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Irs 1040ez 2011

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Irs 1040ez 2011

Irs 1040ez 2011 Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Irs 1040ez 2011 S. Irs 1040ez 2011 Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Irs 1040ez 2011 Full-time student. Irs 1040ez 2011 Adjusted gross income. Irs 1040ez 2011 More information. Irs 1040ez 2011 Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Irs 1040ez 2011 Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Irs 1040ez 2011 Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Irs 1040ez 2011 You are a member of a religious order who has taken a vow of poverty. Irs 1040ez 2011 You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Irs 1040ez 2011 See Exemption From Self-Employment (SE) Tax , later. Irs 1040ez 2011 You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Irs 1040ez 2011 For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Irs 1040ez 2011 Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Irs 1040ez 2011 See Ministerial Services , later. Irs 1040ez 2011 Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Irs 1040ez 2011 However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Irs 1040ez 2011 For the specific services covered, see Ministerial Services , later. Irs 1040ez 2011 Ministers defined. Irs 1040ez 2011   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Irs 1040ez 2011 Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Irs 1040ez 2011   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Irs 1040ez 2011 Employment status for other tax purposes. Irs 1040ez 2011   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Irs 1040ez 2011 For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Irs 1040ez 2011 Common-law employee. Irs 1040ez 2011   Under common-law rules, you are considered either an employee or a self-employed person. Irs 1040ez 2011 Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Irs 1040ez 2011 For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Irs 1040ez 2011   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Irs 1040ez 2011 However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Irs 1040ez 2011 Example. Irs 1040ez 2011 A church hires and pays you a salary to perform ministerial services subject to its control. Irs 1040ez 2011 Under the common-law rules, you are an employee of the church while performing those services. Irs 1040ez 2011 Form SS-8. Irs 1040ez 2011   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Irs 1040ez 2011 Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Irs 1040ez 2011 See Ministerial Services , later. Irs 1040ez 2011 However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Irs 1040ez 2011 Vow of poverty. Irs 1040ez 2011   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Irs 1040ez 2011 You do not need to request a separate exemption. Irs 1040ez 2011 For income tax purposes, the earnings are tax free to you. Irs 1040ez 2011 Your earnings are considered the income of the religious order. Irs 1040ez 2011 Services covered under FICA at the election of the order. Irs 1040ez 2011   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Irs 1040ez 2011 Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Irs 1040ez 2011   The order or subdivision elects coverage by filing Form SS-16. Irs 1040ez 2011 The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Irs 1040ez 2011 If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Irs 1040ez 2011 You do not pay any of the FICA tax. Irs 1040ez 2011 Services performed outside the order. Irs 1040ez 2011   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Irs 1040ez 2011   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Irs 1040ez 2011 You may, however, be able to take a charitable deduction for the amount you turn over to the order. Irs 1040ez 2011 See Publication 526, Charitable Contributions. Irs 1040ez 2011 Rulings. Irs 1040ez 2011   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Irs 1040ez 2011 To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Irs 1040ez 2011 R. Irs 1040ez 2011 B. Irs 1040ez 2011 1, available at www. Irs 1040ez 2011 irs. Irs 1040ez 2011 gov/irb/2014-1_IRB/ar05. Irs 1040ez 2011 html. Irs 1040ez 2011 Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Irs 1040ez 2011 However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Irs 1040ez 2011 Practitioners. Irs 1040ez 2011   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Irs 1040ez 2011 State law specifically exempts Christian Science practitioners from licensing requirements. Irs 1040ez 2011   Some Christian Science practitioners also are Christian Science teachers or lecturers. Irs 1040ez 2011 Income from teaching or lecturing is considered the same as income from their work as practitioners. Irs 1040ez 2011 Readers. Irs 1040ez 2011   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Irs 1040ez 2011 Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Irs 1040ez 2011 Some exceptions are discussed next. Irs 1040ez 2011 Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Irs 1040ez 2011 If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Irs 1040ez 2011 Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Irs 1040ez 2011 28 during the tax year. Irs 1040ez 2011 However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Irs 1040ez 2011 Churches and church organizations make this election by filing two copies of Form 8274. Irs 1040ez 2011 For more information about making this election, see Form 8274. Irs 1040ez 2011 Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Irs 1040ez 2011 This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Irs 1040ez 2011 Make this choice by filing Form 4029. Irs 1040ez 2011 See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Irs 1040ez 2011 U. Irs 1040ez 2011 S. Irs 1040ez 2011 Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Irs 1040ez 2011 Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Irs 1040ez 2011 S. Irs 1040ez 2011 social security system. Irs 1040ez 2011 To determine your alien status, see Publication 519, U. Irs 1040ez 2011 S. Irs 1040ez 2011 Tax Guide for Aliens. Irs 1040ez 2011 Residents of Puerto Rico, the U. Irs 1040ez 2011 S. Irs 1040ez 2011 Virgin Islands, Guam, the CNMI, and American Samoa. Irs 1040ez 2011   If you are a resident of one of these U. Irs 1040ez 2011 S. Irs 1040ez 2011 possessions but not a U. Irs 1040ez 2011 S. Irs 1040ez 2011 citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Irs 1040ez 2011 For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Irs 1040ez 2011 Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Irs 1040ez 2011 Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Irs 1040ez 2011 Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Irs 1040ez 2011 The exemption does not apply to any other income. Irs 1040ez 2011 The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Irs 1040ez 2011 Ministers Most services you perform as a minister, priest, rabbi, etc. Irs 1040ez 2011 , are ministerial services. Irs 1040ez 2011 These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Irs 1040ez 2011 You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Irs 1040ez 2011 A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Irs 1040ez 2011 Services for nonreligious organizations. Irs 1040ez 2011   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Irs 1040ez 2011 Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Irs 1040ez 2011   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Irs 1040ez 2011 Services that are not part of your ministry. Irs 1040ez 2011   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Irs 1040ez 2011 The following are not ministerial services. Irs 1040ez 2011 Services you perform for nonreligious organizations other than the services stated above. Irs 1040ez 2011 Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Irs 1040ez 2011 These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Irs 1040ez 2011 (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Irs 1040ez 2011 ) Services you perform in a government-owned and operated hospital. Irs 1040ez 2011 (These services are considered performed by a government employee, not by a minister as part of the ministry. Irs 1040ez 2011 ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Irs 1040ez 2011 Books or articles. Irs 1040ez 2011   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Irs 1040ez 2011   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Irs 1040ez 2011 Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Irs 1040ez 2011 The services are considered ministerial because you perform them as an agent of the order. Irs 1040ez 2011 For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Irs 1040ez 2011 However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Irs 1040ez 2011 Effect of employee status. Irs 1040ez 2011   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Irs 1040ez 2011 In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Irs 1040ez 2011 This result is true even if you have taken a vow of poverty. Irs 1040ez 2011 Example. Irs 1040ez 2011 Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Irs 1040ez 2011 They renounce all claims to their earnings. Irs 1040ez 2011 The earnings belong to the order. Irs 1040ez 2011 Pat is a licensed attorney. Irs 1040ez 2011 The superiors of the order instructed her to get a job with a law firm. Irs 1040ez 2011 Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Irs 1040ez 2011 Chris is a secretary. Irs 1040ez 2011 The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Irs 1040ez 2011 Chris took the job and gave all his earnings to the order. Irs 1040ez 2011 Pat's services are not duties required by the order. Irs 1040ez 2011 Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Irs 1040ez 2011 Chris' services are duties required by the order. Irs 1040ez 2011 He is acting as an agent of the order and not as an employee of a third party. Irs 1040ez 2011 He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Irs 1040ez 2011 Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Irs 1040ez 2011 Amounts you receive for performing these services are generally subject to SE tax. Irs 1040ez 2011 You may request an exemption from SE tax, discussed next, which applies only to those services. Irs 1040ez 2011 Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Irs 1040ez 2011 Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Irs 1040ez 2011 They do not have to request the exemption. Irs 1040ez 2011 Who cannot be exempt. Irs 1040ez 2011   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Irs 1040ez 2011 These elections are irrevocable. Irs 1040ez 2011 You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Irs 1040ez 2011 You elected before 1968 to be covered under social security for your ministerial services. Irs 1040ez 2011 Requesting exemption. Irs 1040ez 2011    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Irs 1040ez 2011 More detailed explanations follow. Irs 1040ez 2011 If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Irs 1040ez 2011 It does not apply to any other self-employment income. Irs 1040ez 2011 Table 2. Irs 1040ez 2011 The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Irs 1040ez 2011 You file Form 4361, described below under Requesting Exemption—Form 4361 . Irs 1040ez 2011 You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Irs 1040ez 2011 You file for other than economic reasons. Irs 1040ez 2011 You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Irs 1040ez 2011 This requirement does not apply to Christian Science practitioners or readers. Irs 1040ez 2011 You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Irs 1040ez 2011 You establish that the organization is a church or a convention or association of churches. Irs 1040ez 2011 You did not make an election discussed earlier under Who cannot be exempt . Irs 1040ez 2011 You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Irs 1040ez 2011 Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Irs 1040ez 2011 The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Irs 1040ez 2011 If it is approved, keep the approved copy of Form 4361 in your permanent records. Irs 1040ez 2011 When to file. Irs 1040ez 2011   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Irs 1040ez 2011 You have net earnings from self-employment of at least $400. Irs 1040ez 2011 Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Irs 1040ez 2011 The 2 years do not have to be consecutive tax years. Irs 1040ez 2011    The approval process can take some time, so you should file Form 4361 as soon as possible. Irs 1040ez 2011 Example 1. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Irs 1040ez 2011 He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Irs 1040ez 2011 However, if Rev. Irs 1040ez 2011 Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Irs 1040ez 2011 Example 2. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Irs 1040ez 2011 She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Irs 1040ez 2011 However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Irs 1040ez 2011 Example 3. Irs 1040ez 2011 In 2011, Rev. Irs 1040ez 2011 David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Irs 1040ez 2011 In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Irs 1040ez 2011 Therefore, he had no net self-employment earnings as a minister in 2012. Irs 1040ez 2011 Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Irs 1040ez 2011 In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Irs 1040ez 2011 Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Irs 1040ez 2011 Death of individual. Irs 1040ez 2011   The right to file an application for exemption ends with an individual's death. Irs 1040ez 2011 A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Irs 1040ez 2011 Effective date of exemption. Irs 1040ez 2011   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Irs 1040ez 2011 Once the exemption is approved, it is irrevocable. Irs 1040ez 2011 Example. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Irs 1040ez 2011 She files an application for exemption on February 20, 2014. Irs 1040ez 2011 If an exemption is granted, it is effective for 2010 and the following years. Irs 1040ez 2011 Refunds of SE tax. Irs 1040ez 2011   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Irs 1040ez 2011 Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Irs 1040ez 2011 A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Irs 1040ez 2011   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Irs 1040ez 2011 Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Irs 1040ez 2011 Exception. Irs 1040ez 2011   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Irs 1040ez 2011 However, if you pay your benefits back, you may be considered for exemption. Irs 1040ez 2011 Contact your local Social Security Administration office to find out the amount you must pay back. Irs 1040ez 2011 Eligibility requirements. Irs 1040ez 2011   To claim this exemption from SE tax, all the following requirements must be met. Irs 1040ez 2011 You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Irs 1040ez 2011 As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Irs 1040ez 2011 You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Irs 1040ez 2011 The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Irs 1040ez 2011 Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Irs 1040ez 2011 The sect or division must complete part of the form. Irs 1040ez 2011 The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Irs 1040ez 2011 If it is approved, keep the approved copy of Form 4029 in your permanent records. Irs 1040ez 2011 When to file. Irs 1040ez 2011   You can file Form 4029 at any time. Irs 1040ez 2011   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Irs 1040ez 2011 See Effective date of exemption next for information on when the newly approved exemption would become effective. Irs 1040ez 2011    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Irs 1040ez 2011 Effective date of exemption. Irs 1040ez 2011   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Irs 1040ez 2011 (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Irs 1040ez 2011 )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Irs 1040ez 2011 You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Irs 1040ez 2011 The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Irs 1040ez 2011 Refunds of SE tax paid. Irs 1040ez 2011    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Irs 1040ez 2011 For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Irs 1040ez 2011 Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Irs 1040ez 2011 Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Irs 1040ez 2011 A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Irs 1040ez 2011 If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Irs 1040ez 2011 Information for employers. Irs 1040ez 2011   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Irs 1040ez 2011   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Irs 1040ez 2011 Form W-2. Irs 1040ez 2011   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Irs 1040ez 2011 ” Do not make any entries in boxes 3, 4, 5, or 6. Irs 1040ez 2011 Forms 941, 943, and 944. Irs 1040ez 2011   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Irs 1040ez 2011 Instead, follow the instructions given below. Irs 1040ez 2011 Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Irs 1040ez 2011 Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Irs 1040ez 2011 Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Irs 1040ez 2011 Effective date. Irs 1040ez 2011   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Irs 1040ez 2011 The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Irs 1040ez 2011 Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Irs 1040ez 2011 Regular method. Irs 1040ez 2011 Nonfarm optional method. Irs 1040ez 2011 You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Irs 1040ez 2011 Blank worksheets are in the back of this publication, after the Comprehensive Example. Irs 1040ez 2011 Regular Method Most people use the regular method. Irs 1040ez 2011 Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Irs 1040ez 2011 Then, subtract your allowable business deductions and multiply the difference by 92. Irs 1040ez 2011 35% (. Irs 1040ez 2011 9235). Irs 1040ez 2011 Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Irs 1040ez 2011 If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Irs 1040ez 2011 35% (. Irs 1040ez 2011 9235). Irs 1040ez 2011 Do not reduce your wages by any business deductions when making this computation. Irs 1040ez 2011 Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Irs 1040ez 2011 If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Irs 1040ez 2011 Amounts included in gross income. Irs 1040ez 2011   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Irs 1040ez 2011 , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Irs 1040ez 2011 This amount is also subject to income tax. Irs 1040ez 2011   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Irs 1040ez 2011 Example. Irs 1040ez 2011 Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Irs 1040ez 2011 The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Irs 1040ez 2011 His church owns a parsonage that has a fair rental value of $12,000 per year. Irs 1040ez 2011 The church gives Pastor Adams the use of the parsonage. Irs 1040ez 2011 He is not exempt from SE tax. Irs 1040ez 2011 He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Irs 1040ez 2011 The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Irs 1040ez 2011 Overseas duty. Irs 1040ez 2011   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Irs 1040ez 2011 S. Irs 1040ez 2011 citizen or resident alien serving abroad and living in a foreign country. Irs 1040ez 2011   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Irs 1040ez 2011 Example. Irs 1040ez 2011 Diane Jones was the minister of a U. Irs 1040ez 2011 S. Irs 1040ez 2011 church in Mexico. Irs 1040ez 2011 She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Irs 1040ez 2011 The United States does not have a social security agreement with Mexico, so Mrs. Irs 1040ez 2011 Jones is subject to U. Irs 1040ez 2011 S. Irs 1040ez 2011 SE tax and must include $35,000 when figuring net earnings from self-employment. Irs 1040ez 2011 Specified U. Irs 1040ez 2011 S. Irs 1040ez 2011 possessions. Irs 1040ez 2011    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Irs 1040ez 2011 Also see Residents of Puerto Rico, the U. Irs 1040ez 2011 S. Irs 1040ez 2011 Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Irs 1040ez 2011 S. Irs 1040ez 2011 Citizens and Resident and Nonresident Aliens. Irs 1040ez 2011 Amounts not included in gross income. Irs 1040ez 2011   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Irs 1040ez 2011 Offerings that others made to the church. Irs 1040ez 2011 Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Irs 1040ez 2011 Pension payments or retirement allowances you receive for your past ministerial services. Irs 1040ez 2011 The rental value of a parsonage or a parsonage allowance provided to you after you retire. Irs 1040ez 2011 Allowable deductions. Irs 1040ez 2011   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Irs 1040ez 2011 These are ministerial expenses you incurred while working other than as a common-law employee of the church. Irs 1040ez 2011 They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Irs 1040ez 2011 Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Irs 1040ez 2011   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Irs 1040ez 2011 Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Irs 1040ez 2011 Do not complete Schedule C or C-EZ (Form 1040). Irs 1040ez 2011 However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Irs 1040ez 2011 Employee reimbursement arrangements. Irs 1040ez 2011   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Irs 1040ez 2011 Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Irs 1040ez 2011 Accountable plans. Irs 1040ez 2011   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Irs 1040ez 2011 Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Irs 1040ez 2011 You must adequately account to your employer for these expenses within a reasonable period of time. Irs 1040ez 2011 You must return any excess reimbursement or allowance within a reasonable period of time. Irs 1040ez 2011   The reimbursement is not reported on your Form W-2. Irs 1040ez 2011 Generally, if your expenses equal your reimbursement, you have no deduction. Irs 1040ez 2011 If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Irs 1040ez 2011 Nonaccountable plan. Irs 1040ez 2011   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Irs 1040ez 2011 In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Irs 1040ez 2011 Excess reimbursements you fail to return to your employer. Irs 1040ez 2011 Reimbursement of nondeductible expenses related to your employer's business. Irs 1040ez 2011   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Irs 1040ez 2011 Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Irs 1040ez 2011   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs 1040ez 2011 Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Irs 1040ez 2011 If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Irs 1040ez 2011 Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Irs 1040ez 2011 The tax rate for the social security part is 12. Irs 1040ez 2011 4%. Irs 1040ez 2011 In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Irs 1040ez 2011 This tax rate is 2. Irs 1040ez 2011 9%. Irs 1040ez 2011 The combined self-employment tax rate is 15. Irs 1040ez 2011 3%. Irs 1040ez 2011 Additional Medicare Tax. Irs 1040ez 2011   Beginning in 2013, a 0. Irs 1040ez 2011 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Irs 1040ez 2011 Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Irs 1040ez 2011 A self-employment loss is not considered for purposes of this tax. Irs 1040ez 2011 RRTA compensation is separately compared to the threshold. Irs 1040ez 2011 For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Irs 1040ez 2011 Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Irs 1040ez 2011 In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Irs 1040ez 2011 You may use the nonfarm optional method if you meet all the following tests. Irs 1040ez 2011 You are self-employed on a regular basis. Irs 1040ez 2011 You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Irs 1040ez 2011 The net earnings can be from either farm or nonfarm earnings or both. Irs 1040ez 2011 You have used this method less than 5 prior years. Irs 1040ez 2011 (There is a 5-year lifetime limit. Irs 1040ez 2011 ) The years do not have to be consecutive. Irs 1040ez 2011 Your net nonfarm profits were: Less than $5,024, and Less than 72. Irs 1040ez 2011 189% of your gross nonfarm income. Irs 1040ez 2011 If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Irs 1040ez 2011 Table 3. Irs 1040ez 2011 Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Irs 1040ez 2011 . Irs 1040ez 2011 . Irs 1040ez 2011 THEN your net earnings are equal to . Irs 1040ez 2011 . Irs 1040ez 2011 . Irs 1040ez 2011 $6,960 or less Two-thirds of your gross nonfarm income. Irs 1040ez 2011 More than $6,960 $4,640. Irs 1040ez 2011 Actual net earnings. Irs 1040ez 2011   Multiply your total earnings subject to SE tax by 92. Irs 1040ez 2011 35% (. Irs 1040ez 2011 9235) to get actual net earnings. Irs 1040ez 2011 Actual net earnings are equivalent to net earnings under the “Regular Method. Irs 1040ez 2011 ” More information. Irs 1040ez 2011   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Irs 1040ez 2011 Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Irs 1040ez 2011 Note. Irs 1040ez 2011 For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Irs 1040ez 2011 Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Irs 1040ez 2011 Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Irs 1040ez 2011 , in addition to your salary. Irs 1040ez 2011 If the offering is made to the religious institution, it is not taxable to you. Irs 1040ez 2011 Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Irs 1040ez 2011 However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Irs 1040ez 2011 For more information, see Publication 526. Irs 1040ez 2011 Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Irs 1040ez 2011 Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Irs 1040ez 2011 This exclusion applies only for income tax purposes. Irs 1040ez 2011 It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Irs 1040ez 2011 Designation requirement. Irs 1040ez 2011   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Irs 1040ez 2011 It must designate a definite amount. Irs 1040ez 2011 It cannot determine the amount of the housing allowance at a later date. Irs 1040ez 2011 If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Irs 1040ez 2011   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Irs 1040ez 2011 The local congregation must officially designate the part of your salary that is a housing allowance. Irs 1040ez 2011 However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Irs 1040ez 2011 Rental allowances. Irs 1040ez 2011   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Irs 1040ez 2011   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Irs 1040ez 2011 Fair rental value of parsonage. Irs 1040ez 2011   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Irs 1040ez 2011 However, the exclusion cannot be more than the reasonable pay for your services. Irs 1040ez 2011 If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Irs 1040ez 2011 Example. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Joanna Baker is a full-time minister. Irs 1040ez 2011 The church allows her to use a parsonage that has an annual fair rental value of $24,000. Irs 1040ez 2011 The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Irs 1040ez 2011 Her actual utility costs during the year were $7,000. Irs 1040ez 2011 For income tax purposes, Rev. Irs 1040ez 2011 Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Irs 1040ez 2011 She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Irs 1040ez 2011 Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Irs 1040ez 2011 Home ownership. Irs 1040ez 2011   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Irs 1040ez 2011 Excess rental allowance. Irs 1040ez 2011   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Irs 1040ez 2011   Include in the total on Form 1040, line 7. Irs 1040ez 2011 On the dotted line next to line 7, enter “Excess allowance” and the amount. Irs 1040ez 2011 You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Irs 1040ez 2011 However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Irs 1040ez 2011 Retired ministers. Irs 1040ez 2011   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Irs 1040ez 2011 However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Irs 1040ez 2011 Teachers or administrators. Irs 1040ez 2011   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Irs 1040ez 2011 However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Irs 1040ez 2011    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Irs 1040ez 2011 In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Irs 1040ez 2011   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Irs 1040ez 2011 Theological students. Irs 1040ez 2011   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Irs 1040ez 2011 Traveling evangelists. Irs 1040ez 2011   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Irs 1040ez 2011 You are an ordained minister. Irs 1040ez 2011 You perform ministerial services at churches located away from your community. Irs 1040ez 2011 You actually use the rental allowance to maintain your permanent home. Irs 1040ez 2011 Cantors. Irs 1040ez 2011   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Irs 1040ez 2011 Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Irs 1040ez 2011 See Members of Religious Orders , earlier, under Social Security Coverage. Irs 1040ez 2011 Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Irs 1040ez 2011 S. Irs 1040ez 2011 possession. Irs 1040ez 2011 Publication 54 discusses the foreign earned income exclusion. Irs 1040ez 2011 Publication 570, Tax Guide for Individuals With Income From U. Irs 1040ez 2011 S. Irs 1040ez 2011 Possessions, covers the rules for taxpayers with income from U. Irs 1040ez 2011 S. Irs 1040ez 2011 possessions. Irs 1040ez 2011 You can get these free publications from the Internal Revenue Service at IRS. Irs 1040ez 2011 gov or from most U. Irs 1040ez 2011 S. Irs 1040ez 2011 Embassies or consulates. Irs 1040ez 2011 Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Irs 1040ez 2011 Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Irs 1040ez 2011 You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Irs 1040ez 2011 You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Irs 1040ez 2011 See Publication 529 for more information on this limit. Irs 1040ez 2011 However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Irs 1040ez 2011 Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Irs 1040ez 2011 You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Irs 1040ez 2011 Exception. Irs 1040ez 2011   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Irs 1040ez 2011 Figuring the allocation. Irs 1040ez 2011   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Irs 1040ez 2011    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Irs 1040ez 2011 Example. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Irs 1040ez 2011 He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Irs 1040ez 2011 $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Irs 1040ez 2011 Rev. Irs 1040ez 2011 Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Irs 1040ez 2011 Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Irs 1040ez 2011   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Irs 1040ez 2011 The statement must contain all of the following information. Irs 1040ez 2011 A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Irs 1040ez 2011 ) plus the amount. Irs 1040ez 2011 A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Irs 1040ez 2011 A list of each item of otherwise deductible ministerial expenses plus the amount. Irs 1040ez 2011 How you figured the nondeductible part of your otherwise deductible expenses. Irs 1040ez 2011 A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Irs 1040ez 2011   See the attachments prepared for the Comprehensive Example , later. Irs 1040ez 2011 Following the example, you will find blank worksheets for your own use. Irs 1040ez 2011 Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Irs 1040ez 2011 If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Irs 1040ez 2011 See the Instructions for Form 1040 to figure your deduction. Irs 1040ez 2011 The following special rules apply to the self-employed health insurance deduction. Irs 1040ez 2011 You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Irs 1040ez 2011 You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Irs 1040ez 2011 The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Irs 1040ez 2011 Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Irs 1040ez 2011 More information. Irs 1040ez 2011   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Irs 1040ez 2011 Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Irs 1040ez 2011 This is an income tax deduction only, on Form 1040, line 27. Irs 1040ez 2011 Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Irs 1040ez 2011 Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Irs 1040ez 2011 You must pay the tax as you earn or receive income during the year. Irs 1040ez 2011 An employee usually has income tax withheld from his or her wages or salary. Irs 1040ez 2011 However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Irs 1040ez 2011 You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Irs 1040ez 2011 Your salary is for ministerial services (see Ministerial Services , earlier). Irs 1040ez 2011 If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Irs 1040ez 2011 You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Irs 1040ez 2011 Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Irs 1040ez 2011 Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Irs 1040ez 2011 See Form 1040-ES for the different payment methods. Irs 1040ez 2011 The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Irs 1040ez 2011 For more information, see chapter 2 of Publication 505. Irs 1040ez 2011 If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Irs 1040ez 2011 Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Irs 1040ez 2011 Table 4. Irs 1040ez 2011 2013 Filing Requirements for Most Taxpayers IF your filing status is . Irs 1040ez 2011 . Irs 1040ez 2011 . Irs 1040ez 2011 AND at the end of 2013 you were* . Irs 1040ez 2011 . Irs 1040ez 2011 . Irs 1040ez 2011 THEN file a return if your gross income** was at least . Irs 1040ez 2011 . Irs 1040ez 2011 . Irs 1040ez 2011 single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Irs 1040ez 2011 ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Irs 1040ez 2011 Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Irs 1040ez 2011 If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Irs 1040ez 2011 Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Irs 1040ez 2011 Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Irs 1040ez 2011 But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Irs 1040ez 2011 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Irs 1040ez 2011 Additional requirements. Irs 1040ez 2011   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Irs 1040ez 2011 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Irs 1040ez 2011 Self-employment tax. Irs 1040ez 2011   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Irs 1040ez 2011   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Irs 1040ez 2011 You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Irs 1040ez 2011 You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Irs 1040ez 2011 However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Irs 1040ez 2011 Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Irs 1040ez 2011 Note. Irs 1040ez 2011 For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Irs 1040ez 2011 You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Irs 1040ez 2011 Exemption from SE tax. Irs 1040ez 2011   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Irs 1040ez 2011 Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Irs 1040ez 2011 However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Irs 1040ez 2011    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Irs 1040ez 2011 Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Irs 1040ez 2011 More information. Irs 1040ez 2011   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Irs 1040ez 2011 Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Irs 1040ez 2011 You generally can deduct your contributions to the plan. Irs 1040ez 2011 Your contributions and the earnings on them are not taxed until they are distributed. Irs 1040ez 2011 Retirement plans for the self-employed. Irs 1040ez 2011   To set up one of the following plans you must be self-employed. Irs 1040ez 2011 SEP (simplified employee pension) plan. Irs 1040ez 2011 SIMPLE (savings incentive match plan for employees) plan. Irs 1040ez 2011 Qualified retirement plan (also called a Keogh or H. Irs 1040ez 2011 R. Irs 1040ez 2011 10 plan). Irs 1040ez 2011   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Irs 1040ez 2011 See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Irs 1040ez 2011 This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Irs 1040ez 2011   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Irs 1040ez 2011 You are not a self-employed person for purposes of setting up a retirement plan. Irs 1040ez 2011 This result is true even if your salary is subject to SE tax. Irs 1040ez 2011   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Irs 1040ez 2011   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Irs 1040ez 2011 Individual retirement arrangements (IRAs). Irs 1040ez 2011   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Irs 1040ez 2011 Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Irs 1040ez 2011   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Irs 1040ez 2011 You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Irs 1040ez 2011   If you contribute to a traditional IRA, your contribution may be deductible. Irs 1040ez 2011 However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Irs 1040ez 2011   For more information on IRAs, see Publication 590. Irs 1040ez 2011 Tax-sheltered annuity plans. Irs 1040ez 2011   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Irs 1040ez 2011 For more
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The Irs 1040ez 2011

Irs 1040ez 2011 24. Irs 1040ez 2011   Contributions Table of Contents Introduction Useful Items - You may want to see: Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions of PropertyException. Irs 1040ez 2011 Household items. Irs 1040ez 2011 Deduction more than $500. Irs 1040ez 2011 Form 1098-C. Irs 1040ez 2011 Filing deadline approaching and still no Form 1098-C. Irs 1040ez 2011 Exception 1—vehicle used or improved by organization. Irs 1040ez 2011 Exception 2—vehicle given or sold to needy individual. Irs 1040ez 2011 Deduction $500 or less. Irs 1040ez 2011 Right to use property. Irs 1040ez 2011 Tangible personal property. Irs 1040ez 2011 Future interest. Irs 1040ez 2011 Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value When To DeductChecks. Irs 1040ez 2011 Text message. Irs 1040ez 2011 Credit card. Irs 1040ez 2011 Pay-by-phone account. Irs 1040ez 2011 Stock certificate. Irs 1040ez 2011 Promissory note. Irs 1040ez 2011 Option. Irs 1040ez 2011 Borrowed funds. Irs 1040ez 2011 Limits on DeductionsCarryovers Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To Report Introduction This chapter explains how to claim a deduction for your charitable contributions. Irs 1040ez 2011 It discusses the following topics. Irs 1040ez 2011 The types of organizations to which you can make deductible charitable contributions. Irs 1040ez 2011 The types of contributions you can deduct. Irs 1040ez 2011 How much you can deduct. Irs 1040ez 2011 What records you must keep. Irs 1040ez 2011 How to report your charitable contributions. Irs 1040ez 2011 A charitable contribution is a donation or gift to, or for the use of, a qualified organization. Irs 1040ez 2011 It is voluntary and is made without getting, or expecting to get, anything of equal value. Irs 1040ez 2011 Form 1040 required. Irs 1040ez 2011    To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. Irs 1040ez 2011 The amount of your deduction may be limited if certain rules and limits explained in this chapter apply to you. Irs 1040ez 2011 The limits are explained in detail in Publication 526. Irs 1040ez 2011 Useful Items - You may want to see: Publication 526 Charitable Contributions 561 Determining the Value of Donated Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 8283 Noncash Charitable Contributions Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Irs 1040ez 2011 Most organizations other than churches and governments must apply to the IRS to become a qualified organization. Irs 1040ez 2011 How to check whether an organization can receive deductible charitable contributions. Irs 1040ez 2011   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Irs 1040ez 2011 Or go to IRS. Irs 1040ez 2011 gov. Irs 1040ez 2011 Click on “Tools” and then on “Exempt Organizations Select Check” (www. Irs 1040ez 2011 irs. Irs 1040ez 2011 gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Irs 1040ez 2011 This online tool will enable you to search for qualified organizations. Irs 1040ez 2011 You can also call the IRS to find out if an organization is qualified. Irs 1040ez 2011 Call 1-877-829-5500. Irs 1040ez 2011 People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Irs 1040ez 2011 Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Irs 1040ez 2011 gsa. Irs 1040ez 2011 gov/fedrelay. Irs 1040ez 2011 Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Irs 1040ez 2011 A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Irs 1040ez 2011 It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Irs 1040ez 2011 Certain organizations that foster national or international amateur sports competition also qualify. Irs 1040ez 2011 War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Irs 1040ez 2011 Domestic fraternal societies, orders, and associations operating under the lodge system. Irs 1040ez 2011 (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Irs 1040ez 2011 ) Certain nonprofit cemetery companies or corporations. Irs 1040ez 2011 (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Irs 1040ez 2011 ) The United States or any state, the District of Columbia, a U. Irs 1040ez 2011 S. Irs 1040ez 2011 possession (including Puerto Rico), a political subdivision of a state or U. Irs 1040ez 2011 S. Irs 1040ez 2011 possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Irs 1040ez 2011 (Your contribution to this type of organization is only deductible if it is to be used solely for public purposes. Irs 1040ez 2011 ) Examples. Irs 1040ez 2011    The following list gives some examples of qualified organizations. Irs 1040ez 2011 Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Irs 1040ez 2011 Most nonprofit charitable organizations such as the American Red Cross and the United Way. Irs 1040ez 2011 Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Irs 1040ez 2011 This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Irs 1040ez 2011 However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Irs 1040ez 2011 Nonprofit hospitals and medical research organizations. Irs 1040ez 2011 Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Irs 1040ez 2011 Nonprofit volunteer fire companies. Irs 1040ez 2011 Nonprofit organizations that develop and maintain public parks and recreation facilities. Irs 1040ez 2011 Civil defense organizations. Irs 1040ez 2011 Certain foreign charitable organizations. Irs 1040ez 2011   Under income tax treaties with Canada, Israel, and Mexico, you may be able to deduct contributions to certain Canadian, Israeli, or Mexican charitable organizations. Irs 1040ez 2011 Generally, you must have income from sources in that country. Irs 1040ez 2011 For additional information on the deduction of contributions to Canadian charities, see Publication 597, Information on the United States–Canada Income Tax Treaty. Irs 1040ez 2011 If you need more information on how to figure your contribution to Mexican and Israeli charities, see Publication 526. Irs 1040ez 2011 Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Irs 1040ez 2011 A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Irs 1040ez 2011 The contributions must be made to a qualified organization and not set aside for use by a specific person. Irs 1040ez 2011 If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Irs 1040ez 2011 See Contributions of Property , later in this chapter. Irs 1040ez 2011 Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Irs 1040ez 2011 See Limits on Deductions , later. Irs 1040ez 2011 In addition, the total of your charitable contribution deduction and certain other itemized deductions may be limited. Irs 1040ez 2011 See chapter 29. Irs 1040ez 2011 Table 24-1 gives examples of contributions you can and cannot deduct. Irs 1040ez 2011 Contributions From Which You Benefit 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. Irs 1040ez 2011 Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Irs 1040ez 2011 If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Irs 1040ez 2011 For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Irs 1040ez 2011 Example 1. Irs 1040ez 2011 You pay $65 for a ticket to a dinner-dance at a church. Irs 1040ez 2011 Your entire $65 payment goes to the church. Irs 1040ez 2011 The ticket to the dinner-dance has a fair market value of $25. Irs 1040ez 2011 When you buy your ticket, you know that its value is less than your payment. Irs 1040ez 2011 To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Irs 1040ez 2011 You can deduct $40 as a contribution to the church. Irs 1040ez 2011 Example 2. Irs 1040ez 2011 At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Irs 1040ez 2011 The amount you pay is no more than the fair rental value. Irs 1040ez 2011 You have not made a deductible charitable contribution. Irs 1040ez 2011 Athletic events. Irs 1040ez 2011   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Irs 1040ez 2011   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Irs 1040ez 2011 Subtract the price of the tickets from your payment. Irs 1040ez 2011 You can deduct 80% of the remaining amount as a charitable contribution. Irs 1040ez 2011 Example 1. Irs 1040ez 2011 You pay $300 a year for membership in a university's athletic scholarship program. Irs 1040ez 2011 The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Irs 1040ez 2011 You can deduct $240 (80% of $300) as a charitable contribution. Irs 1040ez 2011 Table 24-1. Irs 1040ez 2011 Examples of Charitable Contributions—A Quick Check Use the following lists for a quick check of whether you can deduct a contribution. Irs 1040ez 2011 See the rest of this chapter for more information and additional rules and limits that may apply. Irs 1040ez 2011 Deductible As  Charitable Contributions Not Deductible  As Charitable Contributions Money or property you give to:  Churches, synagogues, temples, mosques, and other religious organizations Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park) Nonprofit schools and hospitals The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc. Irs 1040ez 2011 War veterans groups   Expenses paid for a student living with you, sponsored by a qualified organization  Out-of-pocket expenses when you serve a qualified organization as a volunteer Money or property you give to:  Civic leagues, social and sports clubs, labor unions, and chambers of commerce Foreign organizations (except certain Canadian, Israeli, and Mexican charities) Groups that are run for personal profit Groups whose purpose is to lobby for law changes Homeowners' associations Individuals Political groups or candidates for public office   Cost of raffle, bingo, or lottery tickets  Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups  Tuition  Value of your time or services  Value of blood given to a blood bank    Example 2. Irs 1040ez 2011 The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Irs 1040ez 2011 You must subtract the usual price of a ticket ($120) from your $300 payment. Irs 1040ez 2011 The result is $180. Irs 1040ez 2011 Your deductible charitable contribution is $144 (80% of $180). Irs 1040ez 2011 Charity benefit events. Irs 1040ez 2011   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Irs 1040ez 2011   If there is an established charge for the event, that charge is the value of your benefit. Irs 1040ez 2011 If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Irs 1040ez 2011 Whether you use the tickets or other privileges has no effect on the amount you can deduct. Irs 1040ez 2011 However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Irs 1040ez 2011    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Irs 1040ez 2011 If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Irs 1040ez 2011 Example. Irs 1040ez 2011 You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Irs 1040ez 2011 Printed on the ticket is “Contribution—$40. Irs 1040ez 2011 ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Irs 1040ez 2011 Membership fees or dues. Irs 1040ez 2011    You may be able to deduct membership fees or dues you pay to a qualified organization. Irs 1040ez 2011 However, you can deduct only the amount that is more than the value of the benefits you receive. Irs 1040ez 2011    You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Irs 1040ez 2011 They are not qualified organizations. Irs 1040ez 2011 Certain membership benefits can be disregarded. Irs 1040ez 2011   Both you and the organization can disregard the following membership benefits if you receive them in return for an annual payment of $75 or less. Irs 1040ez 2011 Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Irs 1040ez 2011 Admission, while you are a member, to events open only to members of the organization, if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Irs 1040ez 2011 20. Irs 1040ez 2011 Token items. Irs 1040ez 2011   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Irs 1040ez 2011 You receive only a small item or other benefit of token value. Irs 1040ez 2011 The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Irs 1040ez 2011 Written statement. Irs 1040ez 2011   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Irs 1040ez 2011 The statement must say that you can deduct only the amount of your payment that is more than the value of the goods or services you received. Irs 1040ez 2011 It must also give you a good faith estimate of the value of those goods or services. Irs 1040ez 2011   The organization can give you the statement either when it solicits or when it receives the payment from you. Irs 1040ez 2011 Exception. Irs 1040ez 2011   An organization will not have to give you this statement if one of the following is true. Irs 1040ez 2011 The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Irs 1040ez 2011 You receive only items whose value is not substantial as described under Token items , earlier. Irs 1040ez 2011 You receive only membership benefits that can be disregarded, as described earlier. Irs 1040ez 2011 Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Irs 1040ez 2011 You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization as part of a program of the organization to provide educational opportunities for the student, Is not your relative or dependent, and Is a full-time student in the twelfth or any lower grade at a school in the United States. Irs 1040ez 2011 You can deduct up to $50 a month for each full calendar month the student lives with you. Irs 1040ez 2011 Any month when conditions (1) through (3) are met for 15 days or more counts as a full month. Irs 1040ez 2011 For additional information, see Expenses Paid for Student Living With You in Publication 526. Irs 1040ez 2011 Mutual exchange program. Irs 1040ez 2011   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Irs 1040ez 2011 Table 24-2. Irs 1040ez 2011 Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Irs 1040ez 2011 All of the rules explained in this chapter also apply. Irs 1040ez 2011 See, in particular, Out-of-Pocket Expenses in Giving Services . Irs 1040ez 2011 Question Answer I volunteer 6 hours a week in the office of a qualified organization. Irs 1040ez 2011 The receptionist is paid $10 an hour for the same work. Irs 1040ez 2011 Can I deduct $60 a week for my time?    No, you cannot deduct the value of your time or services. Irs 1040ez 2011 The office is 30 miles from my home. Irs 1040ez 2011 Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Irs 1040ez 2011 If you don't want to figure your actual costs, you can deduct 14 cents for each mile. Irs 1040ez 2011 I volunteer as a Red Cross nurse's aide at a hospital. Irs 1040ez 2011 Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Irs 1040ez 2011 I pay a babysitter to watch my children while I volunteer for a qualified organization. Irs 1040ez 2011 Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Irs 1040ez 2011 (If you have childcare expenses so you can work for pay, see chapter 32. Irs 1040ez 2011 ) Out-of-Pocket Expenses in Giving Services Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Irs 1040ez 2011 The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Irs 1040ez 2011 Table 24-2 contains questions and answers that apply to some individuals who volunteer their services. Irs 1040ez 2011 Conventions. Irs 1040ez 2011   If a qualified organization selects you to attend a convention as its representative, you can deduct unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight in connection with the convention. Irs 1040ez 2011 However, see Travel , later. Irs 1040ez 2011   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Irs 1040ez 2011 You also cannot deduct transportation, meals and lodging, and other expenses for your spouse or children. Irs 1040ez 2011    You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Irs 1040ez 2011 You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Irs 1040ez 2011 Uniforms. Irs 1040ez 2011   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Irs 1040ez 2011 Foster parents. Irs 1040ez 2011   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Irs 1040ez 2011 A qualified organization must select the individuals you take into your home for foster care. Irs 1040ez 2011    You can deduct expenses that meet both of the following requirements. Irs 1040ez 2011 They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Irs 1040ez 2011 They are incurred primarily to benefit the qualified organization. Irs 1040ez 2011   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Irs 1040ez 2011 For details, see chapter 3. Irs 1040ez 2011 Example. Irs 1040ez 2011 You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Irs 1040ez 2011 Your unreimbursed expenses are not deductible as charitable contributions. Irs 1040ez 2011 Car expenses. Irs 1040ez 2011   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. Irs 1040ez 2011 You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Irs 1040ez 2011    If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Irs 1040ez 2011   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Irs 1040ez 2011   You must keep reliable written records of your car expenses. Irs 1040ez 2011 For more information, see Car expenses under Records To Keep, later. Irs 1040ez 2011 Travel. Irs 1040ez 2011   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Irs 1040ez 2011 This applies whether you pay the expenses directly or indirectly. Irs 1040ez 2011 You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Irs 1040ez 2011   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Irs 1040ez 2011 Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Irs 1040ez 2011 However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Irs 1040ez 2011 Example 1. Irs 1040ez 2011 You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Irs 1040ez 2011 You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Irs 1040ez 2011 You participate in the activities of the group and enjoy your time with them. Irs 1040ez 2011 You oversee the breaking of camp and you transport the group home. Irs 1040ez 2011 You can deduct your travel expenses. Irs 1040ez 2011 Example 2. Irs 1040ez 2011 You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Irs 1040ez 2011 The project is sponsored by a charitable organization. Irs 1040ez 2011 In most circumstances, you cannot deduct your expenses. Irs 1040ez 2011 Example 3. Irs 1040ez 2011 You work for several hours each morning on an archaeological dig sponsored by a charitable organization. Irs 1040ez 2011 The rest of the day is free for recreation and sightseeing. Irs 1040ez 2011 You cannot take a charitable contribution deduction even though you work very hard during those few hours. Irs 1040ez 2011 Example 4. Irs 1040ez 2011 You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Irs 1040ez 2011 In the evening you go to the theater. Irs 1040ez 2011 You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Irs 1040ez 2011 Daily allowance (per diem). Irs 1040ez 2011   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Irs 1040ez 2011 You may be able to deduct any necessary travel expenses that are more than the allowance. Irs 1040ez 2011 Deductible travel expenses. Irs 1040ez 2011   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Irs 1040ez 2011 Because these travel expenses are not business-related, they are not subject to the same limits as business-related expenses. Irs 1040ez 2011 For information on business travel expenses, see Travel Expenses in chapter 26. Irs 1040ez 2011 Contributions You Cannot Deduct There are some contributions you cannot deduct, such as those made to specific individuals and those made to nonqualified organizations. Irs 1040ez 2011 (See Contributions to Individuals and Contributions to Nonqualified Organizations , next. Irs 1040ez 2011 ) There are others you can deduct only part of, as discussed later under Contributions From Which You Benefit . Irs 1040ez 2011 Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Irs 1040ez 2011 Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members. Irs 1040ez 2011 Contributions to individuals who are needy or worthy. Irs 1040ez 2011 You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Irs 1040ez 2011 But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Irs 1040ez 2011 Example. Irs 1040ez 2011 You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Irs 1040ez 2011 However, you cannot deduct contributions earmarked for relief of a particular individual or family. Irs 1040ez 2011 Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Irs 1040ez 2011 Expenses you paid for another person who provided services to a qualified organization. Irs 1040ez 2011 Example. Irs 1040ez 2011 Your son does missionary work. Irs 1040ez 2011 You pay his expenses. Irs 1040ez 2011 You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Irs 1040ez 2011 Payments to a hospital that are for a specific patient's care or for services for a specific patient. Irs 1040ez 2011 You cannot deduct these payments even if the hospital is operated by a city, a state, or other qualified organization. Irs 1040ez 2011 Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Irs 1040ez 2011 Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Irs 1040ez 2011 Chambers of commerce and other business leagues or organizations (but see chapter 28). Irs 1040ez 2011 Civic leagues and associations. Irs 1040ez 2011 Communist organizations. Irs 1040ez 2011 Country clubs and other social clubs. Irs 1040ez 2011 Most foreign organizations (other than certain Canadian, Israeli, or Mexican charitable organizations). Irs 1040ez 2011 For details, see Publication 526. Irs 1040ez 2011 Homeowners' associations. Irs 1040ez 2011 Labor unions (but see chapter 28). Irs 1040ez 2011 Political organizations and candidates. Irs 1040ez 2011 Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Irs 1040ez 2011 See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Irs 1040ez 2011 These contributions include the following. Irs 1040ez 2011 Contributions for lobbying. Irs 1040ez 2011 This includes amounts that you earmark for use in, or in connection with, influencing specific legislation. Irs 1040ez 2011 Contributions to a retirement home for room, board, maintenance, or admittance. Irs 1040ez 2011 Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Irs 1040ez 2011 Costs of raffles, bingo, lottery, etc. Irs 1040ez 2011 You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Irs 1040ez 2011 For information on how to report gambling winnings and losses, see Gambling winnings in chapter 12 and Gambling Losses Up to the Amount of Gambling Winnings in chapter 28. Irs 1040ez 2011 Dues to fraternal orders and similar groups. Irs 1040ez 2011 However, see Membership fees or dues , earlier, under Contributions You Can Deduct. Irs 1040ez 2011 Tuition, or amounts you pay instead of tuition. Irs 1040ez 2011 You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Irs 1040ez 2011 You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Irs 1040ez 2011 ” Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Irs 1040ez 2011 Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Irs 1040ez 2011 The cost of meals you eat while you perform services for a qualified organization unless it is necessary for you to be away from home overnight while performing the services. Irs 1040ez 2011 Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final (but see Adoption Credit in chapter 37, and the instructions for Form 8839, Qualified Adoption Expenses). Irs 1040ez 2011 You also may be able to claim an exemption for the child. Irs 1040ez 2011 See Adopted child in chapter 3. Irs 1040ez 2011 Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property (but see chapter 28). Irs 1040ez 2011 Contributions of Property 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. Irs 1040ez 2011 However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Irs 1040ez 2011 See Giving Property That Has Increased in Value , later. Irs 1040ez 2011 For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Irs 1040ez 2011 Clothing and household items. Irs 1040ez 2011   You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Irs 1040ez 2011 Exception. Irs 1040ez 2011   You can take a deduction for a contribution of an item of clothing or household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Irs 1040ez 2011 Household items. Irs 1040ez 2011   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Irs 1040ez 2011   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Irs 1040ez 2011 Cars, boats, and airplanes. Irs 1040ez 2011    The following rules apply to any donation of a qualified vehicle. Irs 1040ez 2011 A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Irs 1040ez 2011 Deduction more than $500. Irs 1040ez 2011   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Irs 1040ez 2011 If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Irs 1040ez 2011 Form 1098-C. Irs 1040ez 2011   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Irs 1040ez 2011 The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Irs 1040ez 2011   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453 and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Irs 1040ez 2011   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Irs 1040ez 2011    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Irs 1040ez 2011 But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Irs 1040ez 2011 Filing deadline approaching and still no Form 1098-C. Irs 1040ez 2011   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Irs 1040ez 2011 Request an automatic 6-month extension of time to file your return. Irs 1040ez 2011 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Irs 1040ez 2011 S. Irs 1040ez 2011 Individual Income Tax Return. Irs 1040ez 2011  For more information, see Automatic Extension in chapter 1. Irs 1040ez 2011 File the return on time without claiming the deduction for the qualified vehicle. Irs 1040ez 2011 After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. Irs 1040ez 2011 Attach Copy B of Form 1098-C (or other statement) to the amended return. Irs 1040ez 2011 For more information about amended returns, see Amended Returns and Claims for Refund in chapter 1. Irs 1040ez 2011 Exceptions. Irs 1040ez 2011   There are two exceptions to the rules just described for deductions of more than $500. Irs 1040ez 2011 Exception 1—vehicle used or improved by organization. Irs 1040ez 2011   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Irs 1040ez 2011 But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Irs 1040ez 2011 The Form 1098-C (or other statement) will show whether this exception applies. Irs 1040ez 2011 Exception 2—vehicle given or sold to needy individual. Irs 1040ez 2011   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Irs 1040ez 2011 But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Irs 1040ez 2011 The Form 1098-C (or other statement) will show whether this exception applies. Irs 1040ez 2011   This exception does not apply if the organization sells the vehicle at auction. Irs 1040ez 2011 In that case, you cannot deduct the vehicle's fair market value. Irs 1040ez 2011 Example. Irs 1040ez 2011 Anita donates a used car to a qualified organization. Irs 1040ez 2011 She bought it 3 years ago for $9,000. Irs 1040ez 2011 A used car guide shows the fair market value for this type of car is $6,000. Irs 1040ez 2011 However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Irs 1040ez 2011 Neither exception 1 nor exception 2 applies. Irs 1040ez 2011 If Anita itemizes her deductions, she can deduct $2,900 for her donation. Irs 1040ez 2011 She must attach Form 1098-C and Form 8283 to her return. Irs 1040ez 2011 Deduction $500 or less. Irs 1040ez 2011   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Irs 1040ez 2011 But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Irs 1040ez 2011   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Irs 1040ez 2011 The statement must contain the information and meet the tests for an acknowledgment described under Deductions of At Least $250 But Not More Than $500 under Records To Keep, later. Irs 1040ez 2011 Partial interest in property. Irs 1040ez 2011   Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Irs 1040ez 2011 Right to use property. Irs 1040ez 2011   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Irs 1040ez 2011 For exceptions and more information, see Partial Interest in Property Not in Trust in Publication 561. Irs 1040ez 2011 Future interests in tangible personal property. Irs 1040ez 2011   You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Irs 1040ez 2011 Tangible personal property. Irs 1040ez 2011   This is any property, other than land or buildings, that can be seen or touched. Irs 1040ez 2011 It includes furniture, books, jewelry, paintings, and cars. Irs 1040ez 2011 Future interest. Irs 1040ez 2011   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Irs 1040ez 2011 Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Irs 1040ez 2011 Publication 561 contains a more complete discussion. Irs 1040ez 2011 Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Irs 1040ez 2011 Used clothing and household items. Irs 1040ez 2011   The fair market value of used clothing and household goods is usually far less than what you paid for them when they were new. Irs 1040ez 2011   For used clothing, you should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Irs 1040ez 2011 See Household Goods in Publication 561 for information on the valuation of household goods, such as furniture, appliances, and linens. Irs 1040ez 2011 Example. Irs 1040ez 2011 Dawn Greene donated a coat to a thrift store operated by her church. Irs 1040ez 2011 She paid $300 for the coat 3 years ago. Irs 1040ez 2011 Similar coats in the thrift store sell for $50. Irs 1040ez 2011 The fair market value of the coat is $50. Irs 1040ez 2011 Dawn's donation is limited to $50. Irs 1040ez 2011 Cars, boats, and airplanes. Irs 1040ez 2011   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Irs 1040ez 2011 Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Irs 1040ez 2011 The guides may be published monthly or seasonally and for different regions of the country. Irs 1040ez 2011 These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Irs 1040ez 2011 The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Irs 1040ez 2011 But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Irs 1040ez 2011   You can also find used car pricing information on the Internet. Irs 1040ez 2011 Example. Irs 1040ez 2011 You donate a used car in poor condition to a local high school for use by students studying car repair. Irs 1040ez 2011 A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Irs 1040ez 2011 However, the guide shows the price for a private party sale of the car is only $750. Irs 1040ez 2011 The fair market value of the car is considered to be $750. Irs 1040ez 2011 Large quantities. Irs 1040ez 2011   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Irs 1040ez 2011 Giving Property That Has Decreased in Value If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. Irs 1040ez 2011 You cannot claim a deduction for the difference between the property's basis and its fair market value. Irs 1040ez 2011 Giving Property That Has Increased in Value 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. Irs 1040ez 2011 Your basis in property is generally what you paid for it. Irs 1040ez 2011 See chapter 13 if you need more information about basis. Irs 1040ez 2011 Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Irs 1040ez 2011 Ordinary income property. Irs 1040ez 2011   Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed. Irs 1040ez 2011 Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and capital assets (defined in chapter 14) held 1 year or less. Irs 1040ez 2011 Amount of deduction. Irs 1040ez 2011   The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. Irs 1040ez 2011 Generally, this rule limits the deduction to your basis in the property. Irs 1040ez 2011 Example. Irs 1040ez 2011 You donate stock you held for 5 months to your church. Irs 1040ez 2011 The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). Irs 1040ez 2011 Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800 (fair market value minus the appreciation). Irs 1040ez 2011 Capital gain property. Irs 1040ez 2011   Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. Irs 1040ez 2011 It includes capital assets held more than 1 year, as well as certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. Irs 1040ez 2011 Amount of deduction — general rule. Irs 1040ez 2011   When figuring your deduction for a contribution of capital gain property, you generally can use the fair market value of the property. Irs 1040ez 2011 Exceptions. Irs 1040ez 2011   In certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. Irs 1040ez 2011 Generally, this means reducing the fair market value to the property's cost or other basis. Irs 1040ez 2011 Bargain sales. Irs 1040ez 2011   A bargain sale of property is a sale or exchange for less than the property's fair market value. Irs 1040ez 2011 A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or exchange. Irs 1040ez 2011 A bargain sale may result in a taxable gain. Irs 1040ez 2011 More information. Irs 1040ez 2011   For more information on donating appreciated property, see Giving Property That Has Increased in Value in Publication 526. Irs 1040ez 2011 When To Deduct You can deduct your contributions only in the year you actually make them in cash or other property (or in a later carryover year, as explained later under Carryovers ). Irs 1040ez 2011 This applies whether you use the cash or an accrual method of accounting. Irs 1040ez 2011 Time of making contribution. Irs 1040ez 2011   Usually, you make a contribution at the time of its unconditional delivery. Irs 1040ez 2011 Checks. Irs 1040ez 2011   A check you mail to a charity is considered delivered on the date you mail it. Irs 1040ez 2011 Text message. Irs 1040ez 2011   Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. Irs 1040ez 2011 Credit card. Irs 1040ez 2011    Contributions charged on your credit card are deductible in the year you make the charge. Irs 1040ez 2011 Pay-by-phone account. Irs 1040ez 2011    Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. Irs 1040ez 2011 Stock certificate. Irs 1040ez 2011   A properly endorsed stock certificate is considered delivered on the date of mailing or other delivery to the charity or to the charity's agent. Irs 1040ez 2011 However, if you give a stock certificate to your agent or to the issuing corporation for transfer to the name of the charity, your contribution is not delivered until the date the stock is transferred on the books of the corporation. Irs 1040ez 2011 Promissory note. Irs 1040ez 2011   If you issue and deliver a promissory note to a charity as a contribution, it is not a contribution until you make the note payments. Irs 1040ez 2011 Option. Irs 1040ez 2011    If you grant a charity an option to buy real property at a bargain price, it is not a contribution until the organization exercises the option. Irs 1040ez 2011 Borrowed funds. Irs 1040ez 2011   If you contribute borrowed funds, you can deduct the contribution in the year you deliver the funds to the charity, regardless of when you repay the loan. Irs 1040ez 2011 Limits on Deductions The amount you can deduct for charitable contributions cannot be more than 50% of your adjusted gross income (AGI). Irs 1040ez 2011 Your deduction may be further limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to. Irs 1040ez 2011 If your total contributions for the year are 20% or less of your AGI, these limits do not apply to you. Irs 1040ez 2011 The limits are discussed in detail under Limits on Deductions in Publication 526. Irs 1040ez 2011 A higher limit applies to certain qualified conservation contributions. Irs 1040ez 2011 See Publication 526 for details. Irs 1040ez 2011 Carryovers You can carry over any contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits. Irs 1040ez 2011 You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. Irs 1040ez 2011 For more information, see Carryovers in Publication 526. Irs 1040ez 2011 Records To Keep You must keep records to prove the amount of the contributions you make during the year. Irs 1040ez 2011 The kind of records you must keep depends on the amount of your contributions and whether they are: Cash contributions, Noncash contributions, or Out-of-pocket expenses when donating your services. Irs 1040ez 2011 Note. Irs 1040ez 2011 An organization generally must give you a written statement if it receives a payment from you that is more than $75 and is partly a contribution and partly for goods or services. Irs 1040ez 2011 (See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Irs 1040ez 2011 ) Keep the statement for your records. Irs 1040ez 2011 It may satisfy all or part of the recordkeeping requirements explained in the following discussions. Irs 1040ez 2011 Cash Contributions Cash contributions include those paid by cash, check, electronic funds transfer, debit card, credit card, or payroll deduction. Irs 1040ez 2011 You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following. Irs 1040ez 2011 A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. Irs 1040ez 2011 Bank records may include: A canceled check, A bank or credit union statement, or A credit card statement. Irs 1040ez 2011 A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution. Irs 1040ez 2011 The payroll deduction records described next. Irs 1040ez 2011 Payroll deductions. Irs 1040ez 2011   If you make a contribution by payroll deduction, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the date and amount of the contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization. Irs 1040ez 2011 If your employer withheld $250 or more from a single paycheck, see Contributions of $250 or More , next. Irs 1040ez 2011 Contributions of $250 or More You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records. Irs 1040ez 2011 If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions. Irs 1040ez 2011 Amount of contribution. Irs 1040ez 2011   In figuring whether your contribution is $250 or more, do not combine separate contributions. Irs 1040ez 2011 For example, if you gave your church $25 each week, your weekly payments do not have to be combined. Irs 1040ez 2011 Each payment is a separate contribution. Irs 1040ez 2011   If contributions are made by payroll deduction, the deduction from each paycheck is treated as a separate contribution. Irs 1040ez 2011   If you made a payment that is partly for goods and services, as described earlier under Contributions From Which You Benefit , your contribution is the amount of the payment that is more than the value of the goods and services. Irs 1040ez 2011 Acknowledgment. Irs 1040ez 2011   The acknowledgment must meet these tests. Irs 1040ez 2011 It must be written. Irs 1040ez 2011 It must include: The amount of cash you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and A statement that the only benefit you received was an intangible religious benefit, if that was the case. Irs 1040ez 2011 The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. Irs 1040ez 2011 An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. Irs 1040ez 2011 An example is admission to a religious ceremony. Irs 1040ez 2011 You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. Irs 1040ez 2011   If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. Irs 1040ez 2011 If the acknowledgment shows the date of the contribution and meets the other tests just described, you do not need any other records. Irs 1040ez 2011 Payroll deductions. Irs 1040ez 2011   If you make a contribution by payroll deduction and your employer withholds $250 or more from a single paycheck, you must keep: A pay stub, Form W-2, or other document furnished by your employer that shows the amount withheld as a contribution, and A pledge card or other document prepared by or for the qualified organization that shows the name of the organization and states the organization does not provide goods or services in return for any contribution made to it by payroll deduction. Irs 1040ez 2011 A single pledge card may be kept for all contributions made by payroll deduction regardless of amount as long as it contains all the required information. Irs 1040ez 2011   If the pay stub, Form W-2, pledge card, or other document does not show the date of the contribution, you must have another document that does show the date of the contribution. Irs 1040ez 2011 If the pay stub, Form W-2, pledge card, or other document shows the date of the contribution, you do not need any other records except those just described in (1) and (2). Irs 1040ez 2011 Noncash Contributions For a contribution not made in cash, the records you must keep depend on whether your deduction for the contribution is: Less than $250, At least $250 but not more than $500, Over $500 but not more than $5,000, or Over $5,000. Irs 1040ez 2011 Amount of deduction. Irs 1040ez 2011   In figuring whether your deduction is $500 or more, combine your claimed deductions for all similar items of property donated to any charitable organization during the year. Irs 1040ez 2011   If you received goods or services in return, as described earlier in Contributions From Which You Benefit , reduce your contribution by the value of those goods or services. Irs 1040ez 2011 If you figure your deduction by reducing the fair market value of the donated property by its appreciation, as described earlier in Giving Property That Has Increased in Value , your contribution is the reduced amount. Irs 1040ez 2011 Deductions of Less Than $250 If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing: The name of the charitable organization, The date and location of the charitable contribution, and A reasonably detailed description of the property. Irs 1040ez 2011 A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the information in (1), (2), and (3) will serve as a receipt. Irs 1040ez 2011 You are not required to have a receipt where it is impractical to get one (for example, if you leave property at a charity's unattended drop site). Irs 1040ez 2011 Additional records. Irs 1040ez 2011   You must also keep reliable written records for each item of contributed property. Irs 1040ez 2011 Your written records must include the following information. Irs 1040ez 2011 The name and address of the organization to which you contributed. Irs 1040ez 2011 The date and location of the contribution. Irs 1040ez 2011 A description of the property in detail reasonable under the circumstances. Irs 1040ez 2011 For a security, keep the name of the issuer, the type of security, and whether it is regularly traded on a stock exchange or in an over-the-counter market. Irs 1040ez 2011 The fair market value of the property at the time of the contribution and how you figured the fair market value. Irs 1040ez 2011 If it was determined by appraisal, keep a signed copy of the appraisal. Irs 1040ez 2011 The cost or other basis of the property, if you must reduce its fair market value by appreciation. Irs 1040ez 2011 Your records should also include the amount of the reduction and how you figured it. Irs 1040ez 2011 The amount you claim as a deduction for the tax year as a result of the contribution, if you contribute less than your entire interest in the property during the tax year. Irs 1040ez 2011 Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. Irs 1040ez 2011 They must also include the name and address of each organization to which you contributed the other interests, the place where any such tangible property is located or kept, and the name of any person in possession of the property, other than the organization to which you contributed it. Irs 1040ez 2011 The terms of any conditions attached to the contribution of property. Irs 1040ez 2011 Deductions of At Least $250 But Not More Than $500 If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep an acknowledgment of your contribution from the qualified organization. Irs 1040ez 2011 If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions. Irs 1040ez 2011 The acknowledgment must contain the information in items (1) through (3) under Deductions of Less Than $250 , earlier, and your written records must include the information listed in that discussion under Additional records . Irs 1040ez 2011 The acknowledgment must also meet these tests. Irs 1040ez 2011 It must be written. Irs 1040ez 2011 It must include: A description (but not necessarily the value) of any property you contributed, Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), and A description and good faith estimate of the value of any goods or services described in (b). Irs 1040ez 2011 If the only benefit you received was an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in a commercial transaction outside the donative context, the acknowledgment must say so and does not need to describe or estimate the value of the benefit. Irs 1040ez 2011 You must get it on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. Irs 1040ez 2011 Deductions Over $500 You are required to give additional information if you claim a deduction over $500 for noncash charitable contributions. Irs 1040ez 2011 See Records To Keep in Publication 526 for more information. Irs 1040ez 2011 Out-of-Pocket Expenses If you give services to a qualified organization and have unreimbursed out-of-pocket expenses related to those services, the following two rules apply. Irs 1040ez 2011 You must have adequate records to prove the amount of the expenses. Irs 1040ez 2011 If any of your unreimbursed out-of-pocket expenses, considered separately, are $250 or more (for example, you pay $250 or more for an airline ticket to attend a convention of a qualified organization as a chosen representative), you must get an acknowledgment from the qualified organization that contains: A description of the services you provided, A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred, A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and A statement that the only benefit you received was an intangible religious benefit, if that was the case. Irs 1040ez 2011 The acknowledgment does not need to describe or estimate the value of an intangible religious benefit (defined earlier under Acknowledgment ). Irs 1040ez 2011 You must get the acknowledgment on or before the earlier of: The date you file your return for the year you make the contribution, or The due date, including extensions, for filing the return. Irs 1040ez 2011 Car expenses. Irs 1040ez 2011   If you claim expenses directly related to use of your car in giving services to a qualified organization, you must keep reliable written records of your expenses. Irs 1040ez 2011 Whether your records are considered reliable depends on all the facts and circumstances. Irs 1040ez 2011 Generally, they may be considered reliable if you made them regularly and at or near the time you had the expenses. Irs 1040ez 2011   For example, your records might show the name of the organization you were serving and the dates you used your car for a charitable purpose. Irs 1040ez 2011 If you use the standard mileage rate of 14 cents a mile, your records must show the miles you drove your car for the charitable purpose. Irs 1040ez 2011 If you deduct your actual expenses, your records must show the costs of operating the car that are directly related to a charitable purpose. Irs 1040ez 2011   See Car expenses under Out-of-Pocket Expenses in Giving Services, earlier, for the expenses you can deduct. Irs 1040ez 2011 How To Report Report your charitable contributions on Schedule A (Form 1040). Irs 1040ez 2011 If your total deduction for all noncash contributions for the year is over $500, you must also file Form 8283. Irs 1040ez 2011 See How To Report in Publication 526 for more information. Irs 1040ez 2011 Prev  Up  Next   Home   More Online Publications