannot deduct gambling losses that are more than your winnings. Compare state income taxes You cannot reduce your gambling winnings by your gambling losses and report the difference. Compare state income taxes 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. Compare state income taxes Therefore, your records should show your winnings separately from your losses. Compare state income taxes Diary of winnings and losses. Compare state income taxes You must keep an accurate diary or similar record of your losses and winnings. Compare state income taxes Your diary should contain at least the following information. Compare state income taxes The date and type of your specific wager or wagering activity. Compare state income taxes The name and address or location of the gambling establishment. Compare state income taxes The names of other persons present with you at the gambling establishment. Compare state income taxes The amount(s) you won or lost. Compare state income taxes See Publication 529 for more information. Compare state income taxes 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. Compare state income taxes Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. Compare state income taxes Self-employed. Compare state income taxes   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. Compare state income taxes 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. Compare state income taxes It is not subject to the passive activity limitations. Compare state income taxes 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. Compare state income taxes See Repayments in chapter 12 for more information. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes See chapter 10 for more information about the tax treatment of pensions and annuities. Compare state income taxes Nondeductible Expenses Examples of nondeductible expenses are listed next. Compare state income taxes The list is followed by discussions of additional nondeductible expenses. Compare state income taxes List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Compare state income taxes Burial or funeral expenses, including the cost of a cemetery lot. Compare state income taxes Capital expenses. Compare state income taxes Fees and licenses, such as car licenses, marriage licenses, and dog tags. Compare state income taxes Hobby losses, but see Hobby Expenses , earlier. Compare state income taxes Home repairs, insurance, and rent. Compare state income taxes Illegal bribes and kickbacks. Compare state income taxes See Bribes and kickbacks in chapter 11 of Publication 535. Compare state income taxes Losses from the sale of your home, furniture, personal car, etc. Compare state income taxes Personal disability insurance premiums. Compare state income taxes Personal, living, or family expenses. Compare state income taxes The value of wages never received or lost vacation time. Compare state income taxes Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Compare state income taxes See chapter 37. Compare state income taxes Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Compare state income taxes These include qualification and registration fees for primary elections. Compare state income taxes Legal fees. Compare state income taxes   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Compare state income taxes 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. Compare state income taxes Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Compare state income taxes This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Compare state income taxes 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. Compare state income taxes Dues paid to airline, hotel, and luncheon clubs are not deductible. Compare state income taxes Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Compare state income taxes 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. Compare state income taxes Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Compare state income taxes This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Compare state income taxes Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Compare state income taxes 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. Compare state income taxes Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Compare state income taxes However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Compare state income taxes See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Compare state income taxes Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Compare state income taxes Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Compare state income taxes You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Compare state income taxes See chapter 18 for information on alimony. Compare state income taxes Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Compare state income taxes 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. Compare state income taxes Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Compare state income taxes Dues used for lobbying. Compare state income taxes   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. Compare state income taxes See Lobbying Expenses in Publication 529 for information on exceptions. Compare state income taxes Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Compare state income taxes 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. Compare state income taxes See chapter 25. Compare state income taxes Example. Compare state income taxes A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Compare state income taxes The diamond falls from the ring and is never found. Compare state income taxes The loss of the diamond is a casualty. Compare state income taxes Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Compare state income taxes See chapter 26 for information on deductible expenses while traveling away from home. Compare state income taxes Meals While Working Late You cannot deduct the cost of meals while working late. Compare state income taxes However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. Compare state income taxes See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Compare state income taxes Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Compare state income taxes Custody of children. Compare state income taxes Breach of promise to marry suit. Compare state income taxes Civil or criminal charges resulting from a personal relationship. Compare state income taxes Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Compare state income taxes Preparation of a title (or defense or perfection of a title). Compare state income taxes Preparation of a will. Compare state income taxes Property claims or property settlement in a divorce. Compare state income taxes You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Compare state income taxes Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Compare state income taxes Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Compare state income taxes Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Compare state income taxes Accounting certificate fees paid for the initial right to practice accounting. Compare state income taxes Bar exam fees and incidental expenses in securing initial admission to the bar. Compare state income taxes Medical and dental license fees paid to get initial licensing. Compare state income taxes Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes 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. Compare state income taxes You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Compare state income taxes Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Compare state income taxes You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. Compare state income taxes If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. Compare state income taxes Example. Compare state income taxes During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Compare state income taxes In earning this income, you had total expenses of $500 during the year. Compare state income taxes You cannot identify the amount of each expense item that is for each income item. Compare state income taxes Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. Compare state income taxes You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Compare state income taxes Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. Compare state income taxes See chapter 26 for more information on deductible travel expenses. Compare state income taxes Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Compare state income taxes However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. Compare state income taxes Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. Compare state income taxes Prev  Up  Next   Home   More Online Publications