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Irs Govefile

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Irs Govefile

Irs govefile Index A Abandonment of home, Abandonment. Irs govefile Absence, temporary, Temporary absence. Irs govefile Abstract fees, Settlement fees or closing costs. Irs govefile Address, change of, Reminders Adjusted basis, Adjusted Basis, Adjusted Basis Definition of, Determining Basis Worksheet 1 to figure, Determining Basis, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 3 for Emily White, Worksheet 1 Instructions. Irs govefile Adjusted Basis of Home Sold Adoption Adjusted basis of home for credit claimed, Decreases to Basis Advertising fees, Selling expenses. Irs govefile Amount realized, Amount Realized Appraisal fees, Settlement fees or closing costs. Irs govefile Architect's fees, Construction. Irs govefile Armed forces Ownership and use tests, Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Irs govefile Assistance (see Tax help) B Back interest, Settlement fees or closing costs. Irs govefile Basis Adjusted basis (see Adjusted basis) Determination of, Determining Basis, Adjusted Basis Other than cost, Basis Other Than Cost Building permit fees, Construction. Irs govefile Business use of home, Business Use or Rental of Home, Use test met for business part (with no business use in year of sale). Irs govefile C Casualties Amounts spent after to restore damaged property, Increases to Basis Deductible casualty losses, Decreases to Basis Disaster as cause of, Specific event safe harbors. Irs govefile Insurance payments for casualty losses, Decreases to Basis Change of address, Reminders Closing costs, Settlement fees or closing costs. Irs govefile Commissions, Selling expenses. Irs govefile , Settlement fees or closing costs. Irs govefile Community property Basis determination, Community property. Irs govefile Condemnation Gain exclusion, Home destroyed or condemned. Irs govefile Ownership and use test when previous home condemned, Previous home destroyed or condemned. Irs govefile Condominiums As main home, Main Home Basis determination, Condominium. Irs govefile Construction costs, Construction. Irs govefile Built by you, Built by you. Irs govefile Cooperative apartments As main home, Main Home Basis determination, Cooperative apartment. Irs govefile Ownership and use tests, Cooperative apartment. Irs govefile Cost as basis, Cost As Basis Credit reports Cost of obtaining, Settlement fees or closing costs. Irs govefile D Date of sale, Date of sale. Irs govefile Death Sale due to, Specific event safe harbors. Irs govefile Spouse's death before sale, ownership and use tests, Sale of main home by surviving spouse. Irs govefile Decreases to basis, Decreases to Basis Depreciation After May 6, 1997, Depreciation after May 6, 1997. Irs govefile Home used for business or rental purposes, Decreases to Basis Destroyed homes Gain exclusion, Home destroyed or condemned. Irs govefile Ownership and use test when previous home destroyed, Previous home destroyed or condemned. Irs govefile Disabilities, individuals with Ownership and use test, Exception for individuals with a disability. Irs govefile Disasters, Specific event safe harbors. Irs govefile Discharge of qualified principal residence indebtedness, Adjusted Basis Divorce Home received from spouse, Home received from spouse. Irs govefile Home transferred to spouse, Transfer to spouse. Irs govefile Ownership and use tests, Home transferred from spouse. Irs govefile Sale due to, Specific event safe harbors. Irs govefile Transfers after July 18, 1984, Transfers after July 18, 1984. Irs govefile Transfers before July 19, 1984, Transfers before July 19, 1984. Irs govefile Use of home after divorce, Use of home after divorce. Irs govefile Doctor's recommendation for sale, Doctor's recommendation safe harbor. Irs govefile E Easements, Decreases to Basis Employee of the intelligence community, Employee of the intelligence community. Irs govefile Employment Change in place of employment, Change in Place of Employment Payment by employer, when job transfer involved, Payment by employer. Irs govefile Energy Conservation subsidies, Decreases to Basis Credit, Decreases to Basis Exclusion of gain, Excluding the Gain, Nonqualified Use Reduced maximum exclusion, Reduced Maximum Exclusion Expatriates, Expatriates. Irs govefile F Federal mortgage subsidies Recapture of, Recapturing (Paying Back) a Federal Mortgage Subsidy Figuring gain or loss, Figuring Gain or Loss, More information. Irs govefile Fire insurance premiums, Settlement fees or closing costs. Irs govefile Foreclosure, Foreclosure or repossession. Irs govefile Foreign Service, Foreign Service member. Irs govefile Ownership and use tests, Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Irs govefile Form 1040 Reporting sale of home, Reporting the Sale Seller-financed mortgages, Seller-financed mortgage. Irs govefile Form 1040, Schedule A Real estate taxes, Real estate taxes. Irs govefile Form 1040, Schedule D Reporting sale of home, Reporting the Sale Form 1099-S Proceeds from real estate transactions, Date of sale. Irs govefile , Form 1099-S. Irs govefile , Form 1099-S. Irs govefile Form 2119 Sale of home, Adjusted Basis Form 6252 Installment sale income, Installment sale. Irs govefile Form 8828 Recapture tax, How to figure and report the recapture. Irs govefile Form 8960 Net Investment Income Tax, Net Investment Income Tax (NIIT). Irs govefile NIIT, Net Investment Income Tax (NIIT). Irs govefile Form 982 Discharge of indebtedness, Adjusted Basis Free tax services, Free help with your tax return. Irs govefile Future developments, Future Developments G Gain or loss Basis determination, Determining Basis, Adjusted Basis Exclusion of gain, Excluding the Gain Exclusion of gain, nonqualified use, Nonqualified Use Gain on sale, Gain on sale. Irs govefile Loss on sale, Loss on sale. Irs govefile Postponed from sale of previous home before May 7, 1997, Decreases to Basis Worksheet 2 to figure, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Completed Example 1 for Amy, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Illustrated Example 2 for Peter and Betty Clark, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White, Worksheet 2. Irs govefile Taxable Gain on Sale of Home Gifts Home received as, Home received as gift. Irs govefile H Health Sale of home due to, Health Help (see Tax help) Homebuyer credit Recapture, Recapture of the post-2008 first-time homebuyer credit. Irs govefile Houseboats As main home, Main Home I Important reminders Change of address, Reminders Home sold with undeducted points, Reminders Improvements Adjusted basis determination, Improvements. Irs govefile Charges for, Settlement fees or closing costs. Irs govefile Receipts and other records, Adjusted Basis Useful life of more than 1 year, Increases to Basis Increases to basis, Increases to Basis Individual taxpayer identification numbers (ITINs), Individual taxpayer identification number (ITIN). Irs govefile Inheritance Home received as, Home acquired from a decedent who died before or after 2010. Irs govefile Installment sales, Installment sale. Irs govefile Involuntary conversion, Specific event safe harbors. Irs govefile ITINs (Individual taxpayer identification numbers), Individual taxpayer identification number (ITIN). Irs govefile J Joint owners not married, Joint owners not married. Irs govefile Joint returns, Jointly owned home. Irs govefile Ownership and use tests, Married Persons L Land Sale of land on which home located, Land. Irs govefile Sale of vacant land, Vacant land. Irs govefile Legal fees, Selling expenses. Irs govefile , Settlement fees or closing costs. Irs govefile , Construction. Irs govefile Legal separation Sale due to, Specific event safe harbors. Irs govefile Like-kind exchange, Sale of home acquired in a like-kind exchange. Irs govefile Living expenses, Reasonable basic living expenses. Irs govefile Loan assumption fees, Settlement fees or closing costs. Irs govefile Loan placement fees, Selling expenses. Irs govefile Loss (see Gain or loss) M Main home Defined, Main Home Factors used to determine, Factors used to determine main home. Irs govefile Property used partly as, Property used partly as your main home. Irs govefile , Property Used Partly for Business or Rental Married taxpayers (see Joint returns) Maximum exclusion, Maximum Exclusion Reduced, Reduced Maximum Exclusion Military (see Armed forces) Missing children, photographs of, Reminders Mobile homes As main home, Main Home More than one home, More than one home. Irs govefile Mortgage fees, Settlement fees or closing costs. Irs govefile Mortgage insurance premiums, Settlement fees or closing costs. Irs govefile Mortgage subsidies Recapturing (paying back) federal mortgage subsidy, Recapturing (Paying Back) a Federal Mortgage Subsidy Mortgages, seller-financed, Seller-financed mortgage. Irs govefile Moving expense, Settlement fees or closing costs. Irs govefile Multiple births Sale due to, Specific event safe harbors. Irs govefile N Nonqualified use, Nonqualified Use Nonresident aliens Spouse as, transfer of home to, Exception. Irs govefile O Option to buy home, Option to buy. Irs govefile Ownership and use tests, Ownership and Use Tests, Ownership and use tests met at different times. Irs govefile P Partly used for business, Property Used Partly for Business or Rental Personal property Selling price of home not to include, Personal property. Irs govefile Points, Selling expenses. Irs govefile Home sold with undeducted points, Reminders Seller-paid, Seller-paid points. Irs govefile Publications (see Tax help) R Real estate taxes, Settlement fees or closing costs. Irs govefile , Real estate taxes. Irs govefile Deducting in year of sale, Deducting Taxes in the Year of Sale Recapture of federal mortgage subsidy, Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of first-time homebuyer credit, Recapture of First-Time Homebuyer Credit Recording fees, Settlement fees or closing costs. Irs govefile Recordkeeping, Adjusted Basis Reduced maximum exclusion, Reduced Maximum Exclusion Worksheet 3, Worksheet 3. Irs govefile Reduced Maximum Exclusion Refinancing, Settlement fees or closing costs. Irs govefile Relatives Sale of home to, Exception for sales to related persons. Irs govefile Remainder interest Sale of, Sale of remainder interest. Irs govefile Remodeling, Improvements. Irs govefile , Exception. Irs govefile (see also Improvements) Rental of home, Business Use or Rental of Home, Use test met for business part (with no business use in year of sale). Irs govefile Before closing, by buyer, Settlement fees or closing costs. Irs govefile Partial use, Property Used Partly for Business or Rental Repairs, Settlement fees or closing costs. Irs govefile , Improvements. Irs govefile , Repairs. Irs govefile (see also Improvements) Reporting the sale, Reporting the Sale, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White Repossession, Foreclosure or repossession. Irs govefile Right-of-ways, Decreases to Basis S Safe harbors Distance safe harbor, Distance safe harbor. Irs govefile Doctor's recommendation for sale, Doctor's recommendation safe harbor. Irs govefile Unforeseeable events, Specific event safe harbors. Irs govefile Sales commissions, Selling expenses. Irs govefile , Settlement fees or closing costs. Irs govefile Sales to related persons, Exception for sales to related persons. Irs govefile Self-employed persons Change in status causing inability to pay basic expenses, Specific event safe harbors. Irs govefile Seller-financed mortgages, Seller-financed mortgage. Irs govefile Seller-paid points, Seller-paid points. Irs govefile Selling expenses, Selling expenses. Irs govefile Selling price, Selling Price Separate returns, Separate returns. Irs govefile Settlement fees, Settlement fees or closing costs. Irs govefile Spouse Death of (see Surviving spouse) Divorce, transfers subsequent to (see Divorce) Survey fees, Settlement fees or closing costs. Irs govefile Surviving spouse Basis determination, Surviving spouse. Irs govefile Ownership and use tests, Sale of main home by surviving spouse. Irs govefile T Tax help, How To Get Tax Help Temporary absence, Temporary absence. Irs govefile Temporary housing, Temporary housing. Irs govefile Title insurance, Settlement fees or closing costs. Irs govefile Title search fees, Settlement fees or closing costs. Irs govefile Trading homes, Trading (exchanging) homes. Irs govefile , Home received as trade. Irs govefile Transfer taxes, Settlement fees or closing costs. Irs govefile , Transfer taxes. Irs govefile Transfer to spouse, Transfer to spouse. Irs govefile After July 18, 1984, Transfers after July 18, 1984. Irs govefile Before July 19, 1984, Transfers before July 19, 1984. Irs govefile TTY/TDD information, How To Get Tax Help U Unemployment, Specific event safe harbors. Irs govefile Unforeseen circumstances, Unforeseen Circumstances Uniformed services (see Armed forces) Use tests, Ownership and Use Tests, Ownership and use tests met at different times. Irs govefile Utilities Charges for installing, Settlement fees or closing costs. Irs govefile Charges related to occupancy of house before closing, Settlement fees or closing costs. Irs govefile Energy conservation subsidy, Decreases to Basis Meter and connection charges for construction, Construction. Irs govefile V Vacant land Sale of, Vacant land. Irs govefile W Worksheets, Worksheets. Irs govefile Adjusted basis (Worksheet 1), Determining Basis, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 3 for Emily White, Worksheet 1 Instructions. Irs govefile Adjusted Basis of Home Sold Gain (or loss), exclusion, and taxable gain (Worksheet 2), Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Completed Example 1 for Amy, Worksheet 1. Irs govefile Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Illustrated Example 2 for Peter and Betty Clark, Worksheet 2. Irs govefile Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White, Worksheet 2. Irs govefile Taxable Gain on Sale of Home Recordkeeping and, Adjusted Basis Reduced maximum exclusion (Worksheet 3), Worksheet 3. Irs govefile Reduced Maximum Exclusion Prev  Up     Home   More Online Publications
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The Irs Govefile

Irs govefile 5. Irs govefile   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. Irs govefile Making the election. Irs govefile Form 3115. Irs govefile Income TaxesAccrual of contested income taxes. Irs govefile Employment Taxes Other TaxesAdditional Medicare Tax. Irs govefile What's New Additional Medicare Tax. Irs govefile  Beginning in 2013, you must withhold a 0. Irs govefile 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Irs govefile Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. Irs govefile See Employment Taxes , and Self-employment tax , later. Irs govefile Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. Irs govefile You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. Irs govefile Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. Irs govefile When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. Irs govefile This applies whether you use the cash method or an accrual method of accounting. Irs govefile Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. Irs govefile You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . Irs govefile Limit on accrual of taxes. Irs govefile   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. Irs govefile However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. Irs govefile Example. Irs govefile Your state imposes a tax on personal property used in a trade or business conducted in the state. Irs govefile This tax is assessed and becomes a lien as of July 1 (accrual date). Irs govefile In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. Irs govefile Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. Irs govefile You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. Irs govefile Uniform capitalization rules. Irs govefile   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. Irs govefile They also apply to certain taxpayers who acquire property for resale. Irs govefile Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. Irs govefile For more information, see chapter 1. Irs govefile Carrying charges. Irs govefile   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Irs govefile You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Irs govefile For more information, see chapter 7. Irs govefile Refunds of taxes. Irs govefile   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. Irs govefile For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. Irs govefile    You must include in income any interest you receive on tax refunds. Irs govefile Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. Irs govefile The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Irs govefile Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Irs govefile See Taxes for local benefits , later. Irs govefile If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. Irs govefile However, you can elect to ratably accrue the taxes during the year. Irs govefile See Electing to ratably accrue , later. Irs govefile Taxes for local benefits. Irs govefile   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. Irs govefile These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. Irs govefile You should increase the basis of your property by the amount of the assessment. Irs govefile   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. Irs govefile If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. Irs govefile Example. Irs govefile To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. Irs govefile The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. Irs govefile The city is paying the principal and interest with the annual payments made by the property owners. Irs govefile The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. Irs govefile The part of the payments used to pay the interest charges on the bonds is deductible as taxes. Irs govefile Charges for services. Irs govefile   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. Irs govefile Purchase or sale of real estate. Irs govefile   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. Irs govefile   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. Irs govefile Treat the seller as paying the taxes up to but not including the date of sale. Irs govefile Treat the buyer as paying the taxes beginning with the date of sale. Irs govefile You can usually find this information on the settlement statement you received at closing. Irs govefile   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. Irs govefile Example. Irs govefile Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. Irs govefile He has not elected to ratably accrue property taxes. Irs govefile November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. Irs govefile He sold the property on June 30, 2013. Irs govefile Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. Irs govefile He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. Irs govefile Electing to ratably accrue. Irs govefile   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. Irs govefile Example. Irs govefile Juan Sanchez is a calendar year taxpayer who uses an accrual method. Irs govefile His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. Irs govefile July 1 is the assessment and lien date. Irs govefile If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. Irs govefile Separate elections. Irs govefile   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. Irs govefile Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. Irs govefile See Form 3115 , later. Irs govefile Making the election. Irs govefile   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. Irs govefile The statement should show all the following items. Irs govefile The trades or businesses to which the election applies and the accounting method or methods used. Irs govefile The period to which the taxes relate. Irs govefile The computation of the real estate tax deduction for that first year. Irs govefile   Generally, you must file your return by the due date (including extensions). Irs govefile However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). Irs govefile Attach the statement to the amended return and write “Filed pursuant to section 301. Irs govefile 9100-2” on the statement. Irs govefile File the amended return at the same address where you filed the original return. Irs govefile Form 3115. Irs govefile    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. Irs govefile For more information, including applicable time frames for filing, see the Instructions for Form 3115. Irs govefile Note. Irs govefile If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. Irs govefile R. Irs govefile B. Irs govefile 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. Irs govefile R. Irs govefile B. Irs govefile 689, and Revenue Procedure 2012-20, 2012-14 I. Irs govefile R. Irs govefile B. Irs govefile 700, or any successor. Irs govefile Revenue Procedure 2011-14 is available at  www. Irs govefile irs. Irs govefile gov/irb/2011-04IRB/ar08. Irs govefile html. Irs govefile Income Taxes This section discusses federal, state, local, and foreign income taxes. Irs govefile Federal income taxes. Irs govefile   You cannot deduct federal income taxes. Irs govefile State and local income taxes. Irs govefile   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. Irs govefile An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). Irs govefile   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. Irs govefile Accrual of contested income taxes. Irs govefile   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. Irs govefile   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. Irs govefile You cannot deduct them in the year in which the liability is finally determined. Irs govefile    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. Irs govefile Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. Irs govefile   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. Irs govefile You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. Irs govefile For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. Irs govefile Foreign income taxes. Irs govefile   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Irs govefile S. Irs govefile possession. Irs govefile However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Irs govefile S. Irs govefile tax under the foreign earned income exclusion or the foreign housing exclusion. Irs govefile For information on these exclusions, see Publication 54, Tax Guide for U. Irs govefile S. Irs govefile Citizens and Resident Aliens Abroad. Irs govefile For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. Irs govefile Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. Irs govefile Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. Irs govefile You may also need to pay certain employment taxes from your own funds. Irs govefile These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. Irs govefile Note. Irs govefile Additional Medicare Tax is only imposed on the employee. Irs govefile There is no employer share of Additional Medicare Tax. Irs govefile Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. Irs govefile You can deduct the employment taxes you must pay from your own funds as taxes. Irs govefile Example. Irs govefile You pay your employee $18,000 a year. Irs govefile However, after you withhold various taxes, your employee receives $14,500. Irs govefile You also pay an additional $1,500 in employment taxes. Irs govefile You should deduct the full $18,000 as wages. Irs govefile You can deduct the $1,500 you pay from your own funds as taxes. Irs govefile For more information on employment taxes, see Publication 15 (Circular E). Irs govefile Unemployment fund taxes. Irs govefile   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. Irs govefile Deduct these payments as taxes. Irs govefile Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. Irs govefile Excise taxes. Irs govefile   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. Irs govefile However, see Fuel taxes , later. Irs govefile   For more information on excise taxes, see Publication 510. Irs govefile Franchise taxes. Irs govefile   You can deduct corporate franchise taxes as a business expense. Irs govefile Fuel taxes. Irs govefile   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. Irs govefile Do not deduct these taxes as a separate item. Irs govefile   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. Irs govefile For more information, see Publication 510. Irs govefile Occupational taxes. Irs govefile   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. Irs govefile Personal property tax. Irs govefile   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. Irs govefile Sales tax. Irs govefile   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. Irs govefile If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. Irs govefile If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. Irs govefile If the property is depreciable, add the sales tax to the basis for depreciation. Irs govefile For more information on basis, see Publication 551. Irs govefile    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Irs govefile Also, do not include these taxes in gross receipts or sales. Irs govefile Self-employment tax. Irs govefile   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. Irs govefile This deduction only affects your income tax. Irs govefile It does not affect your net earnings from self-employment or your self-employment tax. Irs govefile   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). Irs govefile   For more information on self-employment tax, see Publication 334. Irs govefile Additional Medicare Tax. Irs govefile   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. Irs govefile See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. Irs govefile Prev  Up  Next   Home   More Online Publications