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Free state tax service 11. Free state tax service   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. Free state tax service Kickbacks. Free state tax service Form 1099-MISC. Free state tax service Exception. Free state tax service Tax preparation fees. Free state tax service Covered executive branch official. Free state tax service Exceptions to denial of deduction. Free state tax service Indirect political contributions. Free state tax service Type of deduction. Free state tax service Repayment—$3,000 or less. Free state tax service Repayment—over $3,000. Free state tax service Method 1. Free state tax service Method 2. Free state tax service Repayment does not apply. Free state tax service Year of deduction (or credit). Free state tax service Telephone. Free state tax service What's New Standard mileage rate. Free state tax service  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. Free state tax service 5 cents per mile. Free state tax service For more information, see Car and truck expenses under Miscellaneous Expenses. Free state tax service Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. Free state tax service Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. Free state tax service Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. Free state tax service If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. Free state tax service To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Free state tax service Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. Free state tax service For more information on travel, meals, and entertainment, including deductibility, see Publication 463. Free state tax service Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. Free state tax service If the expenses are substantiated, you can deduct the allowable amount on your tax return. Free state tax service Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. Free state tax service For example, you can deduct 100% of the cost of meals on your business books and records. Free state tax service However, only 50% of these costs are allowed by law as a tax deduction. Free state tax service How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. Free state tax service If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. Free state tax service If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. Free state tax service If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. Free state tax service See Table 11-1 , Reporting Reimbursements. Free state tax service Accountable Plans An accountable plan requires your employees to meet all of the following requirements. Free state tax service Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. Free state tax service An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. Free state tax service The advance is reasonably calculated not to exceed the amount of anticipated expenses. Free state tax service You make the advance within a reasonable period of time of your employee paying or incurring the expense. Free state tax service If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. Free state tax service Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. Free state tax service Adequate accounting. Free state tax service   Your employees must adequately account to you for their travel, meals, and entertainment expenses. Free state tax service They must give you documentary evidence of their travel, mileage, and other employee business expenses. Free state tax service This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. Free state tax service Excess reimbursement or allowance. Free state tax service   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. Free state tax service The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. Free state tax service Reasonable period of time. Free state tax service   A reasonable period of time depends on the facts and circumstances. Free state tax service Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Free state tax service You give an advance within 30 days of the time the employee pays or incurs the expense. Free state tax service Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. Free state tax service Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. Free state tax service You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. Free state tax service How to deduct. Free state tax service   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. Free state tax service Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. Free state tax service If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). Free state tax service   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. Free state tax service S. Free state tax service Corporation Income Tax Return. Free state tax service If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. Free state tax service Table 11-1. Free state tax service Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. Free state tax service Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Free state tax service Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. Free state tax service Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Free state tax service The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free state tax service Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. Free state tax service The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free state tax service A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. Free state tax service No reimbursement plan The entire amount as wages in box 1. Free state tax service Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. Free state tax service In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Free state tax service Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. Free state tax service Federal rate. Free state tax service   The federal rate can be figured using any one of the following methods. Free state tax service For car expenses: The standard mileage rate. Free state tax service A fixed and variable rate (FAVR). Free state tax service For per diem amounts: The regular federal per diem rate. Free state tax service The standard meal allowance. Free state tax service The high-low rate. Free state tax service Car allowance. Free state tax service   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. Free state tax service Beginning in 2013, the standard business mileage rate is 56. Free state tax service 5 cents per mile. Free state tax service   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. Free state tax service This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. Free state tax service ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. Free state tax service ). Free state tax service For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. Free state tax service irs. Free state tax service gov/irb/2010-51_IRB/ar14. Free state tax service html and Notice 2012-72, available at www. Free state tax service irs. Free state tax service gov/irb/2012-50_IRB/ar10. Free state tax service html. Free state tax service Per diem allowance. Free state tax service   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. Free state tax service Regular federal per diem rate. Free state tax service   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. Free state tax service It has two components: Lodging expense, and Meal and incidental expense (M&IE). Free state tax service The rates are different for different locations. Free state tax service Publication 1542 lists the rates in the continental United States. Free state tax service Standard meal allowance. Free state tax service   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. Free state tax service You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). Free state tax service Internet access. Free state tax service    Per diem rates are available on the Internet. Free state tax service You can access per diem rates at www. Free state tax service gsa. Free state tax service gov/perdiemrates. Free state tax service High-low method. Free state tax service   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Free state tax service It eliminates the need to keep a current list of the per diem rate for each city. Free state tax service   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. Free state tax service All other areas have a per diem amount of $163 ($52 for M&IE). Free state tax service The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. Free state tax service   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). Free state tax service The rate for all other locations increased to $170 ($52 for M&IE). Free state tax service For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. Free state tax service However, you must use the same rate for all employees reimbursed under the high-low method. Free state tax service   For more information about the high-low method, see Notice 2013-65, available at www. Free state tax service irs. Free state tax service gov/irb/2013-44_IRB/ar13. Free state tax service html. Free state tax service See Publication 1542 (available on the Internet at IRS. Free state tax service gov) for the current per diem rates for all locations. Free state tax service Reporting per diem and car allowances. Free state tax service   The following discussion explains how to report per diem and car allowances. Free state tax service The manner in which you report them depends on how the allowance compares to the federal rate. Free state tax service See Table 11-1. Free state tax service Allowance less than or equal to the federal rate. Free state tax service   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. Free state tax service Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). Free state tax service See How to deduct under Accountable Plans, earlier. Free state tax service Allowance more than the federal rate. Free state tax service   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. Free state tax service   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. Free state tax service Deduct it as travel expenses (as explained above). Free state tax service This part of the allowance is treated as reimbursed under an accountable plan. Free state tax service   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. Free state tax service Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Free state tax service This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. Free state tax service Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. Free state tax service The deduction limit applies even if you reimburse them for 100% of the expenses. Free state tax service Application of the 50% limit. Free state tax service   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. Free state tax service It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. Free state tax service The deduction limit may also apply to meals you furnish on your premises to your employees. Free state tax service Related expenses. Free state tax service   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. Free state tax service Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. Free state tax service However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. Free state tax service Amount subject to 50% limit. Free state tax service   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. Free state tax service The per diem allowance. Free state tax service The federal rate for M&IE. Free state tax service   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. Free state tax service If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. Free state tax service Meal expenses when subject to “hours of service” limits. Free state tax service   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. Free state tax service   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. Free state tax service De minimis (minimal) fringe benefit. Free state tax service   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. Free state tax service See Publication 15-B for additional information on de minimis fringe benefits. Free state tax service Company cafeteria or executive dining room. Free state tax service   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. Free state tax service This includes the cost of maintaining the facilities for providing the food and beverages. Free state tax service These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). Free state tax service Employee activities. Free state tax service   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. Free state tax service The benefit must be primarily for your employees who are not highly compensated. Free state tax service   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. Free state tax service Owned a 10% or more interest in the business during the year or the preceding year. Free state tax service An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Free state tax service Received more than $115,000 in pay for the preceding year. Free state tax service You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. Free state tax service   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. Free state tax service Meals or entertainment treated as compensation. Free state tax service   The 50% limit does not apply to either of the following. Free state tax service Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. Free state tax service Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. Free state tax service Sales of meals or entertainment. Free state tax service   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. Free state tax service For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. Free state tax service The 50% limit does not apply to this expense. Free state tax service Providing meals or entertainment to general public to promote goodwill. Free state tax service   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Free state tax service The 50% limit does not apply to this expense. Free state tax service Director, stockholder, or employee meetings. Free state tax service   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. Free state tax service You can provide some minor social activities, but the main purpose of the meeting must be your company's business. Free state tax service These expenses are subject to the 50% limit. Free state tax service Trade association meetings. Free state tax service   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. Free state tax service These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. Free state tax service Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. Free state tax service All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. Free state tax service The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Free state tax service You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. Free state tax service Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. Free state tax service Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. Free state tax service Advertising expenses. Free state tax service   You generally can deduct reasonable advertising expenses that are directly related to your business activities. Free state tax service Generally, you cannot deduct amounts paid to influence legislation (i. Free state tax service e. Free state tax service , lobbying). Free state tax service See Lobbying expenses , later. Free state tax service   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. Free state tax service For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. Free state tax service S. Free state tax service Savings Bonds, or to participate in similar causes is usually deductible. Free state tax service Anticipated liabilities. Free state tax service   Anticipated liabilities or reserves for anticipated liabilities are not deductible. Free state tax service For example, assume you sold 1-year TV service contracts this year totaling $50,000. Free state tax service From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. Free state tax service You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. Free state tax service You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. Free state tax service Bribes and kickbacks. Free state tax service   Engaging in the payment of bribes or kickbacks is a serious criminal matter. Free state tax service Such activity could result in criminal prosecution. Free state tax service Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. Free state tax service   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. Free state tax service Meaning of “generally enforced. Free state tax service ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. Free state tax service For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. Free state tax service Kickbacks. Free state tax service   A kickback is a payment for referring a client, patient, or customer. Free state tax service The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. Free state tax service In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. Free state tax service   For example, the Yard Corporation is in the business of repairing ships. Free state tax service It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. Free state tax service Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. Free state tax service These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. Free state tax service Form 1099-MISC. Free state tax service   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. Free state tax service See Form 1099-MISC for more information. Free state tax service Car and truck expenses. Free state tax service   The costs of operating a car, truck, or other vehicle in your business are deductible. Free state tax service For more information on how to figure your deduction, see Publication 463. Free state tax service Charitable contributions. Free state tax service   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Free state tax service If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. Free state tax service However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. Free state tax service See the Instructions for Form 1120 for more information. Free state tax service Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Free state tax service Example. Free state tax service You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. Free state tax service The purpose of the ad was to encourage readers to buy your products. Free state tax service Your payment is not a charitable contribution. Free state tax service You can deduct it as an advertising expense. Free state tax service Example. Free state tax service You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. Free state tax service Your payment is not a charitable contribution. Free state tax service You can deduct it as a business expense. Free state tax service See Publication 526 for a discussion of donated inventory, including capital gain property. Free state tax service Club dues and membership fees. Free state tax service   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. Free state tax service This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Free state tax service Exception. Free state tax service   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Free state tax service Boards of trade. Free state tax service Business leagues. Free state tax service Chambers of commerce. Free state tax service Civic or public service organizations. Free state tax service Professional organizations such as bar associations and medical associations. Free state tax service Real estate boards. Free state tax service Trade associations. Free state tax service Credit card convenience fees. Free state tax service   Credit card companies charge a fee to businesses who accept their cards. Free state tax service This fee when paid or incurred by the business can be deducted as a business expense. Free state tax service Damages recovered. Free state tax service   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. Free state tax service You must include this compensation in your income. Free state tax service However, you may be able to take a special deduction. Free state tax service The deduction applies only to amounts recovered for actual economic injury, not any additional amount. Free state tax service The deduction is the smaller of the following. Free state tax service The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. Free state tax service Your losses from the injury you have not deducted. Free state tax service Demolition expenses or losses. Free state tax service   Amounts paid or incurred to demolish a structure are not deductible. Free state tax service These amounts are added to the basis of the land where the demolished structure was located. Free state tax service Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. Free state tax service Education expenses. Free state tax service   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Free state tax service See Education Expenses in chapter 2. Free state tax service   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. Free state tax service You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. Free state tax service For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. Free state tax service   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. Free state tax service This is true even if the education maintains or improves skills presently required in your business. Free state tax service For more information on education expenses, see Publication 970. Free state tax service Franchise, trademark, trade name. Free state tax service   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). Free state tax service   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. Free state tax service   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. Free state tax service Impairment-related expenses. Free state tax service   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. Free state tax service   You are disabled if you have either of the following. Free state tax service A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. Free state tax service A physical or mental impairment that substantially limits one or more of your major life activities. Free state tax service   The expense qualifies as a business expense if all the following apply. Free state tax service Your work clearly requires the expense for you to satisfactorily perform that work. Free state tax service The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. Free state tax service Their treatment is not specifically provided for under other tax law provisions. Free state tax service Example. Free state tax service You are blind. Free state tax service You must use a reader to do your work, both at and away from your place of work. Free state tax service The reader's services are only for your work. Free state tax service You can deduct your expenses for the reader as a business expense. Free state tax service Internet-related expenses. Free state tax service   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. Free state tax service If you are starting a business you may have to amortize these expenses as start-up costs. Free state tax service For more information about amortizing start-up and organizational costs, see chapter 8. Free state tax service Interview expense allowances. Free state tax service   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. Free state tax service You can deduct the reimbursements as a business expense. Free state tax service However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. Free state tax service Legal and professional fees. Free state tax service   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. Free state tax service However, usually legal fees you pay to acquire business assets are not deductible. Free state tax service These costs are added to the basis of the property. Free state tax service   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. Free state tax service If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. Free state tax service The result is the portion of the invoice attributable to business expenses. Free state tax service The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). Free state tax service   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. Free state tax service However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. Free state tax service See Publication 529, Miscellaneous Deductions. Free state tax service Tax preparation fees. Free state tax service   The cost of hiring a tax professional, such as a C. Free state tax service P. Free state tax service A. Free state tax service , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. Free state tax service Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. Free state tax service   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. Free state tax service Licenses and regulatory fees. Free state tax service   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. Free state tax service Some licenses and fees may have to be amortized. Free state tax service See chapter 8 for more information. Free state tax service Lobbying expenses. Free state tax service   Generally, lobbying expenses are not deductible. Free state tax service Lobbying expenses include amounts paid or incurred for any of the following activities. Free state tax service Influencing legislation. Free state tax service Participating in or intervening in any political campaign for, or against, any candidate for public office. Free state tax service Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. Free state tax service Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. Free state tax service Researching, preparing, planning, or coordinating any of the preceding activities. Free state tax service   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. Free state tax service For information on making this allocation, see section 1. Free state tax service 162-28 of the regulations. Free state tax service   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. Free state tax service The organization conducts lobbying activities on matters of direct financial interest to your business. Free state tax service A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. Free state tax service   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. Free state tax service Covered executive branch official. Free state tax service   For purposes of this discussion, a covered executive branch official is any of the following. Free state tax service The President. Free state tax service The Vice President. Free state tax service 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. Free state tax service Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). Free state tax service Exceptions to denial of deduction. Free state tax service   The general denial of the deduction does not apply to the following. Free state tax service Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. Free state tax service An Indian tribal government is treated as a local council or similar governing body. Free state tax service Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). Free state tax service Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). Free state tax service Moving machinery. Free state tax service   Generally, the cost of moving machinery from one city to another is a deductible expense. Free state tax service So is the cost of moving machinery from one plant to another, or from one part of your plant to another. Free state tax service You can deduct the cost of installing the machinery in the new location. Free state tax service However, you must capitalize the costs of installing or moving newly purchased machinery. Free state tax service Outplacement services. Free state tax service   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. Free state tax service are deductible. Free state tax service   The costs of outplacement services may cover more than one deduction category. Free state tax service For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. Free state tax service   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. Free state tax service Penalties and fines. Free state tax service   Penalties paid for late performance or nonperformance of a contract are generally deductible. Free state tax service For instance, you own and operate a construction company. Free state tax service Under a contract, you are to finish construction of a building by a certain date. Free state tax service Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. Free state tax service You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. Free state tax service These additional costs are deductible business expenses. Free state tax service   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. Free state tax service These fines or penalties include the following amounts. Free state tax service Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. Free state tax service Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. Free state tax service Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. Free state tax service Forfeited as collateral posted for a proceeding that could result in a fine or penalty. Free state tax service   Examples of nondeductible penalties and fines include the following. Free state tax service Fines for violating city housing codes. Free state tax service Fines paid by truckers for violating state maximum highway weight laws. Free state tax service Fines for violating air quality laws. Free state tax service Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. Free state tax service   A fine or penalty does not include any of the following. Free state tax service Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. Free state tax service Court costs or stenographic and printing charges. Free state tax service Compensatory damages paid to a government. Free state tax service Political contributions. Free state tax service   Contributions or gifts paid to political parties or candidates are not deductible. Free state tax service In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. Free state tax service Indirect political contributions. Free state tax service   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. Free state tax service Examples of nondeductible expenses include the following. Free state tax service Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. Free state tax service Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. Free state tax service Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. Free state tax service Repairs. Free state tax service   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. Free state tax service Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. Free state tax service Otherwise, the cost must be capitalized and depreciated. Free state tax service See Form 4562 and its instructions for how to compute and claim the depreciation deduction. Free state tax service   The cost of repairs includes the costs of labor, supplies, and certain other items. Free state tax service The value of your own labor is not deductible. Free state tax service Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). Free state tax service Repayments. Free state tax service   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. Free state tax service Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Free state tax service Type of deduction. Free state tax service   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Free state tax service For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. Free state tax service If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Free state tax service   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. Free state tax service However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. Free state tax service Repayment—$3,000 or less. Free state tax service   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Free state tax service Repayment—over $3,000. Free state tax service   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. Free state tax service However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. Free state tax service ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. Free state tax service If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. Free state tax service Method 1. Free state tax service   Figure your tax for 2013 claiming a deduction for the repaid amount. Free state tax service Method 2. Free state tax service   Figure your tax for 2013 claiming a credit for the repaid amount. Free state tax service Follow these steps. Free state tax service Figure your tax for 2013 without deducting the repaid amount. Free state tax service Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Free state tax service Subtract the tax in (2) from the tax shown on your return for the earlier year. Free state tax service This is the amount of your credit. Free state tax service Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). Free state tax service   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. Free state tax service   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. Free state tax service R. Free state tax service C. Free state tax service 1341” next to line 71. Free state tax service Example. Free state tax service For 2012, you filed a return and reported your income on the cash method. Free state tax service In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. Free state tax service Your filing status in 2013 and 2012 is single. Free state tax service Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. Free state tax service Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. Free state tax service Repayment does not apply. Free state tax service   This discussion does not apply to the following. Free state tax service Deductions for bad debts. Free state tax service Deductions from sales to customers, such as returns and allowances, and similar items. Free state tax service Deductions for legal and other expenses of contesting the repayment. Free state tax service Year of deduction (or credit). Free state tax service   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. Free state tax service If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. Free state tax service For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. Free state tax service Subscriptions. Free state tax service   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. Free state tax service Supplies and materials. Free state tax service   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. Free state tax service   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. Free state tax service You do not keep a record of when they are used. Free state tax service You do not take an inventory of the amount on hand at the beginning and end of the tax year. Free state tax service This method does not distort your income. Free state tax service   You can also deduct the cost of books, professional instruments, equipment, etc. Free state tax service , if you normally use them within a year. Free state tax service However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. Free state tax service For more information regarding depreciation see Publication 946, How To Depreciate Property. Free state tax service Utilities. Free state tax service   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. Free state tax service However, any part due to personal use is not deductible. Free state tax service Telephone. Free state tax service   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Free state tax service However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Free state tax service Prev  Up  Next   Home   More Online Publications
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Tax Information for Contributors

Organizations Eligible to Receive Tax-Deductible Charitable Contributions
A searchable database of organizations eligible to receive tax-deductible charitable contributions.

Web-Based Mini-Course - Deducting Charitable Contributions
A short course to help charities and contributors understand what is a deductible charitable contribution and what is not. Also covers amount and types of deductible contributions, what records to keep and how to report contributions.

Tax information on donated property
How donors, charities, and tax professionals must report non-cash charitable contributions.

Charitable Contributions - YouTube video
YouTube video on Charitable Contributions.

Substantiating Charitable Contributions
A brief description of the disclosure and substantiation requirements for contributions to charitable organizations.

Tips for Taxpayers Making Charitable Donations
Tips to ensure that contributions pay off on your tax return.

Special Charitable Contributions for Certain IRA Owners
Tax tips for donating IRA funds to charitable organizations.

Form 990 Resources and Tools for the General Public
Form 990 Resources and Tools for the General Public

Page Last Reviewed or Updated: 30-Mar-2014

The Free State Tax Service

Free state tax service Index A Accounting method Accrual, Accrual Method, Accrual method. Free state tax service Automatic procedures, Automatic change procedures. Free state tax service Cash, Cash Method, Cash method. Free state tax service Change in, Change in Accounting Method Combination, Combination Method Special, Special Methods Accounting periods, Accounting Periods Accrual method Income - general rule, Income—General Rule Income - special rules, Income—Special Rules Of accounting, Accrual Method Adjusted basis, Adjusted basis. Free state tax service Administrator, Executor or administrator. Free state tax service Alternative fuel vehicle refueling property credit, Alternative fuel vehicle refueling property credit (Form 8911). Free state tax service Alternative motor vehicle credit, Alternative motor vehicle credit (Form 8910). Free state tax service Appeal rights, Appeals. Free state tax service Appreciation, Appreciation. Free state tax service Audits, Examinations (audits). Free state tax service Automobile (see Car expenses) B Bad debts, Bad Debts Barter income, Bartering for Property or Services Basis of property, Basis. Free state tax service Bribes, Expenses You Cannot Deduct Business expenses, Business Expenses Business income, Business Income Business use of your home, Business Use of Your Home C Canceled debt, Canceled Debt Cancellation of qualified real property business debt, Cancellation of qualified real property business debt. Free state tax service Capital gain or loss, Is My Gain or Loss Ordinary or Capital? Car expenses, Car and Truck Expenses, Methods for Deducting Car and Truck Expenses Carbon dioxide sequestration credit, Carbon dioxide sequestration credit (Form 8933). Free state tax service Cash discount, Cash discounts. Free state tax service , Cash discounts. Free state tax service Cash method Expenses, Expenses Income, Income Changing accounting method, Changing accounting method. Free state tax service Charitable contributions, Expenses You Cannot Deduct Child employed by parent, Child employed by parent. Free state tax service Claim for refund, Refunds. Free state tax service Collection of tax, Collections. Free state tax service Combination method of accounting, Combination Method Comments on publication, Comments and suggestions. Free state tax service Condemned property, Condemned property. Free state tax service Consignments, Consignments. Free state tax service Construction allowances, Construction allowances. Free state tax service Cost of goods sold, How To Figure Cost of Goods Sold Credit Alternative fuel vehicle refueling property, Alternative fuel vehicle refueling property credit (Form 8911). Free state tax service Alternative motor vehicle, Alternative motor vehicle credit (Form 8910). Free state tax service Carbon dioxide sequestration, Carbon dioxide sequestration credit (Form 8933). Free state tax service Disabled access, Disabled access credit (Form 8826). Free state tax service Distilled spirits, Distilled spirits credit (Form 8906). Free state tax service Employer-provided childcare, Credit for employer-provided childcare facilities and services (Form 8882). Free state tax service How to claim, How To Claim the Credit Indian coal, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free state tax service Investment, Investment credit (Form 3468). Free state tax service Low sulfur diesel fuel production, Low sulfur diesel fuel production credit (Form 8896). Free state tax service Low-income housing, Low-income housing credit (Form 8586). Free state tax service New markets, New markets credit (Form 8874). Free state tax service Nonconventional source fuel, Nonconventional source fuel credit (Form 8907). Free state tax service Orphan drug, Orphan drug credit (Form 8820). Free state tax service Qualified plug-in electric drive motor vehicle, Qualified plug-in electric drive motor vehicle credit (Form 8936). Free state tax service Refined coal, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free state tax service Renewable electricity, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free state tax service Small employer health insurance premiums, Credit for small employer health insurance premiums (Form 8941). Free state tax service Small employer pension plan startup costs, Credit for small employer pension plan startup costs (Form 8881). Free state tax service Taxes paid on certain employee tips, Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). Free state tax service Work opportunity, Work opportunity credit (Form 5884). Free state tax service D Damages, Damages. Free state tax service Debt Bad, Bad Debts Canceled, Canceled Debt Qualified real property business, Qualified real property business debt. Free state tax service Refund offset against, Offset against debts. Free state tax service Definitions Accounting methods, Accounting Methods Accounting periods, Accounting Periods Barter, Bartering for Property or Services Basis, Basis. Free state tax service Business bad debt, Business bad debt. Free state tax service Calendar tax year, Calendar tax year. Free state tax service Cash discount, Cash discounts. Free state tax service , Cash discounts. Free state tax service Disposition of property, What Is a Disposition of Property? Drawing account, Merchandise withdrawn from sale. Free state tax service Entertainment expenses, Entertainment expenses. Free state tax service Fair market value, Fair market value. Free state tax service Fiscal tax year, Fiscal tax year. Free state tax service Fringe benefit, Fringe benefits. Free state tax service Local transportation expenses, Local transportation expenses. Free state tax service Necessary expense, Introduction Net operating loss, Net Operating Losses (NOLs) Nonbusiness bad debt, Nonbusiness bad debts. Free state tax service Ordinary expense, Introduction Principal place of business, Principal place of business. Free state tax service Qualified long-term real property, Qualified long-term real property. Free state tax service Qualified real property business debt, Cancellation of qualified real property business debt. Free state tax service Rent, Rent Expense Restricted property, Other Income Retail space, Retail space. Free state tax service Self-employment (SE) tax, Self-Employment (SE) Tax Sole proprietor, Sole proprietor. Free state tax service Tax home, Local transportation expenses. Free state tax service Trade discount, Trade discounts. Free state tax service , Cash discounts. Free state tax service Travel expenses, Travel, Meals, and Entertainment Depreciation Deduction, Depreciation Listed property, Listed property. Free state tax service Depreciation, recapture, Recapture of depreciation. Free state tax service Direct seller, Direct seller. Free state tax service , Real estate agent or direct seller. Free state tax service Disabled access credit, Disabled access credit (Form 8826). Free state tax service Disposition of property Business property, Introduction Installment sale, Installment sales. Free state tax service , Installment sales. Free state tax service Like-kind exchange, Like-kind exchanges. Free state tax service , Like-kind exchanges. Free state tax service , Exchange of like-kind property. Free state tax service Nontaxable exchange, Nontaxable exchanges. Free state tax service Sale of a business, Sale of a business. Free state tax service Distilled spirits credit, Distilled spirits credit (Form 8906). Free state tax service Dividend income, Interest and Dividend Income Donation of inventory, Donation of inventory. Free state tax service Drawing account, Merchandise withdrawn from sale. Free state tax service Due date of return, When Is My Tax Return Due? E e-file, IRS e-file (Electronic Filing) Economic injury, Economic injury. Free state tax service EFTPS, EFTPS Electronic filing, IRS e-file (Electronic Filing) Employee, Employee. Free state tax service Employee benefit programs, Fringe benefits. Free state tax service Employees' pay, Employees' Pay Employer identification number (EIN), Employer identification number (EIN). Free state tax service Employment taxes About, Employment Taxes Deduction for, Employment taxes. Free state tax service Entertainment expenses, Entertainment expenses. Free state tax service (see Travel expenses) Escrow, payments placed in, Payment placed in escrow. Free state tax service Estimated tax, How Do I Pay Income Tax? Examinations (audits), Examinations (audits). Free state tax service Excise taxes About, Excise Taxes Deduction for, Excise taxes. Free state tax service Executor, Executor or administrator. Free state tax service Expenses, Business Expenses Bad debts, Bad Debts Car, Car and Truck Expenses Depreciation, Depreciation Employees' pay, Employees' Pay Entertainment, Travel, Meals, and Entertainment Home, business use, Business Use of Your Home Insurance, Insurance Interest, Interest Legal and professional fees, Legal and Professional Fees Meals, Travel, Meals, and Entertainment Nondeductible, Expenses You Cannot Deduct Other, Other Expenses You Can Deduct Pension plans, Pension Plans Rent, Rent Expense Taxes, Taxes Travel, Travel, Meals, and Entertainment Truck, Car and Truck Expenses F Fair market value, Fair market value. Free state tax service Filing business taxes, Filing and Paying Business Taxes Fishing crew member, Fishing crew member. Free state tax service , Fishing crew member. Free state tax service Form 1040 (tax return), How Do I File? 1040-ES (estimated tax), How Do I Pay Income Tax? 1040-V (voucher), Balance due. Free state tax service 1099-B (barter), Information returns. Free state tax service 1099-MISC (miscellaneous), Form 1099-MISC. Free state tax service , Information returns. Free state tax service 1128 (change tax year), Change in tax year. Free state tax service 2210 (underpayment of estimated tax), Penalty for underpayment of tax. Free state tax service 2290 (excise tax for heavy trucks), Form 2290. Free state tax service 3115 (change accounting method), Change in Accounting Method 3468 (investment credit), Investment credit (Form 3468). Free state tax service 3800 (general business credit), Useful Items - You may want to see: 4562 (depreciation), Form 4562. Free state tax service 4684 (casualty and theft), Casualties and thefts. Free state tax service 4797 (sale of business property), Dispositions of business property and depreciable property. Free state tax service , Condemned property. Free state tax service , Listed property. Free state tax service 4868 (extension), When Is My Tax Return Due? 5884 (work opportunity credit), Work opportunity credit (Form 5884). Free state tax service 6251 (alternative minimum tax), Useful Items - You may want to see: 6252 (installment sale), Installment sales. Free state tax service 720 (excise tax return), Form 720. Free state tax service 8300 (cash payments over $10,000), Form 8300. Free state tax service 8586 (low-income housing), Low-income housing credit (Form 8586). Free state tax service 8594 (asset acquisition), Sale of a business. Free state tax service 8820 (orphan drug credit), Orphan drug credit (Form 8820). Free state tax service 8824 (like-kind exchange), Like-kind exchanges. Free state tax service , Like-kind exchanges. Free state tax service 8826 (disabled access credit), Disabled access credit (Form 8826). Free state tax service 8829 (business in home), Deduction limit. Free state tax service 8835 (renewable electricity, coal credit), Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free state tax service 8846 (credit for social security on tip income), Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). Free state tax service 8857 (innocent spouse), Innocent spouse relief. Free state tax service 8874 (new markets credit), New markets credit (Form 8874). Free state tax service 8879 (self-selected PIN), Using an Authorized IRS e-file Provider 8881 (pension plan startup costs credit), Credit for small employer pension plan startup costs (Form 8881). Free state tax service 8882 (employer-provided childcare credit), Credit for employer-provided childcare facilities and services (Form 8882). Free state tax service 8886 (transaction statement), Reminders 8896 (low sulfur diesel fuel production credit), Low sulfur diesel fuel production credit (Form 8896). Free state tax service 8906 (distilled spirits credit), Distilled spirits credit (Form 8906). Free state tax service 8907 (nonconventional fuel credit), Nonconventional source fuel credit (Form 8907). Free state tax service 8910 (alternative vehicle credit), Alternative motor vehicle credit (Form 8910). Free state tax service , Car and Truck Expenses 8911 (alternative fuel refueling property credit), Alternative fuel vehicle refueling property credit (Form 8911). Free state tax service 8933 (carbon dioxide sequestration credit), Carbon dioxide sequestration credit (Form 8933). Free state tax service 8936 (qualified plug-in electric drive motor vehicle), Qualified plug-in electric drive motor vehicle credit (Form 8936). Free state tax service 8941 (small employer health insurance premiums), Credit for small employer health insurance premiums (Form 8941). Free state tax service 982 (discharge of indebtedness), Exclusions Schedule C (sole proprietor), How Do I File? Schedule C-EZ (sole proprietor), How Do I File? Schedule SE (self-employment tax), Who must pay self-employment tax. Free state tax service SS-4 (application for EIN), Employer identification number (EIN). Free state tax service SS-5 (application for SSN), Social security number (SSN). Free state tax service W-2 (report wages), Form W-2. Free state tax service W-4 (employee withholding), Employee. Free state tax service W-7 (application for ITIN), Individual taxpayer identification number (ITIN). Free state tax service W-9 (request for TIN), Other payee. Free state tax service Fringe benefits, Fringe benefits. Free state tax service Fuel taxes, Fuel taxes. Free state tax service G Gains and losses, Gains and losses. Free state tax service General business credits, General Business Credits, Business Credits Gross profit Accuracy, Testing Gross Profit Accuracy Additions to, Additions to Gross Profit Guidelines for selected occupations, Guidelines for Selected Occupations (see also Occupations, selected) H Health insurance, deduction for self-employed, Self-employed health insurance deduction. Free state tax service Home, business use of, Business Use of Your Home Hotels, boarding houses, and apartments, Hotels, boarding houses, and apartments. Free state tax service Husband and wife business, Business owned and operated by spouses. Free state tax service I Identification numbers, Identification Numbers Income, Items That Are Not Income (see also Not income) Accounting for your, Accounting for Your Income Barter, Bartering for Property or Services Business, Business Income Damages, Damages. Free state tax service Gains and losses, Gains and losses. Free state tax service Kickbacks, Kickbacks. Free state tax service Kinds of income, Kinds of Income Lost income payments, Lost income payments. Free state tax service Other, Other Income Paid to a third party, Income paid to a third party. Free state tax service Personal property rent, Personal Property Rents Promissory notes, Promissory notes. Free state tax service Recapture of depreciation, Recapture of depreciation. Free state tax service Recovery of items previously deducted, Recovery of items previously deducted. Free state tax service Rental, Real Estate Rents, Personal Property Rents Restricted property, Restricted property. Free state tax service Income tax About, Income Tax Deduction for, Income taxes. Free state tax service How to pay, How Do I Pay Income Tax? Underpayment penalty, Penalty for underpayment of tax. Free state tax service Income tax return, who must file, Do I Have To File an Income Tax Return? Independent contractor, Independent contractor. Free state tax service , Employment Taxes, Sole proprietor or independent contractor. Free state tax service Individual taxpayer identification number (ITIN), Individual taxpayer identification number (ITIN). Free state tax service Information returns, Information Returns Information, How to get more, How To Get More Information Innocent spouse relief, Innocent spouse relief. Free state tax service Installment sales, Installment sales. Free state tax service Insurance Expense, Insurance Nondeductible premiums, Nondeductible premiums. Free state tax service Prepayment, Prepayment. Free state tax service Proceeds, Insurance proceeds. Free state tax service Self-employed health, Self-employed health insurance deduction. Free state tax service Insurance agent Former, Insurance agent, former. Free state tax service Retired, Insurance agent, retired. Free state tax service Interest Expenses, Interest Income, Interest and Dividend Income Inventories, Inventories Investment credit, Investment credit (Form 3468). Free state tax service K Kickbacks, Kickbacks. Free state tax service , Expenses You Cannot Deduct L Lease bonus, Lease bonus. Free state tax service Lease cancellation payments, Lease cancellation payments. Free state tax service Legal fees, Legal and Professional Fees Like-kind exchanges, Like-kind exchanges. Free state tax service , Exchange of like-kind property. Free state tax service Limited liability company, Limited liability company (LLC). Free state tax service Listed property, Listed property. Free state tax service Lobbying expense, Expenses You Cannot Deduct Local transportation expenses, Local transportation expenses. Free state tax service Lodging, Meals and lodging. Free state tax service Long-term capital gain or loss, Is My Capital Gain or Loss Short Term or Long Term? Lost income payments, Lost income payments. Free state tax service Low sulfur diesel fuel production credit, Low sulfur diesel fuel production credit (Form 8896). Free state tax service Low-income housing credit, Low-income housing credit (Form 8586). Free state tax service M Meals, Meals and lodging. Free state tax service (see Travel expenses) Methods for figuring net earnings, Methods for Figuring Net Earnings Mileage rate for vehicles, Standard mileage rate. Free state tax service Motor vehicle, alternative credit, Alternative motor vehicle credit (Form 8910). Free state tax service N Net operating losses, Net Operating Losses (NOLs) Net profit or loss, Introduction New markets credit, New markets credit (Form 8874). Free state tax service Newspaper carrier or distributor, Newspaper carrier or distributor. Free state tax service Newspaper or magazine vendor, Newspaper or magazine vendor. Free state tax service Nonbusiness bad debt, Nonbusiness bad debts. Free state tax service Nonconventional source fuel credit, Nonconventional source fuel credit (Form 8907). Free state tax service Nondeductible insurance premiums, Nondeductible premiums. Free state tax service Nonemployee compensation, Introduction Nontaxable exchanges, Nontaxable exchanges. Free state tax service Not income Appreciation, Appreciation. Free state tax service Consignments, Consignments. Free state tax service Constructions allowances, Construction allowances. Free state tax service Exchange of like-kind property, Exchange of like-kind property. Free state tax service Leasehold improvements, Leasehold improvements. Free state tax service Loans, Loans. Free state tax service Sales tax, Sales tax. Free state tax service Not-for-profit activities, Not-for-Profit Activities Notary public, Notary public. Free state tax service , Notary public. Free state tax service O Occupations, selected Administrator, Executor or administrator. Free state tax service Direct seller, Direct seller. Free state tax service , Real estate agent or direct seller. Free state tax service Executor, Executor or administrator. Free state tax service Fishing crew member, Fishing crew member. Free state tax service Insurance agent, former, Insurance agent, former. Free state tax service Insurance agent, retired, Insurance agent, retired. Free state tax service Newspaper carrier or distributor, Newspaper carrier or distributor. Free state tax service Newspaper or magazine vendor, Newspaper or magazine vendor. Free state tax service Notary public, Notary public. Free state tax service Public official, Public official. Free state tax service Real estate agent, Real estate agent or direct seller. Free state tax service Securities dealer, Securities dealer. Free state tax service Securities trader, Securities trader. Free state tax service Office in the home, Office in the home. Free state tax service (see also Business use of your home) Optional methods, using both, Using Both Optional Methods Ordinary gain or loss, Is My Gain or Loss Ordinary or Capital? Orphan drug credit, Orphan drug credit (Form 8820). Free state tax service P Parking fees, Parking fees and tolls. Free state tax service Partners, husband and wife, Business owned and operated by spouses. Free state tax service Pay, kinds of, Kinds of pay. Free state tax service Paying Business taxes, Filing and Paying Business Taxes Income tax, How Do I Pay Income Tax? Payments to third parties, Payments to third parties. Free state tax service Penalties and fines, Expenses You Cannot Deduct Penalty Failure to file Form 8300, Penalties. Free state tax service Failure to file information returns, Penalties. Free state tax service Failure to furnish correct payee statements, Penalties. Free state tax service Underpayment of tax, Penalty for underpayment of tax. Free state tax service Waiver of, Waiver of penalties. Free state tax service Pension plans, Pension Plans Personal property tax, Personal property tax. Free state tax service Prepaid expense Extends useful life, Prepayment. Free state tax service Rent, Rent paid in advance. Free state tax service Professional fees, Legal and Professional Fees Promissory notes, Promissory notes. Free state tax service Public official, Public official. Free state tax service Punitive damages, Punitive damages. Free state tax service Q Qualified plug-in electric drive motor vehicle credit, Qualified plug-in electric drive motor vehicle credit (Form 8936). Free state tax service Qualified real property business debt, Qualified real property business debt. Free state tax service R Real estate Agent, Real estate agent or direct seller. Free state tax service Dealer, Real estate dealer. Free state tax service Rent, Real Estate Rents Taxes, Real estate taxes. Free state tax service Recovery of items previously deducted, Recovery of items previously deducted. Free state tax service Refund Inquiries, Refund inquiries. Free state tax service Offsets against debts, Offset against debts. Free state tax service Related persons Unreasonable rent, Unreasonable rent. Free state tax service Renewable electricity, refined coal, and Indian coal production credit, Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free state tax service Rent expense, Rent Expense Rental income, Real Estate Rents Repayment of income, Repayment of income. Free state tax service Reportable transaction disclosure statement, Reminders Reporting self-employment tax, Reporting Self-Employment Tax Restricted property, Restricted property. Free state tax service Retirement plans (see Pension plans) S Salaries, Employees' Pay Sale of a business, Sale of a business. Free state tax service Sale of property, What Is a Disposition of Property? (see also Disposition of property) Sales of assets, Introduction Sales tax, Sales tax. Free state tax service Schedule C, How Do I File? Schedule C-EZ, How Do I File? Schedule SE (Form 1040), Who must pay self-employment tax. Free state tax service Schedule SE, filing requirement, Reporting Self-Employment Tax SE tax About, Self-Employment (SE) Tax Aliens, Aliens. Free state tax service Child employed by parent, Child employed by parent. Free state tax service Church employee, Church employee. Free state tax service Community property income, Community Property Income Deduction for, Self-employment tax. Free state tax service Earning credits, Earning credits in 2013 and 2014. Free state tax service Effects of using an optional method, Effects of using an optional method. Free state tax service Farm optional method, Farm Optional Method Fiscal year filer, Fiscal Year Filer Fishing crew member, Fishing crew member. Free state tax service Gain or loss, Gain or Loss Government employee, State or local government employee. Free state tax service , Foreign government or international organization employee. Free state tax service Joint return, Joint return. Free state tax service Lost income payments, Lost Income Payments Maximum earnings For 2011, What's New for 2013, Maximum earnings subject to SE tax. Free state tax service Subject to, Maximum earnings subject to self-employment tax. Free state tax service Methods for figuring net earnings, Methods for Figuring Net Earnings More than one business, More Than One Business, More than one business. Free state tax service Nonfarm optional method, Nonfarm Optional Method Notary public, Notary public. Free state tax service Optional methods Farm, Farm Optional Method Nonfarm, Nonfarm Optional Method Rate, SE tax rate. Free state tax service Regular method, Regular Method Residing abroad, U. Free state tax service S. Free state tax service citizen or resident alien residing abroad. Free state tax service Special rules and exceptions, Special Rules and Exceptions Tax rate, SE tax rate. Free state tax service Time limit for posting income, The Social Security Administration (SSA) time limit for posting self-employment income. Free state tax service Who must pay, Who Must Pay SE Tax? Why use an optional method, Why use an optional method? Section 179 Deduction, Section 179 deduction. Free state tax service Property, Section 179 property. Free state tax service Securities Dealer, Securities dealer. Free state tax service Trader, Securities trader. Free state tax service Self-employed health insurance deduction, Self-employed health insurance deduction. Free state tax service Self-employment tax (see SE tax) Settlement payments, Settlement payments. Free state tax service Short-term capital gain or loss, Is My Capital Gain or Loss Short Term or Long Term? Signature, electronic, Electronic signatures. Free state tax service Small Business Administration, Small Business Administration Small employer health insurance premiums credit, Credit for small employer health insurance premiums (Form 8941). Free state tax service Social security coverage, Social security coverage. Free state tax service Social security number (SSN), Social security number (SSN). Free state tax service Sole proprietor, Sole proprietor. Free state tax service , Sole proprietor or independent contractor. Free state tax service Sport utility vehicle, Section 179 deduction. Free state tax service Standard mileage rate, Standard mileage rate. Free state tax service For 2011, What's New for 2013 Statutory employee, Statutory employee. Free state tax service Suggestions for publication, Comments and suggestions. Free state tax service SUV, Section 179 deduction. Free state tax service T Tax home, Local transportation expenses. Free state tax service , Travel expenses. Free state tax service Tax preparation fees, Tax preparation fees. Free state tax service Tax refund Claim for, Refunds. Free state tax service Offset against debts, Offset against debts. Free state tax service Tax return How to file, How Do I File? Who must file, Do I Have To File an Income Tax Return? Tax year, Accounting Periods Calendar, Calendar tax year. Free state tax service Change in, Change in tax year. Free state tax service Fiscal, Fiscal tax year. Free state tax service Taxes Deduction for, Taxes Employment, Employment Taxes, Employment taxes. Free state tax service Excise, Excise Taxes, Excise taxes. Free state tax service Fuel, Fuel taxes. Free state tax service Income, Income Tax, Income taxes. Free state tax service Paid on certain employee tips, Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). Free state tax service Personal property, Personal property tax. Free state tax service Real estate, Real estate taxes. Free state tax service Sales, Sales tax. Free state tax service Self-employment, Self-Employment (SE) Tax, Self-employment tax. Free state tax service Taxpayer rights, Declaration of Taxpayer Rights Third parties, Payments to, Payments to third parties. Free state tax service Tolls, Parking fees and tolls. Free state tax service Trade discount, Trade discounts. Free state tax service , Trade discounts. Free state tax service Trade or business, Trade or business. Free state tax service Trailer park owner, Trailer park owner. Free state tax service Transportation expenses, Local transportation expenses. Free state tax service Travel expenses, Travel expenses. Free state tax service U Underpayment of tax penalty, Penalty for underpayment of tax. Free state tax service Uniform capitalization rules, Uniform Capitalization Rules W Wages, Employees' Pay Work opportunity credit, Work opportunity credit (Form 5884). Free state tax service Prev  Up     Home   More Online Publications