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How To File 2012 Federal Tax Return

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How To File 2012 Federal Tax Return

How to file 2012 federal tax return 5. How to file 2012 federal tax return   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. How to file 2012 federal tax return J-1 visa holders. How to file 2012 federal tax return Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. How to file 2012 federal tax return The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. How to file 2012 federal tax return Resident aliens should get publications, forms, and instructions for U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens, because the information for filing returns for resident aliens is generally the same as for U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. How to file 2012 federal tax return Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. How to file 2012 federal tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. How to file 2012 federal tax return S. How to file 2012 federal tax return Individual Income Tax Return 1040NR U. How to file 2012 federal tax return S. How to file 2012 federal tax return Nonresident Alien Income Tax Return 1040NR-EZ U. How to file 2012 federal tax return S. How to file 2012 federal tax return Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. How to file 2012 federal tax return Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. How to file 2012 federal tax return If you have not previously established a fiscal tax year, your tax year is the calendar year. How to file 2012 federal tax return A calendar year is 12 consecutive months ending on December 31. How to file 2012 federal tax return If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. How to file 2012 federal tax return S. How to file 2012 federal tax return resident for any calendar year, you will be treated as a U. How to file 2012 federal tax return S. How to file 2012 federal tax return resident for any part of your fiscal year that falls within that calendar year. How to file 2012 federal tax return Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. How to file 2012 federal tax return For an individual, this is a social security number (SSN). How to file 2012 federal tax return If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). How to file 2012 federal tax return An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. How to file 2012 federal tax return You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business at any time during the year, An alien who has a U. How to file 2012 federal tax return S. How to file 2012 federal tax return office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). How to file 2012 federal tax return Social security number (SSN). How to file 2012 federal tax return   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. How to file 2012 federal tax return S. How to file 2012 federal tax return employment. How to file 2012 federal tax return   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. How to file 2012 federal tax return You can also download Form SS-5 from the SSA's website at www. How to file 2012 federal tax return socialsecurity. How to file 2012 federal tax return gov/ssnumber/ss5. How to file 2012 federal tax return htm. How to file 2012 federal tax return You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. How to file 2012 federal tax return Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. How to file 2012 federal tax return F-1 and M-1 visa holders. How to file 2012 federal tax return    If you are an F-1 or M-1 student, you must also show your Form I-20. How to file 2012 federal tax return For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. How to file 2012 federal tax return socialsecurity. How to file 2012 federal tax return gov/pubs/10181. How to file 2012 federal tax return html. How to file 2012 federal tax return J-1 visa holders. How to file 2012 federal tax return   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. How to file 2012 federal tax return For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. How to file 2012 federal tax return socialsecurity. How to file 2012 federal tax return gov/pubs/10107. How to file 2012 federal tax return html. How to file 2012 federal tax return Individual taxpayer identification number (ITIN). How to file 2012 federal tax return   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. How to file 2012 federal tax return For details on how to do so, see Form W-7 and its instructions. How to file 2012 federal tax return Allow 6 to 10 weeks for the IRS to notify you of your ITIN. How to file 2012 federal tax return If you already have an ITIN, enter it wherever an SSN is required on your tax return. How to file 2012 federal tax return   An ITIN is for tax use only. How to file 2012 federal tax return It does not entitle you to social security benefits or change your employment or immigration status under U. How to file 2012 federal tax return S. How to file 2012 federal tax return law. How to file 2012 federal tax return   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. How to file 2012 federal tax return Employer identification number (EIN). How to file 2012 federal tax return   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. How to file 2012 federal tax return To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. How to file 2012 federal tax return Filing Status The amount of your tax depends on your filing status. How to file 2012 federal tax return Your filing status is important in determining whether you can take certain deductions and credits. How to file 2012 federal tax return The rules for determining your filing status are different for resident aliens and nonresident aliens. How to file 2012 federal tax return Resident Aliens Resident aliens can use the same filing statuses available to U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return See your form instructions or Publication 501 for more information on filing status. How to file 2012 federal tax return Married filing jointly. How to file 2012 federal tax return   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. How to file 2012 federal tax return Qualifying widow(er). How to file 2012 federal tax return   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. How to file 2012 federal tax return This applies only if you could have filed a joint return with your spouse for the year your spouse died. How to file 2012 federal tax return Head of household. How to file 2012 federal tax return   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. How to file 2012 federal tax return You must be a resident alien for the entire tax year. How to file 2012 federal tax return   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. How to file 2012 federal tax return Note. How to file 2012 federal tax return   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. How to file 2012 federal tax return In that case, you will not be entitled to the credit. How to file 2012 federal tax return See Publication 596 for more information. How to file 2012 federal tax return Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. How to file 2012 federal tax return If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. How to file 2012 federal tax return Married nonresident alien. How to file 2012 federal tax return   Married nonresident aliens who are not married to U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return Exceptions. How to file 2012 federal tax return   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. How to file 2012 federal tax return However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. How to file 2012 federal tax return S. How to file 2012 federal tax return national. How to file 2012 federal tax return See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. How to file 2012 federal tax return U. How to file 2012 federal tax return S. How to file 2012 federal tax return national is defined later in this section under Qualifying widow(er) . How to file 2012 federal tax return   A nonresident alien generally cannot file as married filing jointly. How to file 2012 federal tax return However, a nonresident alien who is married to a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. How to file 2012 federal tax return For information on these choices, see chapter 1. How to file 2012 federal tax return If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. How to file 2012 federal tax return Qualifying widow(er). How to file 2012 federal tax return   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. How to file 2012 federal tax return You were a resident of Canada, Mexico, or South Korea, or a U. How to file 2012 federal tax return S. How to file 2012 federal tax return national (defined later). How to file 2012 federal tax return Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. How to file 2012 federal tax return You have a dependent child living with you. How to file 2012 federal tax return See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. How to file 2012 federal tax return   A U. How to file 2012 federal tax return S. How to file 2012 federal tax return national is an individual who, although not a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen, owes his or her allegiance to the United States. How to file 2012 federal tax return U. How to file 2012 federal tax return S. How to file 2012 federal tax return nationals include American Samoans and Northern Mariana Islanders who chose to become U. How to file 2012 federal tax return S. How to file 2012 federal tax return nationals instead of U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return Head of household. How to file 2012 federal tax return   You cannot file as head of household if you are a nonresident alien at any time during the tax year. How to file 2012 federal tax return However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . How to file 2012 federal tax return Note. How to file 2012 federal tax return   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. How to file 2012 federal tax return In that case, your spouse will not be entitled to the credit. How to file 2012 federal tax return See Publication 596 for more information. How to file 2012 federal tax return Estates and trusts. How to file 2012 federal tax return   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return Special rules for aliens from certain U. How to file 2012 federal tax return S. How to file 2012 federal tax return possessions. How to file 2012 federal tax return   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. How to file 2012 federal tax return Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. How to file 2012 federal tax return For resident aliens, this includes income from sources both within and outside the United States. How to file 2012 federal tax return For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. How to file 2012 federal tax return S. How to file 2012 federal tax return sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). How to file 2012 federal tax return Deductions Resident and nonresident aliens can claim similar deductions on their U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax returns. How to file 2012 federal tax return However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return Resident Aliens You can claim the same deductions allowed to U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens if you are a resident alien for the entire tax year. How to file 2012 federal tax return While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. How to file 2012 federal tax return You should get Form 1040 and instructions for more information on how to claim your allowable deductions. How to file 2012 federal tax return Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. How to file 2012 federal tax return You generally cannot claim deductions related to income that is not connected with your U. How to file 2012 federal tax return S. How to file 2012 federal tax return business activities. How to file 2012 federal tax return Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. How to file 2012 federal tax return Ordinary and necessary business expenses. How to file 2012 federal tax return   You can deduct all ordinary and necessary expenses in the operation of your U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business to the extent they relate to income effectively connected with that trade or business. How to file 2012 federal tax return The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. How to file 2012 federal tax return For information about other business expenses, see Publication 535. How to file 2012 federal tax return Losses. How to file 2012 federal tax return   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. How to file 2012 federal tax return to the extent that they relate to income that is effectively connected with a trade or business in the United States. How to file 2012 federal tax return Educator expenses. How to file 2012 federal tax return   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. How to file 2012 federal tax return For more information, see your tax form instructions. How to file 2012 federal tax return Individual retirement arrangement (IRA). How to file 2012 federal tax return   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. How to file 2012 federal tax return But you must have taxable compensation effectively connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business to do so. How to file 2012 federal tax return A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. How to file 2012 federal tax return If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. How to file 2012 federal tax return ) at work or through self-employment, your IRA deduction may be reduced or eliminated. How to file 2012 federal tax return But you can still make contributions to a traditional IRA even if you cannot deduct them. How to file 2012 federal tax return If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. How to file 2012 federal tax return   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). How to file 2012 federal tax return Moving expenses. How to file 2012 federal tax return   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. How to file 2012 federal tax return You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. How to file 2012 federal tax return Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. How to file 2012 federal tax return If you had no former job location, the new job location must be at least 50 miles from your former home. How to file 2012 federal tax return   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. How to file 2012 federal tax return   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. How to file 2012 federal tax return   For more information on the moving expense deduction, see Publication 521. How to file 2012 federal tax return Reimbursements. How to file 2012 federal tax return   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. How to file 2012 federal tax return You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. How to file 2012 federal tax return For more information, see Publication 521. How to file 2012 federal tax return Moving expense or travel expense. How to file 2012 federal tax return   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. How to file 2012 federal tax return Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. How to file 2012 federal tax return Self-employed SEP, SIMPLE, and qualified retirement plans. How to file 2012 federal tax return   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. How to file 2012 federal tax return To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. How to file 2012 federal tax return Penalty on early withdrawal of savings. How to file 2012 federal tax return   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. How to file 2012 federal tax return Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. How to file 2012 federal tax return However, if the interest income is effectively connected with your U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. How to file 2012 federal tax return Student loan interest expense. How to file 2012 federal tax return   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. How to file 2012 federal tax return Generally, you can claim the deduction if all the following requirements are met. How to file 2012 federal tax return Your filing status is any filing status except married filing separately. How to file 2012 federal tax return Your modified adjusted gross income is less than $75,000. How to file 2012 federal tax return No one else is claiming an exemption for you on his or her 2013 tax return. How to file 2012 federal tax return You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. How to file 2012 federal tax return The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. How to file 2012 federal tax return The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. How to file 2012 federal tax return The person for whom the expenses were paid or incurred was an eligible student. How to file 2012 federal tax return Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. How to file 2012 federal tax return For more information, see Publication 970, Tax Benefits for Education. How to file 2012 federal tax return Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return However, nonresident aliens generally can claim only a personal exemption for themselves on their U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax return. How to file 2012 federal tax return Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax purposes and was not the dependent of another taxpayer. How to file 2012 federal tax return You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. How to file 2012 federal tax return You can claim an exemption for each person who qualifies as a dependent according to the rules for U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. How to file 2012 federal tax return Get Publication 501 for more information. How to file 2012 federal tax return Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. How to file 2012 federal tax return See Identification Number, earlier. How to file 2012 federal tax return Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). How to file 2012 federal tax return You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. How to file 2012 federal tax return Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. How to file 2012 federal tax return See Identification Number, earlier. How to file 2012 federal tax return Residents of Mexico or Canada or U. How to file 2012 federal tax return S. How to file 2012 federal tax return nationals. How to file 2012 federal tax return   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax purposes and cannot be claimed as the dependent on another U. How to file 2012 federal tax return S. How to file 2012 federal tax return taxpayer's return. How to file 2012 federal tax return In addition, you can claim exemptions for your dependents who meet certain tests. How to file 2012 federal tax return Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens to determine who is a dependent and for which dependents exemptions can be claimed. How to file 2012 federal tax return See Publication 501 for these rules. How to file 2012 federal tax return For purposes of these rules, dependents who are U. How to file 2012 federal tax return S. How to file 2012 federal tax return nationals meet the citizenship test discussed in Publication 501. How to file 2012 federal tax return Residents of South Korea. How to file 2012 federal tax return   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. How to file 2012 federal tax return The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. How to file 2012 federal tax return S. How to file 2012 federal tax return source gross income effectively connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business for the tax year to the alien's entire income from all sources during the tax year. How to file 2012 federal tax return Example. How to file 2012 federal tax return Mr. How to file 2012 federal tax return Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. How to file 2012 federal tax return During the tax year he receives U. How to file 2012 federal tax return S. How to file 2012 federal tax return compensation of $18,000. How to file 2012 federal tax return He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return Thus, his total income for the year is $24,000. How to file 2012 federal tax return Mr. How to file 2012 federal tax return Park meets all requirements for claiming exemptions for his spouse and two children. How to file 2012 federal tax return The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. How to file 2012 federal tax return   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. How to file 2012 federal tax return   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. How to file 2012 federal tax return S. How to file 2012 federal tax return taxpayer's return. How to file 2012 federal tax return   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return See Publication 501 for these rules. How to file 2012 federal tax return   List your spouse and dependents on line 7c of Form 1040NR. How to file 2012 federal tax return Enter the total on the appropriate line to the right of line 7c. How to file 2012 federal tax return Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. How to file 2012 federal tax return However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return Resident Aliens You can claim the same itemized deductions as U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens, using Schedule A of Form 1040. How to file 2012 federal tax return These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. How to file 2012 federal tax return If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. How to file 2012 federal tax return For further information, see Form 1040 and instructions. How to file 2012 federal tax return Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return These deductions include state and local income taxes, charitable contributions to U. How to file 2012 federal tax return S. How to file 2012 federal tax return organizations, casualty and theft losses, and miscellaneous deductions. How to file 2012 federal tax return Use Schedule A of Form 1040NR to claim itemized deductions. How to file 2012 federal tax return If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. How to file 2012 federal tax return If you are claiming any other itemized deduction, you must file Form 1040NR. How to file 2012 federal tax return Standard deduction. How to file 2012 federal tax return   Nonresident aliens cannot claim the standard deduction. How to file 2012 federal tax return However, see Students and business apprentices from India , next. How to file 2012 federal tax return Students and business apprentices from India. How to file 2012 federal tax return   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. How to file 2012 federal tax return You can claim the standard deduction provided you do not claim itemized deductions. How to file 2012 federal tax return   Use Worksheet 5-1 to figure your standard deduction. How to file 2012 federal tax return If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. How to file 2012 federal tax return State and local income taxes. How to file 2012 federal tax return   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. How to file 2012 federal tax return If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. How to file 2012 federal tax return Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. How to file 2012 federal tax return See Recoveries in Publication 525 for details on how to figure the amount to include in income. How to file 2012 federal tax return Charitable contributions. How to file 2012 federal tax return   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. How to file 2012 federal tax return Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. How to file 2012 federal tax return Certain organizations that promote national or international amateur sports competition are also qualified organizations. How to file 2012 federal tax return Foreign organizations. How to file 2012 federal tax return   Contributions made directly to a foreign organization are not deductible. How to file 2012 federal tax return However, you can deduct contributions to a U. How to file 2012 federal tax return S. How to file 2012 federal tax return organization that transfers funds to a charitable foreign organization if the U. How to file 2012 federal tax return S. How to file 2012 federal tax return organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. How to file 2012 federal tax return S. How to file 2012 federal tax return organization. How to file 2012 federal tax return   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. How to file 2012 federal tax return Worksheet 5-1. How to file 2012 federal tax return 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. How to file 2012 federal tax return If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. How to file 2012 federal tax return You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. How to file 2012 federal tax return 1 Enter the amount shown below for your filing status. How to file 2012 federal tax return           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. How to file 2012 federal tax return           2 Can you be claimed as a dependent on someone else's U. How to file 2012 federal tax return S. How to file 2012 federal tax return income tax return?  No. How to file 2012 federal tax return Enter the amount from line 1 on line 4. How to file 2012 federal tax return Skip line 3 and go to line 5. How to file 2012 federal tax return   Yes. How to file 2012 federal tax return Go to line 3. How to file 2012 federal tax return         3 Is your earned income* more than $650?           Yes. How to file 2012 federal tax return Add $350 to your earned income. How to file 2012 federal tax return Enter the total. How to file 2012 federal tax return           No. How to file 2012 federal tax return Enter $1,000 3. How to file 2012 federal tax return       4 Enter the smaller of line 1 or line 3 4. How to file 2012 federal tax return   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). How to file 2012 federal tax return If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). How to file 2012 federal tax return Otherwise, enter -0- 5. How to file 2012 federal tax return   6 Add lines 4 and 5. How to file 2012 federal tax return Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). How to file 2012 federal tax return Print “Standard Deduction Allowed Under U. How to file 2012 federal tax return S. How to file 2012 federal tax return –India Income Tax Treaty” in the space to the left of these lines. How to file 2012 federal tax return This is your standard deduction for 2013. How to file 2012 federal tax return 6. How to file 2012 federal tax return   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. How to file 2012 federal tax return It also includes any amount received as a scholarship that you must include in your income. How to file 2012 federal tax return Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). How to file 2012 federal tax return Contributions from which you benefit. How to file 2012 federal tax return   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. How to file 2012 federal tax return   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. How to file 2012 federal tax return For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. How to file 2012 federal tax return Cash contributions. How to file 2012 federal tax return   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. How to file 2012 federal tax return The written record must include the name of the charity, date of the contribution, and the amount of the contribution. How to file 2012 federal tax return   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). How to file 2012 federal tax return If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. How to file 2012 federal tax return Noncash contributions. How to file 2012 federal tax return   For contributions not made in cash, the records you must keep depend on the amount of your deduction. How to file 2012 federal tax return See Publication 526 for details. How to file 2012 federal tax return For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. How to file 2012 federal tax return If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. How to file 2012 federal tax return If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. How to file 2012 federal tax return If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. How to file 2012 federal tax return You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. How to file 2012 federal tax return See Form 8283 and its instructions for details. How to file 2012 federal tax return Contributions of appreciated property. How to file 2012 federal tax return   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. How to file 2012 federal tax return However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. How to file 2012 federal tax return Your basis in the property is generally what you paid for it. How to file 2012 federal tax return If you need more information about basis, get Publication 551, Basis of Assets. How to file 2012 federal tax return   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. How to file 2012 federal tax return For information about these rules, see Publication 526. How to file 2012 federal tax return Limit. How to file 2012 federal tax return   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. How to file 2012 federal tax return For a discussion of limits on charitable contributions and other information, get Publication 526. How to file 2012 federal tax return Casualty and theft losses. How to file 2012 federal tax return   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return The property can be personal use property or income-producing property not connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business. How to file 2012 federal tax return The property must be located in the United States at the time of the casualty or theft. How to file 2012 federal tax return You can deduct theft losses only in the year in which you discover the loss. How to file 2012 federal tax return   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. How to file 2012 federal tax return The fair market value of property immediately after a theft is considered zero, because you no longer have the property. How to file 2012 federal tax return   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. How to file 2012 federal tax return If you do not, you cannot deduct this loss as a casualty or theft loss. How to file 2012 federal tax return   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. How to file 2012 federal tax return Losses from personal use property. How to file 2012 federal tax return    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. How to file 2012 federal tax return You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. How to file 2012 federal tax return Losses from income-producing property. How to file 2012 federal tax return   These losses are not subject to the limitations that apply to personal use property. How to file 2012 federal tax return Use Section B of Form 4684 to figure your deduction for these losses. How to file 2012 federal tax return Job expenses and other miscellaneous deductions. How to file 2012 federal tax return   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. How to file 2012 federal tax return Generally, the allowable deductions must be related to effectively connected income. How to file 2012 federal tax return Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). How to file 2012 federal tax return   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). How to file 2012 federal tax return For more information on miscellaneous deductions, see the instructions for Form 1040NR. How to file 2012 federal tax return Travel expenses. How to file 2012 federal tax return   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. How to file 2012 federal tax return Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. How to file 2012 federal tax return You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. How to file 2012 federal tax return   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. How to file 2012 federal tax return You cannot deduct travel expenses for other members of your family or party. How to file 2012 federal tax return Deductible travel expenses. How to file 2012 federal tax return   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. How to file 2012 federal tax return , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. How to file 2012 federal tax return You generally can deduct only 50% of unreimbursed meal expenses. How to file 2012 federal tax return The standard meal allowance rates for high-cost areas are available at www. How to file 2012 federal tax return gsa. How to file 2012 federal tax return gov/perdiem. How to file 2012 federal tax return The rates for other areas are in Publication 463. How to file 2012 federal tax return   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). How to file 2012 federal tax return Expenses allocable to U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax-exempt income. How to file 2012 federal tax return   You cannot deduct an expense, or part of an expense, that is allocable to U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax-exempt income, including income exempt by tax treaty. How to file 2012 federal tax return Example. How to file 2012 federal tax return Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. How to file 2012 federal tax return S. How to file 2012 federal tax return company. How to file 2012 federal tax return During her stay in the United States, she received a salary of $8,000 from her Polish employer. How to file 2012 federal tax return She received no other U. How to file 2012 federal tax return S. How to file 2012 federal tax return source income. How to file 2012 federal tax return She spent $3,000 on travel expenses, of which $1,000 were for meals. How to file 2012 federal tax return None of these expenses were reimbursed. How to file 2012 federal tax return Under the tax treaty with Poland, $5,000 of her salary is exempt from U. How to file 2012 federal tax return S. How to file 2012 federal tax return income tax. How to file 2012 federal tax return In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). How to file 2012 federal tax return She must reduce the remaining $2,500 of travel expenses by 62. How to file 2012 federal tax return 5% ($1,563) because 62. How to file 2012 federal tax return 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. How to file 2012 federal tax return She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). How to file 2012 federal tax return She completes the remaining lines according to the instructions for Schedule A. How to file 2012 federal tax return More information. How to file 2012 federal tax return   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. How to file 2012 federal tax return Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. How to file 2012 federal tax return Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizens. How to file 2012 federal tax return The following items are some of the credits you may be able to claim. How to file 2012 federal tax return Foreign tax credit. How to file 2012 federal tax return   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. How to file 2012 federal tax return You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. How to file 2012 federal tax return To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. How to file 2012 federal tax return   For more information, get Publication 514, Foreign Tax Credit for Individuals. How to file 2012 federal tax return Child and dependent care credit. How to file 2012 federal tax return   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. How to file 2012 federal tax return Generally, you must be able to claim an exemption for your dependent. How to file 2012 federal tax return   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. How to file 2012 federal tax return Credit for the elderly or the disabled. How to file 2012 federal tax return   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. How to file 2012 federal tax return For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). How to file 2012 federal tax return Education credits. How to file 2012 federal tax return   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. How to file 2012 federal tax return There are two education credits: the American Opportunity Credit and the lifetime learning credit. How to file 2012 federal tax return You cannot claim these credits if you are married filing separately. How to file 2012 federal tax return Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. How to file 2012 federal tax return For more information, see Publication 970. How to file 2012 federal tax return Retirement savings contributions credit. How to file 2012 federal tax return   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. How to file 2012 federal tax return You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). How to file 2012 federal tax return Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. How to file 2012 federal tax return For more information, see Publication 590. How to file 2012 federal tax return Child tax credit. How to file 2012 federal tax return   You may be able to take this credit if you have a qualifying child. How to file 2012 federal tax return   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. How to file 2012 federal tax return Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). How to file 2012 federal tax return Is a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen, a U. How to file 2012 federal tax return S. How to file 2012 federal tax return national, or a resident alien. How to file 2012 federal tax return Did not provide over half of his or her own support for 2013. How to file 2012 federal tax return Lived with you more than half of 2013. How to file 2012 federal tax return Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. How to file 2012 federal tax return Is claimed as a dependent on your return. How to file 2012 federal tax return An adopted child is always treated as your own child. How to file 2012 federal tax return An adopted child includes a child lawfully placed with you for legal adoption. How to file 2012 federal tax return   See your form instructions for additional details. How to file 2012 federal tax return Adoption credit. How to file 2012 federal tax return   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. How to file 2012 federal tax return This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. How to file 2012 federal tax return To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. How to file 2012 federal tax return Earned income credit. How to file 2012 federal tax return   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). How to file 2012 federal tax return If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. How to file 2012 federal tax return If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. How to file 2012 federal tax return If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. How to file 2012 federal tax return You cannot claim the earned income credit if your filing status is married filing separately. How to file 2012 federal tax return    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. How to file 2012 federal tax return You cannot claim the credit using an ITIN. How to file 2012 federal tax return If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. How to file 2012 federal tax return An example of a federally funded benefit is Medicaid. How to file 2012 federal tax return If a card has this legend and the individual's immigration status has changed so that the individual is now a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. How to file 2012 federal tax return Other information. How to file 2012 federal tax return   There are other eligibility rules that are not discussed here. How to file 2012 federal tax return For more information, get Publication 596, Earned Income Credit. How to file 2012 federal tax return Nonresident Aliens You can claim some of the same credits that resident aliens can claim. How to file 2012 federal tax return You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. How to file 2012 federal tax return Credits Credits are allowed only if you receive effectively connected income. How to file 2012 federal tax return You may be able to claim some of the following credits. How to file 2012 federal tax return Foreign tax credit. How to file 2012 federal tax return   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. How to file 2012 federal tax return S. How to file 2012 federal tax return possession on that income. How to file 2012 federal tax return   If you do not have foreign source income effectively connected with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return trade or business, you cannot claim credits against your U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax for taxes paid or accrued to a foreign country or U. How to file 2012 federal tax return S. How to file 2012 federal tax return possession. How to file 2012 federal tax return   You cannot take any credit for taxes imposed by a foreign country or U. How to file 2012 federal tax return S. How to file 2012 federal tax return possession on your U. How to file 2012 federal tax return S. How to file 2012 federal tax return source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. How to file 2012 federal tax return   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. How to file 2012 federal tax return See Publication 514 for more information. How to file 2012 federal tax return Child and dependent care credit. How to file 2012 federal tax return   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. How to file 2012 federal tax return Generally, you must be able to claim an exemption for your dependent. How to file 2012 federal tax return   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). How to file 2012 federal tax return   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. How to file 2012 federal tax return Earned income generally means wages, salaries, and professional fees for personal services performed. How to file 2012 federal tax return   For more information, get Publication 503. How to file 2012 federal tax return Education credits. How to file 2012 federal tax return   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. How to file 2012 federal tax return However, if you are married and choose to file a joint return with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. How to file 2012 federal tax return Retirement savings contributions credit. How to file 2012 federal tax return   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. How to file 2012 federal tax return You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. How to file 2012 federal tax return Use Form 8880 to figure the credit. How to file 2012 federal tax return For more information, see Publication 590. How to file 2012 federal tax return Child tax credit. How to file 2012 federal tax return   You may be able to take this credit if you have a qualifying child. How to file 2012 federal tax return   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. How to file 2012 federal tax return Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). How to file 2012 federal tax return Is a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen, a U. How to file 2012 federal tax return S. How to file 2012 federal tax return national, or a resident alien. How to file 2012 federal tax return Did not provide over half of his or her own support for 2013. How to file 2012 federal tax return Lived with you more than half of 2013. How to file 2012 federal tax return Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. How to file 2012 federal tax return Is claimed as a dependent on your return. How to file 2012 federal tax return An adopted child is always treated as your own child. How to file 2012 federal tax return An adopted child includes a child lawfully placed with you for legal adoption. How to file 2012 federal tax return   See your form instructions for additional details. How to file 2012 federal tax return Adoption credit. How to file 2012 federal tax return   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. How to file 2012 federal tax return This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. How to file 2012 federal tax return To claim the adoption credit, file Form 8839 with your Form 1040NR. How to file 2012 federal tax return   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). How to file 2012 federal tax return Credit for prior year minimum tax. How to file 2012 federal tax return   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. How to file 2012 federal tax return Earned income credit. How to file 2012 federal tax return   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. How to file 2012 federal tax return However, if you are married and choose to file a joint return with a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. How to file 2012 federal tax return    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. How to file 2012 federal tax return You cannot claim the credit using an ITIN. How to file 2012 federal tax return If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. How to file 2012 federal tax return An example of a federally funded benefit is Medicaid. How to file 2012 federal tax return If a card has this legend and the individual's immigration status has changed so that the individual is now a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. How to file 2012 federal tax return   See Publication 596 for more information on the credit. How to file 2012 federal tax return Tax Withheld You can claim the tax withheld during the year as a payment against your U. How to file 2012 federal tax return S. How to file 2012 federal tax return tax. How to file 2012 federal tax return You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. How to file 2012 federal tax return The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. How to file 2012 federal tax return Withholding from wages. How to file 2012 federal tax return   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. How to file 2012 federal tax return S. How to file 2012 federal tax return income tax liability for the same year. How to file 2012 federal tax return You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. How to file 2012 federal tax return Excess social security tax withheld. How to file 2012 federal tax return   If you have two or more employers, you may be able to claim a credit against your U. How to file 2012 federal tax return S. How to file 2012 federal tax return income tax liability for social security tax withheld in excess of the maximum required. How to file 2012 federal tax return See Social Security and Medicare Taxes in chapter 8 for more information. How to file 2012 federal tax return Additional Medicare Tax. How to file 2012 federal tax return   Your employer is responsible for withholding the 0. How to file 2012 federal tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. How to file 2012 federal tax return If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. How to file 2012 federal tax return Tax paid on undistributed long-term capital gains. How to file 2012 federal tax return   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. How to file 2012 federal tax return You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. How to file 2012 federal tax return Tax withheld at the source. How to file 2012 federal tax return   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. How to file 2012 federal tax return Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. How to file 2012 federal tax return Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. How to file 2012 federal tax return Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. How to file 2012 federal tax return Tax withheld on partnership income. How to file 2012 federal tax return   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. How to file 2012 federal tax return The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. How to file 2012 federal tax return A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. How to file 2012 federal tax return In this case, the partnership will give you a statement on Form 1042-S. How to file 2012 federal tax return Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. How to file 2012 federal tax return Claiming tax withheld on your return. How to file 2012 federal tax return   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. How to file 2012 federal tax return The following table lists some of the more common information documents and shows where to find the amount of tax withheld. How to file 2012 federal tax return Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. How to file 2012 federal tax return You should file Form 1040 and report all income from sources both in and outside the United States. How to file 2012 federal tax return However, you can exclude the income discussed in the following paragraphs. How to file 2012 federal tax return For tax purposes other than reporting income, however, you will be treated as a nonresident alien. How to file 2012 federal tax return For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. How to file 2012 federal tax return There are also limits on what deductions and credits are allowed. How to file 2012 federal tax return See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. How to file 2012 federal tax return Residents of Puerto Rico. How to file 2012 federal tax return   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). How to file 2012 federal tax return   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. How to file 2012 federal tax return You must also make your first payment of estimated tax by June 15. How to file 2012 federal tax return You cannot file a joint income tax return or make joint payments of estimated tax. How to file 2012 federal tax return However, if you are married to a U. How to file 2012 federal tax return S. How to file 2012 federal tax return citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. How to file 2012 federal tax return   If you earn wages subject to withholding, your U. How to file 2012 federal tax return S. How to file 2012 federal tax return income tax return is due by April 15. How to file 2012 federal tax return Your first payment of estimated tax is also due by April 15. How to file 2012 federal tax return For information on withholding and estimated tax, see chapter 8 . How to file 2012 federal tax return Residents of American Samoa. How to file 2012 federal tax return   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. How to file 2012 federal tax return S. How to file 2012 federal tax return government or any of its agencies). How to file 2012 federal tax return An employee of the American Samoan government is not considered an employee of the U. How to file 2012 federal tax return S. How to file 2012 federal tax return government or any of its agencies for purposes of the exclusion. How to file 2012 federal tax return For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. How to file 2012 federal tax return S. 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How to file 2012 federal tax return Publication 587 - Main Content Table of Contents Qualifying for a DeductionExclusive Use Regular Use Trade or Business Use Principal Place of Business Place To Meet Patients, Clients, or Customers Separate Structure Figuring the DeductionUsing Actual Expenses Using the Simplified Method Daycare Facility Standard meal and snack rates. How to file 2012 federal tax return Sale or Exchange of Your HomeGain on Sale Depreciation Basis Adjustment Reporting the Sale More Information Business Furniture and EquipmentListed Property Property Bought for Business Use Personal Property Converted to Business Use Recordkeeping Where To DeductSelf-Employed Persons Employees Partners How To Get Tax HelpLow Income Taxpayer Clinics Worksheet To Figure the Deduction for Business Use of Your HomeInstructions for the Worksheet Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Instructions for the Simplified Method Worksheet Instructions for the Daycare Facility Worksheet Instructions for the Area Adjustment Worksheet Qualifying for a Deduction Generally, you cannot deduct items related to your home, such as mortgage interest, real estate taxes, utilities, maintenance, rent, depreciation, or property insurance, as business expenses. How to file 2012 federal tax return However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. How to file 2012 federal tax return Even then, the deductible amount of these types of expenses may be limited. How to file 2012 federal tax return Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home. How to file 2012 federal tax return To qualify to deduct expenses for business use of your home, you must use part of your home: Exclusively and regularly as your principal place of business (defined later), Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, In the case of a separate structure which is not attached to your home, in connection with your trade or business, On a regular basis for certain storage use (see Storage of inventory or product samples , later), For rental use (see Publication 527), or As a daycare facility (see Daycare Facility , later). How to file 2012 federal tax return Additional tests for employee use. How to file 2012 federal tax return   If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. How to file 2012 federal tax return You must meet the tests discussed earlier plus: Your business use must be for the convenience of your employer, and You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer. How to file 2012 federal tax return If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. How to file 2012 federal tax return Exclusive Use To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. How to file 2012 federal tax return The area used for business can be a room or other separately identifiable space. How to file 2012 federal tax return The space does not need to be marked off by a permanent partition. How to file 2012 federal tax return You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. How to file 2012 federal tax return Example. How to file 2012 federal tax return You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. How to file 2012 federal tax return Your family also uses the den for recreation. How to file 2012 federal tax return The den is not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den. How to file 2012 federal tax return Exceptions to Exclusive Use You do not have to meet the exclusive use test if either of the following applies. How to file 2012 federal tax return You use part of your home for the storage of inventory or product samples (discussed next). How to file 2012 federal tax return You use part of your home as a daycare facility, discussed later under Daycare Facility . How to file 2012 federal tax return Note. How to file 2012 federal tax return With the exception of these two uses, any portion of the home used for business purposes must meet the exclusive use test. How to file 2012 federal tax return Storage of inventory or product samples. How to file 2012 federal tax return    If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. How to file 2012 federal tax return However, you must meet all the following tests. How to file 2012 federal tax return You sell products at wholesale or retail as your trade or business. How to file 2012 federal tax return You keep the inventory or product samples in your home for use in your trade or business. How to file 2012 federal tax return Your home is the only fixed location of your trade or business. How to file 2012 federal tax return You use the storage space on a regular basis. How to file 2012 federal tax return The space you use is a separately identifiable space suitable for storage. How to file 2012 federal tax return Example. How to file 2012 federal tax return Your home is the only fixed location of your business of selling mechanics' tools at retail. How to file 2012 federal tax return You regularly use half of your basement for storage of inventory and product samples. How to file 2012 federal tax return You sometimes use the area for personal purposes. How to file 2012 federal tax return The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business. How to file 2012 federal tax return Regular Use To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. How to file 2012 federal tax return Incidental or occasional business use is not regular use. How to file 2012 federal tax return You must consider all facts and circumstances in determining whether your use is on a regular basis. How to file 2012 federal tax return Trade or Business Use To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or business. How to file 2012 federal tax return If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use. How to file 2012 federal tax return Example. How to file 2012 federal tax return You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. How to file 2012 federal tax return You do not make investments as a broker or dealer. How to file 2012 federal tax return So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home. How to file 2012 federal tax return Principal Place of Business You can have more than one business location, including your home, for a single trade or business. How to file 2012 federal tax return To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. How to file 2012 federal tax return To determine whether your home is your principal place of business, you must consider: The relative importance of the activities performed at each place where you conduct business, and The amount of time spent at each place where you conduct business. How to file 2012 federal tax return Your home office will qualify as your principal place of business if you meet the following requirements. How to file 2012 federal tax return You use it exclusively and regularly for administrative or management activities of your trade or business. How to file 2012 federal tax return You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. How to file 2012 federal tax return If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. How to file 2012 federal tax return However, see the later discussions under Place To Meet Patients, Clients, or Customers and Separate Structure for other ways to qualify to deduct home office expenses. How to file 2012 federal tax return Administrative or management activities. How to file 2012 federal tax return   There are many activities that are administrative or managerial in nature. How to file 2012 federal tax return The following are a few examples. How to file 2012 federal tax return Billing customers, clients, or patients. How to file 2012 federal tax return Keeping books and records. How to file 2012 federal tax return Ordering supplies. How to file 2012 federal tax return Setting up appointments. How to file 2012 federal tax return Forwarding orders or writing reports. How to file 2012 federal tax return Administrative or management activities performed at other locations. How to file 2012 federal tax return   The following activities performed by you or others will not disqualify your home office from being your principal place of business. How to file 2012 federal tax return You have others conduct your administrative or management activities at locations other than your home. How to file 2012 federal tax return (For example, another company does your billing from its place of business. How to file 2012 federal tax return ) You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room. How to file 2012 federal tax return You occasionally conduct minimal administrative or management activities at a fixed location outside your home. How to file 2012 federal tax return You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. How to file 2012 federal tax return (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home. How to file 2012 federal tax return ) You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead. How to file 2012 federal tax return Please click here for the text description of the image. How to file 2012 federal tax return Can you deduct business use of the home expenses? Example 1. How to file 2012 federal tax return John is a self-employed plumber. How to file 2012 federal tax return Most of John's time is spent at customers' homes and offices installing and repairing plumbing. How to file 2012 federal tax return He has a small office in his home that he uses exclusively and regularly for the administrative or management activities of his business, such as phoning customers, ordering supplies, and keeping his books. How to file 2012 federal tax return John writes up estimates and records of work completed at his customers' premises. How to file 2012 federal tax return He does not conduct any substantial administrative or management activities at any fixed location other than his home office. How to file 2012 federal tax return John does not do his own billing. How to file 2012 federal tax return He uses a local bookkeeping service to bill his customers. How to file 2012 federal tax return John's home office qualifies as his principal place of business for deducting expenses for its use. How to file 2012 federal tax return He uses the home office for the administrative or managerial activities of his plumbing business and he has no other fixed location where he conducts these administrative or managerial activities. How to file 2012 federal tax return His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. How to file 2012 federal tax return He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. How to file 2012 federal tax return Example 2. How to file 2012 federal tax return Pamela is a self-employed sales representative for several different product lines. How to file 2012 federal tax return She has an office in her home that she uses exclusively and regularly to set up appointments and write up orders and other reports for the companies whose products she sells. How to file 2012 federal tax return She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight. How to file 2012 federal tax return Pamela's business is selling products to customers at various locations throughout her territory. How to file 2012 federal tax return To make these sales, she regularly visits customers to explain the available products and take orders. How to file 2012 federal tax return Pamela's home office qualifies as her principal place of business for deducting expenses for its use. How to file 2012 federal tax return She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. How to file 2012 federal tax return The fact that she conducts some administrative or management activities in her hotel room (not a fixed location) does not disqualify her home office from being her principal place of business. How to file 2012 federal tax return She meets all the qualifications, including principal place of business, so she can deduct expenses (subject to certain limitations, explained later) for the business use of her home. How to file 2012 federal tax return Example 3. How to file 2012 federal tax return Paul is a self-employed anesthesiologist. How to file 2012 federal tax return He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. How to file 2012 federal tax return One of the hospitals provides him with a small shared office where he could conduct administrative or management activities. How to file 2012 federal tax return Paul very rarely uses the office the hospital provides. How to file 2012 federal tax return He uses a room in his home that he has converted to an office. How to file 2012 federal tax return He uses this room exclusively and regularly to conduct all the following activities. How to file 2012 federal tax return Contacting patients, surgeons, and hospitals regarding scheduling. How to file 2012 federal tax return Preparing for treatments and presentations. How to file 2012 federal tax return Maintaining billing records and patient logs. How to file 2012 federal tax return Satisfying continuing medical education requirements. How to file 2012 federal tax return Reading medical journals and books. How to file 2012 federal tax return Paul's home office qualifies as his principal place of business for deducting expenses for its use. How to file 2012 federal tax return He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. How to file 2012 federal tax return His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. How to file 2012 federal tax return His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. How to file 2012 federal tax return He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. How to file 2012 federal tax return Example 4. How to file 2012 federal tax return Kathleen is employed as a teacher. How to file 2012 federal tax return She is required to teach and meet with students at the school and to grade papers and tests. How to file 2012 federal tax return The school provides her with a small office where she can work on her lesson plans, grade papers and tests, and meet with parents and students. How to file 2012 federal tax return The school does not require her to work at home. How to file 2012 federal tax return Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. How to file 2012 federal tax return She uses this home office exclusively and regularly for the administrative duties of her teaching job. How to file 2012 federal tax return Kathleen must meet the convenience-of-the-employer test, even if her home qualifies as her principal place of business for deducting expenses for its use. How to file 2012 federal tax return Her employer provides her with an office and does not require her to work at home, so she does not meet the convenience-of-the-employer test and cannot claim a deduction for the business use of her home. How to file 2012 federal tax return More Than One Trade or Business The same home office can be the principal place of business for two or more separate business activities. How to file 2012 federal tax return Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. How to file 2012 federal tax return You must use the home office exclusively and regularly for one or more of the following purposes. How to file 2012 federal tax return As the principal place of business for one or more of your trades or businesses. How to file 2012 federal tax return As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses. How to file 2012 federal tax return If your home office is a separate structure, in connection with one or more of your trades or businesses. How to file 2012 federal tax return You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i. How to file 2012 federal tax return e. How to file 2012 federal tax return , personal) activities. How to file 2012 federal tax return If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. How to file 2012 federal tax return See Rental to employer , later, if you rent part of your home to your employer. How to file 2012 federal tax return Example. How to file 2012 federal tax return Tracy White is employed as a teacher. How to file 2012 federal tax return Her principal place of work is the school, which provides her office space to do her school work. How to file 2012 federal tax return She also has a mail order jewelry business. How to file 2012 federal tax return All her work in the jewelry business is done in her home office and the office is used exclusively for that business. How to file 2012 federal tax return If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business. How to file 2012 federal tax return If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. How to file 2012 federal tax return As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. How to file 2012 federal tax return She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity. How to file 2012 federal tax return Place To Meet Patients, Clients, or Customers If you meet or deal with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business if you meet both the following tests. How to file 2012 federal tax return You physically meet with patients, clients, or customers on your premises. How to file 2012 federal tax return Their use of your home is substantial and integral to the conduct of your business. How to file 2012 federal tax return Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement. How to file 2012 federal tax return Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home. How to file 2012 federal tax return The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business. How to file 2012 federal tax return Example. How to file 2012 federal tax return June Quill, a self-employed attorney, works 3 days a week in her city office. How to file 2012 federal tax return She works 2 days a week in her home office used only for business. How to file 2012 federal tax return She regularly meets clients there. How to file 2012 federal tax return Her home office qualifies for a business deduction because she meets clients there in the normal course of her business. How to file 2012 federal tax return Separate Structure You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business. How to file 2012 federal tax return The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers. How to file 2012 federal tax return Example. How to file 2012 federal tax return John Berry operates a floral shop in town. How to file 2012 federal tax return He grows the plants for his shop in a greenhouse behind his home. How to file 2012 federal tax return He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses for its use, subject to certain limitations, explained later. How to file 2012 federal tax return Figuring the Deduction After you determine that you meet the tests under Qualifying for a Deduction , you can begin to figure how much you can deduct. How to file 2012 federal tax return When figuring the amount you can deduct for the business use of your home, you will use either your actual expenses or a simplified method. How to file 2012 federal tax return Electing to use the simplified method. How to file 2012 federal tax return   The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. How to file 2012 federal tax return You choose whether or not to figure your deduction using the simplified method each taxable year. How to file 2012 federal tax return See Using the Simplified Method , later. How to file 2012 federal tax return Rental to employer. How to file 2012 federal tax return   If you rent part of your home to your employer and you use the rented part in performing services for your employer as an employee, your deduction for the business use of your home is limited. How to file 2012 federal tax return You can deduct mortgage interest, qualified mortgage insurance premiums, real estate taxes, and personal casualty losses for the rented part, subject to any limitations. How to file 2012 federal tax return However, you cannot deduct otherwise allowable trade or business expenses, business casualty losses, or depreciation related to the use of your home (or use the simplified method as an alternative to deducting these actual expenses) in performing services for your employer. How to file 2012 federal tax return Using Actual Expenses If you do not or cannot elect to use the simplified method for a home, you will figure your deduction for that home using your actual expenses. How to file 2012 federal tax return You will also need to figure the percentage of your home used for business and the limit on the deduction. How to file 2012 federal tax return If you are an employee or a partner, or you use your home in your farming business and you file Schedule F (Form 1040), you can use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication, to help you figure your deduction. How to file 2012 federal tax return If you use your home in a trade or business and you file Schedule C (Form 1040), you will use Form 8829 to figure your deduction. How to file 2012 federal tax return Part-year use. How to file 2012 federal tax return   You cannot deduct expenses for the business use of your home incurred during any part of the year you did not use your home for business purposes. How to file 2012 federal tax return For example, if you begin using part of your home for business on July 1, and you meet all the tests from that date until the end of the year, consider only your expenses for the last half of the year in figuring your allowable deduction. How to file 2012 federal tax return Expenses related to tax-exempt income. How to file 2012 federal tax return   Generally, you cannot deduct expenses that are related to tax-exempt allowances. How to file 2012 federal tax return However, if you receive a tax-exempt parsonage allowance or a tax-exempt military allowance, your expenses for mortgage interest and real estate taxes are deductible under the normal rules. How to file 2012 federal tax return No deduction is allowed for other expenses related to the tax-exempt allowance. How to file 2012 federal tax return   If your housing is provided free of charge and the value of the housing is tax exempt, you cannot deduct the rental value of any portion of the housing. How to file 2012 federal tax return Actual Expenses You must divide the expenses of operating your home between personal and business use. How to file 2012 federal tax return The part of a home operating expense you can use to figure your deduction depends on both of the following. How to file 2012 federal tax return Whether the expense is direct, indirect, or unrelated. How to file 2012 federal tax return The percentage of your home used for business. How to file 2012 federal tax return Table 1, next, describes the types of expenses you may have and the extent to which they are deductible. How to file 2012 federal tax return Table 1. How to file 2012 federal tax return Types of Expenses  Expense  Description  Deductibility Direct Expenses only for  the business part  of your home. How to file 2012 federal tax return Deductible in full. How to file 2012 federal tax return *   Examples:  Painting or repairs  only in the area  used for business. How to file 2012 federal tax return Exception: May be only partially  deductible in a daycare facility. How to file 2012 federal tax return See Daycare Facility , later. How to file 2012 federal tax return Indirect Expenses for  keeping up and running your  entire home. How to file 2012 federal tax return Deductible based on the percentage of your home used for business. How to file 2012 federal tax return *   Examples:  Insurance, utilities, and  general repairs. How to file 2012 federal tax return   Unrelated Expenses only for  the parts of your  home not used  for business. How to file 2012 federal tax return Not deductible. How to file 2012 federal tax return   Examples:  Lawn care or painting  a room not used  for business. How to file 2012 federal tax return   *Subject to the deduction limit, discussed later. How to file 2012 federal tax return Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses. How to file 2012 federal tax return Certain expenses are deductible whether or not you use your home for business. How to file 2012 federal tax return If you qualify to deduct business use of the home expenses, use the business percentage of these expenses to figure your total business use of the home deduction. How to file 2012 federal tax return These expenses include the following. How to file 2012 federal tax return Real estate taxes. How to file 2012 federal tax return Qualified mortgage insurance premiums. How to file 2012 federal tax return Deductible mortgage interest. How to file 2012 federal tax return Casualty losses. How to file 2012 federal tax return Other expenses are deductible only if you use your home for business. How to file 2012 federal tax return You can use the business percentage of these expenses to figure your total business use of the home deduction. How to file 2012 federal tax return These expenses generally include (but are not limited to) the following. How to file 2012 federal tax return Depreciation (covered under Depreciating Your Home , later). How to file 2012 federal tax return Insurance. How to file 2012 federal tax return Rent paid for the use of property you do not own but use in your trade or business. How to file 2012 federal tax return Repairs. How to file 2012 federal tax return Security system. How to file 2012 federal tax return Utilities and services. How to file 2012 federal tax return Real estate taxes. How to file 2012 federal tax return   To figure the business part of your real estate taxes, multiply the real estate taxes paid by the percentage of your home used for business. How to file 2012 federal tax return   For more information on the deduction for real estate taxes, see Publication 530, Tax Information for Homeowners. How to file 2012 federal tax return Deductible mortgage interest. How to file 2012 federal tax return   To figure the business part of your deductible mortgage interest, multiply this interest by the percentage of your home used for business. How to file 2012 federal tax return You can include interest on a second mortgage in this computation. How to file 2012 federal tax return If your total mortgage debt is more than $1,000,000 or your home equity debt is more than $100,000, your deduction may be limited. How to file 2012 federal tax return For more information on what interest is deductible, see Publication 936, Home Mortgage Interest Deduction. How to file 2012 federal tax return Qualified mortgage insurance premiums. How to file 2012 federal tax return   To figure the business part of your qualified mortgage insurance premiums, multiply the premiums by the percentage of your home used for business. How to file 2012 federal tax return You can include premiums for insurance on a second mortgage in this computation. How to file 2012 federal tax return If your adjusted gross income is more than $100,000 ($50,000 if your filing status is married filing separately), your deduction may be limited. How to file 2012 federal tax return For more information, see Publication 936, and Line 13 in the Instructions for Schedule A (Form 1040). How to file 2012 federal tax return Casualty losses. How to file 2012 federal tax return    If you have a casualty loss on your home that you use for business, treat the casualty loss as a direct expense, an indirect expense, or an unrelated expense, depending on the property affected. How to file 2012 federal tax return A direct expense is the loss on the portion of the property you use only in your business. How to file 2012 federal tax return Use the entire loss to figure the business use of the home deduction. How to file 2012 federal tax return An indirect expense is the loss on property you use for both business and personal purposes. How to file 2012 federal tax return Use only the business portion to figure the deduction. How to file 2012 federal tax return An unrelated expense is the loss on property you do not use in your business. How to file 2012 federal tax return Do not use any of the loss to figure the deduction. How to file 2012 federal tax return Example. How to file 2012 federal tax return You meet the rules to take a deduction for an office in your home that is 10% of the total area of your house. How to file 2012 federal tax return A storm damages your roof. How to file 2012 federal tax return This is an indirect expense as the roof is part of the whole house and is considered to be used both for business and personal purposes. How to file 2012 federal tax return You would complete Form 4684, Casualties and Thefts, to report your loss. How to file 2012 federal tax return You complete both section A (Personal Use Property) and section B (Business and Income-Producing Property) as your home is used both for business and personal purposes. How to file 2012 federal tax return Since you use 90% of your home for personal purposes, use 90% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 2, 3, 5, and 6 of Form 4684. How to file 2012 federal tax return Since you use 10% of your home for business purposes, use 10% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 20, 21, 23, and 24 of Form 4684. How to file 2012 federal tax return Forms and worksheets to use. How to file 2012 federal tax return   If you are filing Schedule C (Form 1040), get Form 8829 and follow the instructions for casualty losses. How to file 2012 federal tax return If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. How to file 2012 federal tax return You will also need to get Form 4684. How to file 2012 federal tax return More information. How to file 2012 federal tax return   For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts. How to file 2012 federal tax return Insurance. How to file 2012 federal tax return   You can deduct the cost of insurance that covers the business part of your home. How to file 2012 federal tax return However, if your insurance premium gives you coverage for a period that extends past the end of your tax year, you can deduct only the business percentage of the part of the premium that gives you coverage for your tax year. How to file 2012 federal tax return You can deduct the business percentage of the part that applies to the following year in that year. How to file 2012 federal tax return Rent. How to file 2012 federal tax return   If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. How to file 2012 federal tax return To figure your deduction, multiply your rent payments by the percentage of your home used for business. How to file 2012 federal tax return   If you own your home, you cannot deduct the fair rental value of your home. How to file 2012 federal tax return However, see Depreciating Your Home , later. How to file 2012 federal tax return Repairs. How to file 2012 federal tax return   The cost of repairs that relate to your business, including labor (other than your own labor), is a deductible expense. How to file 2012 federal tax return For example, a furnace repair benefits the entire home. How to file 2012 federal tax return If you use 10% of your home for business, you can deduct 10% of the cost of the furnace repair. How to file 2012 federal tax return   Repairs keep your home in good working order over its useful life. How to file 2012 federal tax return Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. How to file 2012 federal tax return However, repairs are sometimes treated as a permanent improvement and are not deductible. How to file 2012 federal tax return See Permanent improvements , later, under Depreciating Your Home. How to file 2012 federal tax return Security system. How to file 2012 federal tax return   If you install a security system that protects all the doors and windows in your home, you can deduct the business part of the expenses you incur to maintain and monitor the system. How to file 2012 federal tax return You also can take a depreciation deduction for the part of the cost of the security system relating to the business use of your home. How to file 2012 federal tax return Utilities and services. How to file 2012 federal tax return   Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. How to file 2012 federal tax return However, if you use part of your home for business, you can deduct the business part of these expenses. How to file 2012 federal tax return Generally, the business percentage for utilities is the same as the percentage of your home used for business. How to file 2012 federal tax return Telephone. How to file 2012 federal tax return   The basic local telephone service charge, including taxes, for the first telephone line into your home (i. How to file 2012 federal tax return e. How to file 2012 federal tax return , landline) is a nondeductible personal expense. How to file 2012 federal tax return 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. How to file 2012 federal tax return Do not include these expenses as a cost of using your home for business. How to file 2012 federal tax return Deduct these charges separately on the appropriate form or schedule. How to file 2012 federal tax return For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home). How to file 2012 federal tax return Depreciating Your Home If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. How to file 2012 federal tax return Depreciation is an allowance for the wear and tear on the part of your home used for business. How to file 2012 federal tax return You cannot depreciate the cost or value of the land. How to file 2012 federal tax return You recover its cost when you sell or otherwise dispose of the property. How to file 2012 federal tax return Before you figure your depreciation deduction, you need to know the following information. How to file 2012 federal tax return The month and year you started using your home for business. How to file 2012 federal tax return The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business. How to file 2012 federal tax return The cost of any improvements before and after you began using the property for business. How to file 2012 federal tax return The percentage of your home used for business. How to file 2012 federal tax return See Business Percentage , later. How to file 2012 federal tax return Adjusted basis defined. How to file 2012 federal tax return   The adjusted basis of your home is generally its cost, plus the cost of any permanent improvements you made to it, minus any casualty losses or depreciation deducted in earlier tax years. How to file 2012 federal tax return For a discussion of adjusted basis, see Publication 551. How to file 2012 federal tax return Permanent improvements. How to file 2012 federal tax return   A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. How to file 2012 federal tax return Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. How to file 2012 federal tax return    You must carefully distinguish between repairs and improvements. How to file 2012 federal tax return See Repairs , earlier, under Actual Expenses. How to file 2012 federal tax return You also must keep accurate records of these expenses. How to file 2012 federal tax return These records will help you decide whether an expense is a deductible or a capital (added to the basis) expense. How to file 2012 federal tax return However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement. How to file 2012 federal tax return Example. How to file 2012 federal tax return You buy an older home and fix up two rooms as a beauty salon. How to file 2012 federal tax return You patch the plaster on the ceilings and walls, paint, repair the floor, install an outside door, and install new wiring, plumbing, and other equipment. How to file 2012 federal tax return Normally, the patching, painting, and floor work are repairs and the other expenses are permanent improvements. How to file 2012 federal tax return However, because the work gives your property a new use, the entire remodeling job is a permanent improvement and its cost is added to the basis of the property. How to file 2012 federal tax return You cannot deduct any portion of it as a repair expense. How to file 2012 federal tax return Adjusting for depreciation deducted in earlier years. How to file 2012 federal tax return   Decrease the basis of your property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you properly selected. How to file 2012 federal tax return If you deducted less depreciation than you could have under the method you selected, decrease the basis by the amount you could have deducted under that method. How to file 2012 federal tax return If you did not deduct any depreciation, decrease the basis by the amount you could have deducted. How to file 2012 federal tax return   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted, plus the part of the excess depreciation you deducted that actually decreased your tax liability for any year. How to file 2012 federal tax return   If you deducted the incorrect amount of depreciation, see Publication 946. How to file 2012 federal tax return Fair market value defined. How to file 2012 federal tax return   The fair market value of your home is the price at which the property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. How to file 2012 federal tax return Sales of similar property, on or about the date you begin using your home for business, may be helpful in determining the property's fair market value. How to file 2012 federal tax return Figuring the depreciation deduction for the current year. How to file 2012 federal tax return   If you began using your home for business before 2013, continue to use the same depreciation method you used in past tax years. How to file 2012 federal tax return   If you began using your home for business for the first time in 2013, depreciate the business part as nonresidential real property under the modified accelerated cost recovery system (MACRS). How to file 2012 federal tax return Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years. How to file 2012 federal tax return For more information on MACRS and other methods of depreciation, see Publication 946. How to file 2012 federal tax return   To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). How to file 2012 federal tax return The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. How to file 2012 federal tax return The adjusted basis of your home (excluding land) on the date you began using your home for business. How to file 2012 federal tax return The fair market value of your home (excluding land) on the date you began using your home for business. How to file 2012 federal tax return Depreciation table. How to file 2012 federal tax return   If 2013 was the first year you used your home for business, you can figure your 2013 depreciation for the business part of your home by using the appropriate percentage from the following table. How to file 2012 federal tax return Table 2. How to file 2012 federal tax return MACRS Percentage Table for 39-Year Nonresidential Real Property Month First Used for Business Percentage To Use 1 2. How to file 2012 federal tax return 461% 2 2. How to file 2012 federal tax return 247% 3 2. How to file 2012 federal tax return 033% 4 1. How to file 2012 federal tax return 819% 5 1. How to file 2012 federal tax return 605% 6 1. How to file 2012 federal tax return 391% 7 1. How to file 2012 federal tax return 177% 8 0. How to file 2012 federal tax return 963% 9 0. How to file 2012 federal tax return 749% 10 0. How to file 2012 federal tax return 535% 11 0. How to file 2012 federal tax return 321% 12 0. How to file 2012 federal tax return 107%   Multiply the depreciable basis of the business part of your home by the percentage from the table for the first month you use your home for business. How to file 2012 federal tax return See Publication 946 for the percentages for the remaining tax years of the recovery period. How to file 2012 federal tax return Example. How to file 2012 federal tax return In May, George Miller began to use one room in his home exclusively and regularly to meet clients. How to file 2012 federal tax return This room is 8% of the square footage of his home. How to file 2012 federal tax return He bought the home in 2003 for $125,000. How to file 2012 federal tax return He determined from his property tax records that his adjusted basis in the house (exclusive of land) is $115,000. How to file 2012 federal tax return In May, the house had a fair market value of $165,000. How to file 2012 federal tax return He multiplies his adjusted basis of $115,000 (which is less than the fair market value) by 8%. How to file 2012 federal tax return The result is $9,200, his depreciable basis for the business part of the house. How to file 2012 federal tax return George files his return based on the calendar year. How to file 2012 federal tax return May is the 5th month of his tax year. How to file 2012 federal tax return He multiplies his depreciable basis of $9,200 by 1. How to file 2012 federal tax return 605% (. How to file 2012 federal tax return 01605), the percentage from the table for the 5th month. How to file 2012 federal tax return His depreciation deduction is $147. How to file 2012 federal tax return 66. How to file 2012 federal tax return Depreciating permanent improvements. How to file 2012 federal tax return   Add the costs of permanent improvements made before you began using your home for business to the basis of your property. How to file 2012 federal tax return Depreciate these costs as part of the cost of your home as explained earlier. How to file 2012 federal tax return The costs of improvements made after you begin using your home for business (that affect the business part of your home, such as a new roof) are depreciated separately. How to file 2012 federal tax return Multiply the cost of the improvement by the business-use percentage and depreciate the result over the recovery period that would apply to your home if you began using it for business at the same time as the improvement. How to file 2012 federal tax return For improvements made this year, the recovery period is 39 years. How to file 2012 federal tax return For the percentage to use for the first year, see Table 2, earlier. How to file 2012 federal tax return For more information on recovery periods, see Publication 946. How to file 2012 federal tax return Business Percentage To find the business percentage, compare the size of the part of your home that you use for business to your whole house. How to file 2012 federal tax return Use the resulting percentage to figure the business part of the expenses for operating your entire home. How to file 2012 federal tax return You can use any reasonable method to determine the business percentage. How to file 2012 federal tax return The following are two commonly used methods for figuring the percentage. How to file 2012 federal tax return Divide the area (length multiplied by the width) used for business by the total area of your home. How to file 2012 federal tax return If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home. How to file 2012 federal tax return Example 1. How to file 2012 federal tax return Your office is 240 square feet (12 feet × 20 feet). How to file 2012 federal tax return Your home is 1,200 square feet. How to file 2012 federal tax return Your office is 20% (240 ÷ 1,200) of the total area of your home. How to file 2012 federal tax return Your business percentage is 20%. How to file 2012 federal tax return Example 2. How to file 2012 federal tax return You use one room in your home for business. How to file 2012 federal tax return Your home has 10 rooms, all about equal size. How to file 2012 federal tax return Your office is 10% (1 ÷ 10) of the total area of your home. How to file 2012 federal tax return Your business percentage is 10%. How to file 2012 federal tax return Use lines 1-7 of Form 8829, or lines 1-3 on the Worksheet To Figure the Deduction for Business Use of Your Home (near the end of this publication) to figure your business percentage. How to file 2012 federal tax return Deduction Limit If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. How to file 2012 federal tax return If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. How to file 2012 federal tax return Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation of your home (with depreciation of your home taken last), that are allocable to the business, is limited to the gross income from the business use of your home minus the sum of the following. How to file 2012 federal tax return The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). How to file 2012 federal tax return These expenses are discussed in detail under Actual Expenses , earlier. How to file 2012 federal tax return The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. How to file 2012 federal tax return If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax. How to file 2012 federal tax return Carryover of unallowed expenses. How to file 2012 federal tax return   If your deductions are greater than the current year's limit, you can carry over the excess to the next year in which you use actual expenses. How to file 2012 federal tax return They are subject to the deduction limit for that year, whether or not you live in the same home during that year. How to file 2012 federal tax return Figuring the deduction limit and carryover. How to file 2012 federal tax return   If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. How to file 2012 federal tax return If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829. How to file 2012 federal tax return Example. How to file 2012 federal tax return You meet the requirements for deducting expenses for the business use of your home. How to file 2012 federal tax return You use 20% of your home for business. How to file 2012 federal tax return In 2013, your business expenses and the expenses for the business use of your home are deducted from your gross income in the following order. How to file 2012 federal tax return    Gross income from business $6,000 Minus:   Deductible mortgage interest and real estate taxes (20%) 3,000 Business expenses not related to the use of your home (100%) (business phone, supplies, and depreciation on equipment) 2,000 Deduction limit $1,000 Minus other expenses allocable to business use of home:   Maintenance, insurance, and utilities (20%) 800 Depreciation allowed (20% = $1,600 allowable, but subject to balance of deduction limit) 200 Other expenses up to the deduction limit $1,000 Depreciation carryover to 2014 ($1,600 − $200) (subject to deduction limit in 2014) $1,400   You can deduct all of the business part of your deductible mortgage interest and real estate taxes ($3,000). How to file 2012 federal tax return You also can deduct all of your business expenses not related to the use of your home ($2,000). How to file 2012 federal tax return Additionally, you can deduct all of the business part of your expenses for maintenance, insurance, and utilities, because the total ($800) is less than the $1,000 deduction limit. How to file 2012 federal tax return Your deduction for depreciation for the business use of your home is limited to $200 ($1,000 minus $800) because of the deduction limit. How to file 2012 federal tax return You can carry over the $1,400 balance and add it to your depreciation for 2014, subject to your deduction limit in 2014. How to file 2012 federal tax return More than one place of business. How to file 2012 federal tax return   If part of the gross income from your trade or business is from the business use of part of your home and part is from a place other than your home, you must determine the part of your gross income from the business use of your home before you figure the deduction limit. How to file 2012 federal tax return In making this determination, consider the time you spend at each location, the business investment in each location, and any other relevant facts and circumstances. How to file 2012 federal tax return If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. How to file 2012 federal tax return For more information on transportation costs, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. How to file 2012 federal tax return Using the Simplified Method The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. How to file 2012 federal tax return In most cases, you will figure your deduction by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. How to file 2012 federal tax return The area you use to figure your deduction is limited to 300 square feet. How to file 2012 federal tax return See Simplified Amount , later, for information about figuring the amount of the deduction. How to file 2012 federal tax return For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I. How to file 2012 federal tax return R. How to file 2012 federal tax return B. How to file 2012 federal tax return 478, available at www. How to file 2012 federal tax return irs. How to file 2012 federal tax return gov/irb/2013-06_IRB/ar09. How to file 2012 federal tax return html. How to file 2012 federal tax return Actual expenses and depreciation of your home. How to file 2012 federal tax return   If you elect to use the simplified method, you cannot deduct any actual expenses for the business except for business expenses that are not related to the use of the home. How to file 2012 federal tax return You also cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for the portion of the home that is used for a qualified business use. How to file 2012 federal tax return The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. How to file 2012 federal tax return If you figure your deduction for business use of the home using actual expenses in a subsequent year, you will have to use the appropriate optional depreciation table for MACRS to figure your depreciation. How to file 2012 federal tax return More information. How to file 2012 federal tax return   For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I. How to file 2012 federal tax return R. How to file 2012 federal tax return B. How to file 2012 federal tax return 478, available at www. How to file 2012 federal tax return irs. How to file 2012 federal tax return gov/irb/2013-06_IRB/ar09. How to file 2012 federal tax return html. How to file 2012 federal tax return See Publication 946 for the optional depreciation tables Although you cannot deduct any depreciation or section 179 expense for the portion of your home used for a qualified business use, you may still claim depreciation or the section 179 expense deduction on other assets used in the business (for example, furniture and equipment). How to file 2012 federal tax return Expenses deductible without regard to business use. How to file 2012 federal tax return   When using the simplified method, treat as personal expenses those business expenses related to the use of the home that are deductible without regard to whether there is a qualified business use of the home. How to file 2012 federal tax return These expenses include mortgage interest, real estate taxes, and casualty losses, subject to any limitations. How to file 2012 federal tax return See Where To Deduct , later. How to file 2012 federal tax return If you also rent part of your home, you must still allocate these expenses between rental use and personal use (for this purpose, personal use includes business use reported using the simplified method). How to file 2012 federal tax return No deduction of carryover of actual expenses. How to file 2012 federal tax return   If you used actual expenses to figure your deduction for business use of the home in a prior year and your deduction was limited, you cannot deduct the disallowed amount carried over from the prior year during a year you figure your deduction using the simplified method. How to file 2012 federal tax return Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction. How to file 2012 federal tax return Electing the Simplified Method You choose whether or not to figure your deduction using the simplified method each taxable year. How to file 2012 federal tax return Make the election for a home by using the simplified method to figure the deduction for the qualified business use of that home on a timely filed, original federal income tax return. How to file 2012 federal tax return An election for a taxable year, once made, is irrevocable. How to file 2012 federal tax return A change from using the simplified method in one year to actual expenses in a succeeding taxable year, or vice-versa, is not a change in method of accounting and does not require the consent of the Commissioner. How to file 2012 federal tax return Shared use. How to file 2012 federal tax return   If you share your home with someone else who also uses the home in a business that qualifies for this deduction, each of you make your own election. How to file 2012 federal tax return More than one qualified business use. How to file 2012 federal tax return   If you conduct more than one business that qualifies for this deduction in your home, your election to use the simplified method applies to all your qualified business uses of that home. How to file 2012 federal tax return More than one home. How to file 2012 federal tax return   If you used more than one home during the year (for example, you moved during the year), you can elect to use the simplified method for only one of the homes. How to file 2012 federal tax return You must figure the deduction for any other home using actual expenses. How to file 2012 federal tax return Simplified Amount Your deduction for the qualified business use of a home is the sum of each amount you figure for a separate qualified business use of your home. How to file 2012 federal tax return To figure your deduction for the business use of a home using the simplified method, you will need to know the following information for each qualified business use of the home. How to file 2012 federal tax return The allowable area of your home used in conducting the business. How to file 2012 federal tax return If you did not conduct the business for the entire year in the home or the area changed during the year, you will need to know the allowable area you used and the number of days you conducted the business for each month. How to file 2012 federal tax return The gross income from the business use of your home. How to file 2012 federal tax return The amount of the business expenses that are not related to the use of your home. How to file 2012 federal tax return If the qualified business use is for a daycare facility that uses space in your home on a regular (but not exclusive) basis, you will also need to know the percentage of time that part of your home is used for daycare. How to file 2012 federal tax return To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these 3 steps. How to file 2012 federal tax return Multiply the allowable area by $5 (or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis). How to file 2012 federal tax return See Allowable area and Space used regularly for daycare , later. How to file 2012 federal tax return Subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. How to file 2012 federal tax return If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. How to file 2012 federal tax return See Gross income limitation , later. How to file 2012 federal tax return Take the smaller of the amounts from (1) and (2). How to file 2012 federal tax return This is the amount you can deduct for this qualified business use of your home using the simplified method. How to file 2012 federal tax return If you are an employee or a partner, or you use your home in your farming business and file Schedule F (Form 1040), you can use the Simplified Method Worksheet, near the end of this publication, to help you figure your deduction. How to file 2012 federal tax return If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction. How to file 2012 federal tax return Allowable area. How to file 2012 federal tax return   In most cases, the allowable area is the smaller of the actual area (in square feet) of your home used in conducting the business and 300 square feet. How to file 2012 federal tax return Your allowable area may be smaller if you conducted the business as a qualified joint venture with your spouse, the area used by the business was shared with another qualified business use, you used the home for the business for only part of the year, or the area used by the business changed during the year. How to file 2012 federal tax return You can use the Area Adjustment Worksheet (for simplified method), near the end of this publication, to help you figure your allowable area for a qualified business use. How to file 2012 federal tax return Area used by a qualified joint venture. How to file 2012 federal tax return   If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the business use separately. How to file 2012 federal tax return Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. How to file 2012 federal tax return Then, each spouse will figure the allowable area separately. How to file 2012 federal tax return For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C. How to file 2012 federal tax return Shared use. How to file 2012 federal tax return   If you share your home with someone else who uses the home to conduct business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. How to file 2012 federal tax return You must allocate the shared space between you and the other person in a reasonable manner. How to file 2012 federal tax return Example. How to file 2012 federal tax return Kristin and Lindsey are roommates. How to file 2012 federal tax return Kristin uses 300 square feet of their home for a qualified business use. How to file 2012 federal tax return Lindsey uses 200 square feet of their home for a separate qualified business use. How to file 2012 federal tax return The qualified business uses share 100 square feet. How to file 2012 federal tax return In addition to the portion that they do not share, Kristin and Lindsey can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. How to file 2012 federal tax return If divided evenly, Kristin could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. How to file 2012 federal tax return More than one qualified business use. How to file 2012 federal tax return   If you conduct more than one business qualifying for the deduction, you are limited to a maximum of 300 square feet for all of the businesses. How to file 2012 federal tax return Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. How to file 2012 federal tax return However, do not allocate more square feet to a qualified business use than you actually use for that business. How to file 2012 federal tax return Rental use. How to file 2012 federal tax return   The simplified method does not apply to rental use. How to file 2012 federal tax return A rental use that qualifies for the deduction must be figured using actual expenses. How to file 2012 federal tax return If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses. How to file 2012 federal tax return You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use. How to file 2012 federal tax return Part-year use or area changes. How to file 2012 federal tax return   If your qualified business use was for a portion of the taxable year (for example, a seasonal business or a business that begins during the taxable year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. How to file 2012 federal tax return You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. How to file 2012 federal tax return When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. How to file 2012 federal tax return Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. How to file 2012 federal tax return Example 1. How to file 2012 federal tax return Andy files his federal income tax return on a calendar year basis. How to file 2012 federal tax return On July 20, he began using 420 square feet of his home for a qualified business use. How to file 2012 federal tax return He continued to use the 420 square feet until the end of the year. How to file 2012 federal tax return His average monthly allowable square footage is 125 square feet, which is figured using 300 square feet for each month August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12). How to file 2012 federal tax return Example 2. How to file 2012 federal tax return Amy files her federal income tax return on a calendar year basis. How to file 2012 federal tax return On April 20, she began using 100 square feet of her home for a qualified business use. How to file 2012 federal tax return On August 5, she expanded the area of her qualified use to 330 square feet. How to file 2012 federal tax return Amy continued to use the 330 square feet until the end of the year. How to file 2012 federal tax return Her average monthly allowable square footage is 150 square feet, which is figured using 100 square feet for May through July and 300 square feet for August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12). How to file 2012 federal tax return Gross income limitation. How to file 2012 federal tax return   Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home. How to file 2012 federal tax return If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home. How to file 2012 federal tax return Business expenses not related to use of the home. How to file 2012 federal tax return   These expenses relate to the business activity in the home, but not to the use of the home itself. How to file 2012 federal tax return You can still deduct business expenses that are unrelated to the use of the home. How to file 2012 federal tax return See Where To Deduct , later. How to file 2012 federal tax return Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. How to file 2012 federal tax return Space used regularly for daycare. How to file 2012 federal tax return   If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction. How to file 2012 federal tax return The reduced rate will equal the prescribed rate times a fraction. How to file 2012 federal tax return The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses. How to file 2012 federal tax return You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate. How to file 2012 federal tax return    If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet. How to file 2012 federal tax return Daycare Facility If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes. How to file 2012 federal tax return To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. How to file 2012 federal tax return You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves. How to file 2012 federal tax return You must have applied for, been granted, or be exempt from having, a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law. How to file 2012 federal tax return You do not meet this requirement if your application was rejected or your license or other authorization was revoked. How to file 2012 federal tax return Figuring the deduction. How to file 2012 federal tax return   If you elect to use the simplified method for your home, figure your deduction as described earlier in Using the Simplified Method under Figuring the Deduction. How to file 2012 federal tax return    If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, figure what part is used for daycare, as explained in Business Percentage , earlier, under Figuring the Deduction. How to file 2012 federal tax return If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. How to file 2012 federal tax return   If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. How to file 2012 federal tax return A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day. How to file 2012 federal tax return You do not have to keep records to show the specific hours the area was used for business. How to file 2012 federal tax return You can use the area occasionally for personal reasons. How to file 2012 federal tax return However, a room you use only occasionally for business does not qualify for the deduction. How to file 2012 federal tax return To find the percentage of time you actually use your home for business, compare the total time used for business to the total time that part of your home can be used for all purposes. How to file 2012 federal tax return You can compare the hours of business use in a week with the number of hours in a week (168). How to file 2012 federal tax return Or you can compare the hours of business use for the year with the number of hours in the year (8,760 in 2013). How to file 2012 federal tax return If you started or stopped using your home for daycare in 2013, you must prorate the number of hours based on the number of days the home was available for daycare. How to file 2012 federal tax return Example 1. How to file 2012 federal tax return Mary Lake used her basement to operate a daycare business for children. How to file 2012 federal tax return She figures the business percentage of the basement as follows. How to file 2012 federal tax return Square footage of the basement Square footage of her home = 1,600 3,200 = 50%           She used the basement for daycare an average of 12 hours a day, 5 days a week, for 50 weeks a year. How to file 2012 federal tax return During the other 12 hours a day, the family could use the basement. How to file 2012 federal tax return She figures the percentage of time the basement was used for daycare as follows. How to file 2012 federal tax return Number of hours used for daycare (12 x 5 x 50) Total number of hours in the year (24 x 365) = 3,000 8,760 = 34. How to file 2012 federal tax return 25%           Mary can deduct 34. How to file 2012 federal tax return 25% of any direct expenses for the basement. How to file 2012 federal tax return However, because her indirect expenses are for the entire house, she can deduct only 17. How to file 2012 federal tax return 13% of the indirect expenses. How to file 2012 federal tax return She figures the percentage for her indirect expenses as follows. How to file 2012 federal tax return Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 34. How to file 2012 federal tax return 25% Percentage for indirect expenses 17. How to file 2012 federal tax return 13% Mary completes Form 8829, Part I, figuring the percentage of her home used for business, including the percentage of time the basement was used. How to file 2012 federal tax return In Part II, Mary figures her deductible expenses. How to file 2012 federal tax return She uses the following information to complete Part II. How to file 2012 federal tax return Gross income from her daycare business $50,000 Expenses not related to the business use of the home $25,000 Tentative profit $25,000 Rent $8,400 Utilities $850 Painting the basement $500 Mary enters her tentative profit, $25,000, on line 8. How to file 2012 federal tax return (This figure is the same as the amount on line 29 of her Schedule C (Form 1040). How to file 2012 federal tax return ) The expenses she paid for rent and utilities relate to her entire home. How to file 2012 federal tax return Therefore, she enters the amount paid for rent on line 18, column (b), and the amount paid for utilities on line 20, column (b). How to file 2012 federal tax return She shows the total of these expenses on line 22, column (b). How to file 2012 federal tax return For line 23, she multiplies the amount on line 22, column (b) by the percentage on line 7 and enters the result, $1,585. How to file 2012 federal tax return Mary paid $500 to have the basement painted. How to file 2012 federal tax return The painting is a direct expense. How to file 2012 federal tax return However, because she did not use the basement exclusively for daycare, she must multiply $500 by the percentage of time the basement was used for daycare (34. How to file 2012 federal tax return 25% – line 6). How to file 2012 federal tax return She enters $171 (34. How to file 2012 federal tax return 25% × $500) on line 19, column (a). How to file 2012 federal tax return She adds line 22, column (a), and line 23 and enters $1,756 ($171 + $1,585) on line 25. How to file 2012 federal tax return This is less than her deduction limit (line 15), so she can deduct the entire amount. How to file 2012 federal tax return She follows the instructions to complete the rest of Part II and enters $1,756 on lines 33 and 35. How to file 2012 federal tax return She then carries the $1,756 to line 30 of her Schedule C (Form 1040). How to file 2012 federal tax return Example 2. How to file 2012 federal tax return Assume the same facts as in Example 1 except that Mary also has another room that was available each business day for children to take naps in. How to file 2012 federal tax return Although she did not keep a record of the number of hours the room was actually used for naps, it was used for part of each business day. How to file 2012 federal tax return Since the room was available for business use during regular operating hours each business day and was used regularly in the business, it is considered used for daycare throughout each business day. How to file 2012 federal tax return The basement and room are 60% of the total area of her home. How to file 2012 federal tax return In figuring her expenses, 34. How to file 2012 federal tax return 25% of any direct expenses for the basement and room are deductible. How to file 2012 federal tax return In addition, 20. How to file 2012 federal tax return 55% (34. How to file 2012 federal tax return 25% × 60%) of her indirect expenses are deductible. How to file 2012 federal tax return Example 3. How to file 2012 federal tax return Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, 2013. How to file 2012 federal tax return She used the basement for daycare an average of 12 hours a day, 5 days a week, but for only 25 weeks of the year. How to file 2012 federal tax return During the other 12 hours a day, the family could still use the basement. How to file 2012 federal tax return She figures the percentage of time the basement was used for business as follows. How to file 2012 federal tax return Number of hours used for daycare (12 x 5 x 25) Total number of hours during period used (24 x 175) = 1,500 4,200 = 35. How to file 2012 federal tax return 71%           Mary can deduct 35. How to file 2012 federal tax return 71% of any direct expenses for the basement. How to file 2012 federal tax return However, because her indirect expenses are for the entire house, she can deduct only 17. How to file 2012 federal tax return 86% of the indirect expenses. How to file 2012 federal tax return She figures the percentage for her indirect expenses as follows. How to file 2012 federal tax return Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 35. How to file 2012 federal tax return 71% Percentage for indirect expenses 17. How to file 2012 federal tax return 86% Meals. How to file 2012 federal tax return   If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. How to file 2012 federal tax return Claim it as a separate deduction on your Schedule C (Form 1040). How to file 2012 federal tax return You can never deduct the cost of food consumed by you or your family. How to file 2012 federal tax return You can deduct as a business expense 100% of the actual cost of food consumed by your daycare recipients (see Standard meal and snack rates , later, for an optional method for eligible children) and generally only 50% of the cost of food consumed by your employees. How to file 2012 federal tax return However, you can deduct 100% of the cost of food consumed by your employees if its value can be excluded from their wages as a de minimis fringe benefit. How to file 2012 federal tax return For more information on meals that meet these requirements, see Meals in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. How to file 2012 federal tax return   If you deduct the actual cost of food for your daycare business, keep a separate record (with receipts) of your family's food costs. How to file 2012 federal tax return   Reimbursements you receive from a sponsor under the Child and Adult Care Food Program of the Department of Agriculture are taxable only to the extent they exceed your expenses for food for eligible children. How to file 2012 federal tax return If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). How to file 2012 federal tax return If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C (Form 1040). How to file 2012 federal tax return Do not include payments or expenses for your own children if they are eligible for the program. How to file 2012 federal tax return Follow this procedure even if you receive a Form 1099-MISC, Miscellaneous Income, reporting a payment from the sponsor. How to file 2012 federal tax return Standard meal and snack rates. How to file 2012 federal tax return   If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. How to file 2012 federal tax return For these purposes: A family daycare provider is a person engaged in the business of providing family daycare. How to file 2012 federal tax return Family daycare is childcare provided to eligible children in the home of the family daycare provider. How to file 2012 federal tax return The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day. How to file 2012 federal tax return Eligible children are minor children receiving family daycare in the home of the family daycare provider. How to file 2012 federal tax return Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home. How to file 2012 federal tax return Eligible children do not include children who receive daycare services for personal reasons of the provider. How to file 2012 federal tax return For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. How to file 2012 federal tax return   You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown in Table 3, later. How to file 2012 federal tax return You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. How to file 2012 federal tax return If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement. How to file 2012 federal tax return   You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. How to file 2012 federal tax return If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year. How to file 2012 federal tax return However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year. How to file 2012 federal tax return   If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. How to file 2012 federal tax return The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. How to file 2012 federal tax return This information can be recorded in a log similar to the one shown in Exhibit A, near the end of this publication. How to file 2012 federal tax return   The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils. How to file 2012 federal tax return These expenses can be claimed as a separate deduction on your Schedule C (Form 1040). How to file 2012 federal tax return     Table 3. How to file 2012 federal tax return Standard Meal and Snack Rates1 Location of Family Daycare Provider Breakfast Lunch Dinner Snack States other than Alaska an