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Taxact 2011 sign in 11. Taxact 2011 sign in   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. Taxact 2011 sign in Kickbacks. Taxact 2011 sign in Form 1099-MISC. Taxact 2011 sign in Exception. Taxact 2011 sign in Tax preparation fees. Taxact 2011 sign in Covered executive branch official. Taxact 2011 sign in Exceptions to denial of deduction. Taxact 2011 sign in Indirect political contributions. Taxact 2011 sign in Type of deduction. Taxact 2011 sign in Repayment—$3,000 or less. Taxact 2011 sign in Repayment—over $3,000. Taxact 2011 sign in Method 1. Taxact 2011 sign in Method 2. Taxact 2011 sign in Repayment does not apply. Taxact 2011 sign in Year of deduction (or credit). Taxact 2011 sign in Telephone. Taxact 2011 sign in What's New Standard mileage rate. Taxact 2011 sign in  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. Taxact 2011 sign in 5 cents per mile. Taxact 2011 sign in For more information, see Car and truck expenses under Miscellaneous Expenses. Taxact 2011 sign in Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. Taxact 2011 sign in Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. Taxact 2011 sign in Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. Taxact 2011 sign in If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. Taxact 2011 sign in To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Taxact 2011 sign in Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. Taxact 2011 sign in For more information on travel, meals, and entertainment, including deductibility, see Publication 463. Taxact 2011 sign in Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. Taxact 2011 sign in If the expenses are substantiated, you can deduct the allowable amount on your tax return. Taxact 2011 sign in Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. Taxact 2011 sign in For example, you can deduct 100% of the cost of meals on your business books and records. Taxact 2011 sign in However, only 50% of these costs are allowed by law as a tax deduction. Taxact 2011 sign in How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. Taxact 2011 sign in If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. Taxact 2011 sign in If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. Taxact 2011 sign in If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. Taxact 2011 sign in See Table 11-1 , Reporting Reimbursements. Taxact 2011 sign in Accountable Plans An accountable plan requires your employees to meet all of the following requirements. Taxact 2011 sign in Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. Taxact 2011 sign in An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. Taxact 2011 sign in The advance is reasonably calculated not to exceed the amount of anticipated expenses. Taxact 2011 sign in You make the advance within a reasonable period of time of your employee paying or incurring the expense. Taxact 2011 sign in If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. Taxact 2011 sign in Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. Taxact 2011 sign in Adequate accounting. Taxact 2011 sign in   Your employees must adequately account to you for their travel, meals, and entertainment expenses. Taxact 2011 sign in They must give you documentary evidence of their travel, mileage, and other employee business expenses. Taxact 2011 sign in This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. Taxact 2011 sign in Excess reimbursement or allowance. Taxact 2011 sign in   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. Taxact 2011 sign in The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. Taxact 2011 sign in Reasonable period of time. Taxact 2011 sign in   A reasonable period of time depends on the facts and circumstances. Taxact 2011 sign in Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Taxact 2011 sign in You give an advance within 30 days of the time the employee pays or incurs the expense. Taxact 2011 sign in Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. Taxact 2011 sign in Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. Taxact 2011 sign in You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. Taxact 2011 sign in How to deduct. Taxact 2011 sign in   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. Taxact 2011 sign in Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. Taxact 2011 sign in If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). Taxact 2011 sign in   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. Taxact 2011 sign in S. Taxact 2011 sign in Corporation Income Tax Return. Taxact 2011 sign in If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. Taxact 2011 sign in Table 11-1. Taxact 2011 sign in Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. Taxact 2011 sign in Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Taxact 2011 sign in Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. Taxact 2011 sign in Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Taxact 2011 sign in The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Taxact 2011 sign in Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. Taxact 2011 sign in The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Taxact 2011 sign in A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. Taxact 2011 sign in No reimbursement plan The entire amount as wages in box 1. Taxact 2011 sign in Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. Taxact 2011 sign in In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Taxact 2011 sign in Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. Taxact 2011 sign in Federal rate. Taxact 2011 sign in   The federal rate can be figured using any one of the following methods. Taxact 2011 sign in For car expenses: The standard mileage rate. Taxact 2011 sign in A fixed and variable rate (FAVR). Taxact 2011 sign in For per diem amounts: The regular federal per diem rate. Taxact 2011 sign in The standard meal allowance. Taxact 2011 sign in The high-low rate. Taxact 2011 sign in Car allowance. Taxact 2011 sign in   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. Taxact 2011 sign in Beginning in 2013, the standard business mileage rate is 56. Taxact 2011 sign in 5 cents per mile. Taxact 2011 sign in   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. Taxact 2011 sign in This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. Taxact 2011 sign in ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. Taxact 2011 sign in ). Taxact 2011 sign in For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. Taxact 2011 sign in irs. Taxact 2011 sign in gov/irb/2010-51_IRB/ar14. Taxact 2011 sign in html and Notice 2012-72, available at www. Taxact 2011 sign in irs. Taxact 2011 sign in gov/irb/2012-50_IRB/ar10. Taxact 2011 sign in html. Taxact 2011 sign in Per diem allowance. Taxact 2011 sign in   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. Taxact 2011 sign in Regular federal per diem rate. Taxact 2011 sign in   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. Taxact 2011 sign in It has two components: Lodging expense, and Meal and incidental expense (M&IE). Taxact 2011 sign in The rates are different for different locations. Taxact 2011 sign in Publication 1542 lists the rates in the continental United States. Taxact 2011 sign in Standard meal allowance. Taxact 2011 sign in   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. Taxact 2011 sign in You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). Taxact 2011 sign in Internet access. Taxact 2011 sign in    Per diem rates are available on the Internet. Taxact 2011 sign in You can access per diem rates at www. Taxact 2011 sign in gsa. Taxact 2011 sign in gov/perdiemrates. Taxact 2011 sign in High-low method. Taxact 2011 sign in   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Taxact 2011 sign in It eliminates the need to keep a current list of the per diem rate for each city. Taxact 2011 sign in   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. Taxact 2011 sign in All other areas have a per diem amount of $163 ($52 for M&IE). Taxact 2011 sign in The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. Taxact 2011 sign in   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). Taxact 2011 sign in The rate for all other locations increased to $170 ($52 for M&IE). Taxact 2011 sign in For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. Taxact 2011 sign in However, you must use the same rate for all employees reimbursed under the high-low method. Taxact 2011 sign in   For more information about the high-low method, see Notice 2013-65, available at www. Taxact 2011 sign in irs. Taxact 2011 sign in gov/irb/2013-44_IRB/ar13. Taxact 2011 sign in html. Taxact 2011 sign in See Publication 1542 (available on the Internet at IRS. Taxact 2011 sign in gov) for the current per diem rates for all locations. Taxact 2011 sign in Reporting per diem and car allowances. Taxact 2011 sign in   The following discussion explains how to report per diem and car allowances. Taxact 2011 sign in The manner in which you report them depends on how the allowance compares to the federal rate. Taxact 2011 sign in See Table 11-1. Taxact 2011 sign in Allowance less than or equal to the federal rate. Taxact 2011 sign in   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. Taxact 2011 sign in Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). Taxact 2011 sign in See How to deduct under Accountable Plans, earlier. Taxact 2011 sign in Allowance more than the federal rate. Taxact 2011 sign in   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. Taxact 2011 sign in   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. Taxact 2011 sign in Deduct it as travel expenses (as explained above). Taxact 2011 sign in This part of the allowance is treated as reimbursed under an accountable plan. Taxact 2011 sign in   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. Taxact 2011 sign in Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Taxact 2011 sign in This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. Taxact 2011 sign in Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. Taxact 2011 sign in The deduction limit applies even if you reimburse them for 100% of the expenses. Taxact 2011 sign in Application of the 50% limit. Taxact 2011 sign in   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. Taxact 2011 sign in It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. Taxact 2011 sign in The deduction limit may also apply to meals you furnish on your premises to your employees. Taxact 2011 sign in Related expenses. Taxact 2011 sign in   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. Taxact 2011 sign in Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. Taxact 2011 sign in However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. Taxact 2011 sign in Amount subject to 50% limit. Taxact 2011 sign in   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. Taxact 2011 sign in The per diem allowance. Taxact 2011 sign in The federal rate for M&IE. Taxact 2011 sign in   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. Taxact 2011 sign in If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. Taxact 2011 sign in Meal expenses when subject to “hours of service” limits. Taxact 2011 sign in   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. Taxact 2011 sign in   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. Taxact 2011 sign in De minimis (minimal) fringe benefit. Taxact 2011 sign in   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. Taxact 2011 sign in See Publication 15-B for additional information on de minimis fringe benefits. Taxact 2011 sign in Company cafeteria or executive dining room. Taxact 2011 sign in   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. Taxact 2011 sign in This includes the cost of maintaining the facilities for providing the food and beverages. Taxact 2011 sign in These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). Taxact 2011 sign in Employee activities. Taxact 2011 sign in   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. Taxact 2011 sign in The benefit must be primarily for your employees who are not highly compensated. Taxact 2011 sign in   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. Taxact 2011 sign in Owned a 10% or more interest in the business during the year or the preceding year. Taxact 2011 sign in An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Taxact 2011 sign in Received more than $115,000 in pay for the preceding year. Taxact 2011 sign in You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. Taxact 2011 sign in   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. Taxact 2011 sign in Meals or entertainment treated as compensation. Taxact 2011 sign in   The 50% limit does not apply to either of the following. Taxact 2011 sign in Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. Taxact 2011 sign in Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. Taxact 2011 sign in Sales of meals or entertainment. Taxact 2011 sign in   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. Taxact 2011 sign in For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. Taxact 2011 sign in The 50% limit does not apply to this expense. Taxact 2011 sign in Providing meals or entertainment to general public to promote goodwill. Taxact 2011 sign in   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Taxact 2011 sign in The 50% limit does not apply to this expense. Taxact 2011 sign in Director, stockholder, or employee meetings. Taxact 2011 sign in   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. Taxact 2011 sign in You can provide some minor social activities, but the main purpose of the meeting must be your company's business. Taxact 2011 sign in These expenses are subject to the 50% limit. Taxact 2011 sign in Trade association meetings. Taxact 2011 sign in   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. Taxact 2011 sign in These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. Taxact 2011 sign in Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. Taxact 2011 sign in All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. Taxact 2011 sign in The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Taxact 2011 sign in You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. Taxact 2011 sign in Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. Taxact 2011 sign in Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. Taxact 2011 sign in Advertising expenses. Taxact 2011 sign in   You generally can deduct reasonable advertising expenses that are directly related to your business activities. Taxact 2011 sign in Generally, you cannot deduct amounts paid to influence legislation (i. Taxact 2011 sign in e. Taxact 2011 sign in , lobbying). Taxact 2011 sign in See Lobbying expenses , later. Taxact 2011 sign in   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. Taxact 2011 sign in For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. Taxact 2011 sign in S. Taxact 2011 sign in Savings Bonds, or to participate in similar causes is usually deductible. Taxact 2011 sign in Anticipated liabilities. Taxact 2011 sign in   Anticipated liabilities or reserves for anticipated liabilities are not deductible. Taxact 2011 sign in For example, assume you sold 1-year TV service contracts this year totaling $50,000. Taxact 2011 sign in From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. Taxact 2011 sign in You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. Taxact 2011 sign in You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. Taxact 2011 sign in Bribes and kickbacks. Taxact 2011 sign in   Engaging in the payment of bribes or kickbacks is a serious criminal matter. Taxact 2011 sign in Such activity could result in criminal prosecution. Taxact 2011 sign in Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. Taxact 2011 sign in   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. Taxact 2011 sign in Meaning of “generally enforced. Taxact 2011 sign in ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. Taxact 2011 sign in For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. Taxact 2011 sign in Kickbacks. Taxact 2011 sign in   A kickback is a payment for referring a client, patient, or customer. Taxact 2011 sign in The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. Taxact 2011 sign in In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. Taxact 2011 sign in   For example, the Yard Corporation is in the business of repairing ships. Taxact 2011 sign in It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. Taxact 2011 sign in Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. Taxact 2011 sign in These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. Taxact 2011 sign in Form 1099-MISC. Taxact 2011 sign in   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. Taxact 2011 sign in See Form 1099-MISC for more information. Taxact 2011 sign in Car and truck expenses. Taxact 2011 sign in   The costs of operating a car, truck, or other vehicle in your business are deductible. Taxact 2011 sign in For more information on how to figure your deduction, see Publication 463. Taxact 2011 sign in Charitable contributions. Taxact 2011 sign in   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Taxact 2011 sign in If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. Taxact 2011 sign in However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. Taxact 2011 sign in See the Instructions for Form 1120 for more information. Taxact 2011 sign in Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Taxact 2011 sign in Example. Taxact 2011 sign in You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. Taxact 2011 sign in The purpose of the ad was to encourage readers to buy your products. Taxact 2011 sign in Your payment is not a charitable contribution. Taxact 2011 sign in You can deduct it as an advertising expense. Taxact 2011 sign in Example. Taxact 2011 sign in You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. Taxact 2011 sign in Your payment is not a charitable contribution. Taxact 2011 sign in You can deduct it as a business expense. Taxact 2011 sign in See Publication 526 for a discussion of donated inventory, including capital gain property. Taxact 2011 sign in Club dues and membership fees. Taxact 2011 sign in   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. Taxact 2011 sign in This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Taxact 2011 sign in Exception. Taxact 2011 sign in   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Taxact 2011 sign in Boards of trade. Taxact 2011 sign in Business leagues. Taxact 2011 sign in Chambers of commerce. Taxact 2011 sign in Civic or public service organizations. Taxact 2011 sign in Professional organizations such as bar associations and medical associations. Taxact 2011 sign in Real estate boards. Taxact 2011 sign in Trade associations. Taxact 2011 sign in Credit card convenience fees. Taxact 2011 sign in   Credit card companies charge a fee to businesses who accept their cards. Taxact 2011 sign in This fee when paid or incurred by the business can be deducted as a business expense. Taxact 2011 sign in Damages recovered. Taxact 2011 sign in   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. Taxact 2011 sign in You must include this compensation in your income. Taxact 2011 sign in However, you may be able to take a special deduction. Taxact 2011 sign in The deduction applies only to amounts recovered for actual economic injury, not any additional amount. Taxact 2011 sign in The deduction is the smaller of the following. Taxact 2011 sign in The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. Taxact 2011 sign in Your losses from the injury you have not deducted. Taxact 2011 sign in Demolition expenses or losses. Taxact 2011 sign in   Amounts paid or incurred to demolish a structure are not deductible. Taxact 2011 sign in These amounts are added to the basis of the land where the demolished structure was located. Taxact 2011 sign in Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. Taxact 2011 sign in Education expenses. Taxact 2011 sign in   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Taxact 2011 sign in See Education Expenses in chapter 2. Taxact 2011 sign in   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. Taxact 2011 sign in You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. Taxact 2011 sign in For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. Taxact 2011 sign in   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. Taxact 2011 sign in This is true even if the education maintains or improves skills presently required in your business. Taxact 2011 sign in For more information on education expenses, see Publication 970. Taxact 2011 sign in Franchise, trademark, trade name. Taxact 2011 sign in   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). Taxact 2011 sign in   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. Taxact 2011 sign in   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. Taxact 2011 sign in Impairment-related expenses. Taxact 2011 sign in   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. Taxact 2011 sign in   You are disabled if you have either of the following. Taxact 2011 sign in A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. Taxact 2011 sign in A physical or mental impairment that substantially limits one or more of your major life activities. Taxact 2011 sign in   The expense qualifies as a business expense if all the following apply. Taxact 2011 sign in Your work clearly requires the expense for you to satisfactorily perform that work. Taxact 2011 sign in The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. Taxact 2011 sign in Their treatment is not specifically provided for under other tax law provisions. Taxact 2011 sign in Example. Taxact 2011 sign in You are blind. Taxact 2011 sign in You must use a reader to do your work, both at and away from your place of work. Taxact 2011 sign in The reader's services are only for your work. Taxact 2011 sign in You can deduct your expenses for the reader as a business expense. Taxact 2011 sign in Internet-related expenses. Taxact 2011 sign in   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. Taxact 2011 sign in If you are starting a business you may have to amortize these expenses as start-up costs. Taxact 2011 sign in For more information about amortizing start-up and organizational costs, see chapter 8. Taxact 2011 sign in Interview expense allowances. Taxact 2011 sign in   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. Taxact 2011 sign in You can deduct the reimbursements as a business expense. Taxact 2011 sign in However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. Taxact 2011 sign in Legal and professional fees. Taxact 2011 sign in   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. Taxact 2011 sign in However, usually legal fees you pay to acquire business assets are not deductible. Taxact 2011 sign in These costs are added to the basis of the property. Taxact 2011 sign in   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. Taxact 2011 sign in If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. Taxact 2011 sign in The result is the portion of the invoice attributable to business expenses. Taxact 2011 sign in The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). Taxact 2011 sign in   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. Taxact 2011 sign in However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. Taxact 2011 sign in See Publication 529, Miscellaneous Deductions. Taxact 2011 sign in Tax preparation fees. Taxact 2011 sign in   The cost of hiring a tax professional, such as a C. Taxact 2011 sign in P. Taxact 2011 sign in A. Taxact 2011 sign in , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. Taxact 2011 sign in Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. Taxact 2011 sign in   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. Taxact 2011 sign in Licenses and regulatory fees. Taxact 2011 sign in   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. Taxact 2011 sign in Some licenses and fees may have to be amortized. Taxact 2011 sign in See chapter 8 for more information. Taxact 2011 sign in Lobbying expenses. Taxact 2011 sign in   Generally, lobbying expenses are not deductible. Taxact 2011 sign in Lobbying expenses include amounts paid or incurred for any of the following activities. Taxact 2011 sign in Influencing legislation. Taxact 2011 sign in Participating in or intervening in any political campaign for, or against, any candidate for public office. Taxact 2011 sign in Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. Taxact 2011 sign in Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. Taxact 2011 sign in Researching, preparing, planning, or coordinating any of the preceding activities. Taxact 2011 sign in   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. Taxact 2011 sign in For information on making this allocation, see section 1. Taxact 2011 sign in 162-28 of the regulations. Taxact 2011 sign in   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. Taxact 2011 sign in The organization conducts lobbying activities on matters of direct financial interest to your business. Taxact 2011 sign in A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. Taxact 2011 sign in   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. Taxact 2011 sign in Covered executive branch official. Taxact 2011 sign in   For purposes of this discussion, a covered executive branch official is any of the following. Taxact 2011 sign in The President. Taxact 2011 sign in The Vice President. Taxact 2011 sign in Any officer or employee of the White House Office of the Executive Office of the President and the two most senior level officers of each of the other agencies in the Executive Office. Taxact 2011 sign in Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). Taxact 2011 sign in Exceptions to denial of deduction. Taxact 2011 sign in   The general denial of the deduction does not apply to the following. Taxact 2011 sign in Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. Taxact 2011 sign in An Indian tribal government is treated as a local council or similar governing body. Taxact 2011 sign in Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). Taxact 2011 sign in Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). Taxact 2011 sign in Moving machinery. Taxact 2011 sign in   Generally, the cost of moving machinery from one city to another is a deductible expense. Taxact 2011 sign in So is the cost of moving machinery from one plant to another, or from one part of your plant to another. Taxact 2011 sign in You can deduct the cost of installing the machinery in the new location. Taxact 2011 sign in However, you must capitalize the costs of installing or moving newly purchased machinery. Taxact 2011 sign in Outplacement services. Taxact 2011 sign in   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. Taxact 2011 sign in are deductible. Taxact 2011 sign in   The costs of outplacement services may cover more than one deduction category. Taxact 2011 sign in For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. Taxact 2011 sign in   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. Taxact 2011 sign in Penalties and fines. Taxact 2011 sign in   Penalties paid for late performance or nonperformance of a contract are generally deductible. Taxact 2011 sign in For instance, you own and operate a construction company. Taxact 2011 sign in Under a contract, you are to finish construction of a building by a certain date. Taxact 2011 sign in Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. Taxact 2011 sign in You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. Taxact 2011 sign in These additional costs are deductible business expenses. Taxact 2011 sign in   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. Taxact 2011 sign in These fines or penalties include the following amounts. Taxact 2011 sign in Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. Taxact 2011 sign in Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. Taxact 2011 sign in Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. Taxact 2011 sign in Forfeited as collateral posted for a proceeding that could result in a fine or penalty. Taxact 2011 sign in   Examples of nondeductible penalties and fines include the following. Taxact 2011 sign in Fines for violating city housing codes. Taxact 2011 sign in Fines paid by truckers for violating state maximum highway weight laws. Taxact 2011 sign in Fines for violating air quality laws. Taxact 2011 sign in Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. Taxact 2011 sign in   A fine or penalty does not include any of the following. Taxact 2011 sign in Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. Taxact 2011 sign in Court costs or stenographic and printing charges. Taxact 2011 sign in Compensatory damages paid to a government. Taxact 2011 sign in Political contributions. Taxact 2011 sign in   Contributions or gifts paid to political parties or candidates are not deductible. Taxact 2011 sign in In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. Taxact 2011 sign in Indirect political contributions. Taxact 2011 sign in   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. Taxact 2011 sign in Examples of nondeductible expenses include the following. Taxact 2011 sign in Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. Taxact 2011 sign in Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. Taxact 2011 sign in Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. Taxact 2011 sign in Repairs. Taxact 2011 sign in   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. Taxact 2011 sign in Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. Taxact 2011 sign in Otherwise, the cost must be capitalized and depreciated. Taxact 2011 sign in See Form 4562 and its instructions for how to compute and claim the depreciation deduction. Taxact 2011 sign in   The cost of repairs includes the costs of labor, supplies, and certain other items. Taxact 2011 sign in The value of your own labor is not deductible. Taxact 2011 sign in Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). Taxact 2011 sign in Repayments. Taxact 2011 sign in   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. Taxact 2011 sign in Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Taxact 2011 sign in Type of deduction. Taxact 2011 sign in   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Taxact 2011 sign in For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. Taxact 2011 sign in If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Taxact 2011 sign in   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. Taxact 2011 sign in However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. Taxact 2011 sign in Repayment—$3,000 or less. Taxact 2011 sign in   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Taxact 2011 sign in Repayment—over $3,000. Taxact 2011 sign in   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. Taxact 2011 sign in However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. Taxact 2011 sign in ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. Taxact 2011 sign in If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. Taxact 2011 sign in Method 1. Taxact 2011 sign in   Figure your tax for 2013 claiming a deduction for the repaid amount. Taxact 2011 sign in Method 2. Taxact 2011 sign in   Figure your tax for 2013 claiming a credit for the repaid amount. Taxact 2011 sign in Follow these steps. Taxact 2011 sign in Figure your tax for 2013 without deducting the repaid amount. Taxact 2011 sign in Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Taxact 2011 sign in Subtract the tax in (2) from the tax shown on your return for the earlier year. Taxact 2011 sign in This is the amount of your credit. Taxact 2011 sign in Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). Taxact 2011 sign in   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. Taxact 2011 sign in   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. Taxact 2011 sign in R. Taxact 2011 sign in C. Taxact 2011 sign in 1341” next to line 71. Taxact 2011 sign in Example. Taxact 2011 sign in For 2012, you filed a return and reported your income on the cash method. Taxact 2011 sign in In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. Taxact 2011 sign in Your filing status in 2013 and 2012 is single. Taxact 2011 sign in Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. Taxact 2011 sign in Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. Taxact 2011 sign in Repayment does not apply. Taxact 2011 sign in   This discussion does not apply to the following. Taxact 2011 sign in Deductions for bad debts. Taxact 2011 sign in Deductions from sales to customers, such as returns and allowances, and similar items. Taxact 2011 sign in Deductions for legal and other expenses of contesting the repayment. Taxact 2011 sign in Year of deduction (or credit). Taxact 2011 sign in   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. Taxact 2011 sign in If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. Taxact 2011 sign in For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. Taxact 2011 sign in Subscriptions. Taxact 2011 sign in   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. Taxact 2011 sign in Supplies and materials. Taxact 2011 sign in   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. Taxact 2011 sign in   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. Taxact 2011 sign in You do not keep a record of when they are used. Taxact 2011 sign in You do not take an inventory of the amount on hand at the beginning and end of the tax year. Taxact 2011 sign in This method does not distort your income. Taxact 2011 sign in   You can also deduct the cost of books, professional instruments, equipment, etc. Taxact 2011 sign in , if you normally use them within a year. Taxact 2011 sign in However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. Taxact 2011 sign in For more information regarding depreciation see Publication 946, How To Depreciate Property. Taxact 2011 sign in Utilities. Taxact 2011 sign in   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. Taxact 2011 sign in However, any part due to personal use is not deductible. Taxact 2011 sign in Telephone. Taxact 2011 sign in   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Taxact 2011 sign in However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Taxact 2011 sign in Prev  Up  Next   Home   More Online Publications
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IRS Withholding Calculator

If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new  Form W-4, Employee's Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.

Who Can Benefit From The Withholding Calculator?

  • Employees who would like to change their withholding to reduce their tax refund or their balance due;
  • Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
  • Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

CAUTION:    If you will be subject to alternative minimum tax, self-employment tax, or other taxes; you will probably achieve more accurate withholding by following the instructions in Pub 505: Tax Withholding and Estimated Tax.

Ready to start? Make sure scripting is enabled before using this application. Continue to the Withholding Calculator

Tips For Using This Program

  • Have your most recent pay stubs handy.
  • Have your most recent income tax return handy.
  • Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.

To Change Your Withholding:

  1. Use your results from this calculator to help you complete a new Form W-4, Employee's Withholding Allowance Certificate.
  2. Submit the completed Form to your employer.
Page Last Reviewed or Updated: 02-Jan-2014

IRS Withholding Calculator

 

The Taxact 2011 Sign In

Taxact 2011 sign in Index A Abortion, Abortion Acupuncture, Acupuncture Adopted child's medical expenses, Adopted child. Taxact 2011 sign in AGI limitation, Introduction, Community property states. Taxact 2011 sign in Alcoholism, Alcoholism Ambulances, Ambulance Archer MSAs Health coverage tax credit, How To Take the Credit Medical expenses paid for decedent from, Decedent Artificial limbs, Artificial Limb Artificial teeth, Artificial Teeth Aspirin, Nonprescription Drugs and Medicines Assistance (see Tax help) Assisted living homes, Nursing Home Athletic club dues, Health Club Dues Automobiles (see Cars) B Baby sitting, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Bandages, Bandages Basis Medical equipment or property (Worksheet D), Worksheet D. Taxact 2011 sign in Adjusted Basis of Medical Equipment or Property Sold Birth control pills, Birth Control Pills Body scan, Body Scan Braille books and magazines, Braille Books and Magazines Breast pumps and supplies, Breast Pumps and Supplies Breast reconstruction surgery, Breast Reconstruction Surgery C Calculation of deduction, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Capital expenses, Capital Expenses Improvements to rented property, Improvements to property rented by a person with a disability. Taxact 2011 sign in Operation and upkeep, Operation and upkeep. Taxact 2011 sign in Worksheet A, Capital expense worksheet. Taxact 2011 sign in Cars, Car Out-of-pocket expenses, Car expenses. Taxact 2011 sign in Standard medical mileage rates, Car expenses. Taxact 2011 sign in Child care, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Children's medical expenses Adopted child, Adopted child. Taxact 2011 sign in Dependents, Dependent Chiropractor, Chiropractor Christian Scientist practitioner, Christian Science Practitioner Chronically ill persons, Chronically ill individual. Taxact 2011 sign in COBRA assistance Recapture of COBRA premium assistance, Worksheet F. Taxact 2011 sign in Recapture of COBRA Premium Assistance for Higher Income Taxpayers COBRA premium assistance, COBRA Premium Assistance Community property states, Community property states. Taxact 2011 sign in Computer banks to track medical information, Medical Information Plan Contact lenses, Contact Lenses Controlled substances, Controlled Substances Cosmetic surgery, Cosmetic Surgery Credit (see Health coverage tax credit) Crutches, Crutches D Dancing lessons, Dancing Lessons Decedent's medical expenses, Decedent, What if you pay medical expenses of a deceased spouse or dependent? Deductible amount, How Much of the Expenses Can You Deduct? Deductible expenses, Whose Medical Expenses Can You Include?, X-ray Definition of medical expenses Doctor, What Are Medical Expenses? Physician, What Are Medical Expenses? Dental treatment, Dental Treatment Artificial teeth, Artificial Teeth Teeth whitening, Teeth Whitening Dentures, Artificial Teeth Dependent's medical expenses Adopted child, Adopted child. Taxact 2011 sign in Multiple support agreement, Support claimed under a multiple support agreement. Taxact 2011 sign in Qualifying child, Dependent Qualifying relative, Dependent Dependents Disabled dependent care, Disabled Dependent Care Expenses, Dependents with disabilities. Taxact 2011 sign in Diagnostic devices, Diagnostic Devices Diaper services, Diaper Service Disabilities, persons with Dependent care expenses, Disabled Dependent Care Expenses, Dependents with disabilities. Taxact 2011 sign in Improvements to rented property, Improvements to property rented by a person with a disability. Taxact 2011 sign in Special education, Special Education Divorced taxpayers Medical expenses of child, Child of divorced or separated parents. Taxact 2011 sign in Drug addiction, Drug Addiction Drugs (see Medicines) Dues Health club, Health Club Dues E Education, special, Special Education Electrolysis, Cosmetic Surgery Employer-sponsored health insurance plans, Employer-Sponsored Health Insurance Plan Employment taxes, Employment taxes. Taxact 2011 sign in Excluded expenses Insurance premiums, Insurance Premiums You Cannot Include Eye surgery, Eye Surgery Eyeglasses, Eyeglasses F Fertility enhancement Eggs, temporary storage of, Fertility Enhancement Fertility, Fertility Enhancement In vitro fertilization, Fertility Enhancement Figuring the deduction, How Do You Figure and Report the Deduction on Your Tax Return? Final return for decedent Medical expenses paid, Decedent Flexible spending account, Flexible Spending Account Food (see Weight-loss programs) Form 1040 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule A Impairment-related work expenses, Where to report. Taxact 2011 sign in Medical and dental expenses, Introduction, What Tax Form Do You Use? Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule C Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 1040, Schedule C-EZ Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 1040, Schedule E Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 1040, Schedule F Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 1040NR Health coverage tax credit, How To Take the Credit Form 1040X Amended return, What Expenses Can You Include This Year? Deceased taxpayer, What if the decedent's return had been filed and the medical expenses were not included? Form 1099-H Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2106 Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 2106-EZ Impairment-related work expenses, Where to report. Taxact 2011 sign in Form 2555 Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2555-EZ Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 8453 Health coverage tax credit, How To Take the Credit Form 8885 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Founder's fee (see Lifetime care, advance payments) Free tax services, Free help with your tax return. Taxact 2011 sign in Funeral expenses, Funeral Expenses Future medical care, Payments for future medical care. Taxact 2011 sign in , Future Medical Care G Glasses, Eyeglasses Guide dog or other animal, Guide Dog or Other Service Animal H Hair Removal, Cosmetic Surgery Transplants, Cosmetic Surgery Wigs, Wig Health club dues, Health Club Dues Health coverage tax credit, Health Coverage Tax Credit Advanced payments, Monthly HCTC Alternative TAA recipient, Health Coverage Tax Credit Archer MSAs, How To Take the Credit Both spouses eligible, Qualifying Family Member Children of divorced parents, Health Coverage Tax Credit, Qualifying Family Member Eligible coverage month, Eligible Coverage Month Insurance that covers other individuals, Insurance that covers other individuals. Taxact 2011 sign in Legally separated, Legally separated. Taxact 2011 sign in Married persons filing separate returns, Qualifying Family Member Monthly HCTC, Monthly HCTC Nonqualified health insurance, Nonqualified Health Insurance Other specified coverage Benefits from the Veterans Administration, Other Specified Coverage Pension Benefit Guaranty Corporation (PBGC) recipient, Health Coverage Tax Credit Qualified health insurance, Qualified Health Insurance Qualifying family member, Qualifying Family Member Reimbursement credit, Monthly HCTC Reporting, How To Take the Credit State-qualified health insurance, State-qualified health insurance. Taxact 2011 sign in TAA recipient, Health Coverage Tax Credit Yearly HCTC, Yearly HCTC Health Coverage Tax Credit Alternative TAA recipient, Who Can Take This Credit? PBGC pension payee, Who Can Take This Credit? TAA recipient, Who Can Take This Credit? Health institutes, Health Institute Health insurance Credit (see Health coverage tax credit) Employer-sponsored plan, Employer-Sponsored Health Insurance Plan Premiums Deductible, Insurance Premiums Nondeductible, Insurance Premiums You Cannot Include Paid by employer, Premiums paid by your employer. Taxact 2011 sign in Paid by employer and you, Premiums paid by you and your employer. Taxact 2011 sign in Paid by you, Premiums paid by you. Taxact 2011 sign in Prepaid, Prepaid Insurance Premiums Unused sick leave used to pay, Unused Sick Leave Used To Pay Premiums Reimbursements (see Reimbursements) Self-employed persons, Health Insurance Costs for Self-Employed Persons Health maintenance organizations (HMOs), Health Maintenance Organization (HMO) Health reimbursement arrangements (HRAs), Health reimbursement arrangement (HRA). Taxact 2011 sign in Health savings accounts (HSAs) Payments from, Health Savings Accounts Hearing aids, Hearing Aids Hearing-impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Help (see Tax help) HMOs (Health maintenance organizations), Health Maintenance Organization (HMO) Home care (see Nursing services) Home improvements (see Capital expenses:) Hospital services, Hospital Services Hotels, Lodging Household help, Household Help HRAs (Health reimbursement arrangements), Health reimbursement arrangement (HRA). Taxact 2011 sign in I Illegal operations and treatments, Illegal Operations and Treatments Illegal substances, Controlled Substances Impairment-related work expenses, Workers' compensation. Taxact 2011 sign in , Impairment-related expenses defined. Taxact 2011 sign in Reporting of, Where to report. Taxact 2011 sign in Insulin, Nonprescription Drugs and Medicines Insurance (see Health insurance) Intellectually and developmentally disabled persons Mentally retarded, Intellectually and Developmentally Disabled, Special Home for Special homes for, Intellectually and Developmentally Disabled, Special Home for L Laboratory fees, Laboratory Fees Lactation expenses (see Breast pumps and supplies) Laser eye surgery, Eye Surgery Lead-based paint removal, Lead-Based Paint Removal Learning disabilities, Special Education Legal fees, Legal Fees Lessons, dancing and swimming, Dancing Lessons Lifetime care Advance payments for, Lifetime Care—Advance Payments Lodging, Lodging, Trips (see also Trips) Long-term care, Long-Term Care Chronically ill individuals, Chronically ill individual. Taxact 2011 sign in Maintenance and personal care services, Maintenance and personal care services. Taxact 2011 sign in Qualified insurance contracts, Qualified Long-Term Care Insurance Contracts Qualified services, Qualified Long-Term Care Services M Maintenance and personal care services, Maintenance and personal care services. Taxact 2011 sign in Maternity clothes, Maternity Clothes Meals, Meals, Weight-Loss Program (see also Weight-loss programs) Medical conferences, Medical Conferences Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Taxact 2011 sign in Adjusted Basis of Medical Equipment or Property Sold Medical expense records, What Tax Form Do You Use? Medical information plans, Medical Information Plan Medical savings accounts (MSAs), Medical Savings Account (MSA) Medicare Medicare A, deductible expense, Medicare A Medicare B, deductible expense, Medicare B Medicare D, deductible expense, Medicare D Medicines, Medicines Imported, Imported medicines and drugs. Taxact 2011 sign in , Medicines and Drugs From Other Countries Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Support claimed under a multiple support agreement. Taxact 2011 sign in N Nondeductible expenses, What Expenses Are Not Includible?, Weight-Loss Program Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Nursing homes, Nursing Home Nursing services, Nursing Services, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Chronically ill individuals, Chronically ill individual. Taxact 2011 sign in Nutritional supplements Natural medicines, Nutritional Supplements O Operations, Operations Cosmetic surgery, Cosmetic Surgery Eye surgery, Eye Surgery Illegal operations and treatments, Illegal Operations and Treatments Optometrist, Optometrist Optometrist services, Eyeglasses Organ donors, Transplants Osteopath, Osteopath Oxygen, Oxygen P Paint removal, for lead-based, Lead-Based Paint Removal Parking fees and tolls, Car expenses. Taxact 2011 sign in Personal injury damages, Damages for Personal Injuries Personal use items, Personal Use Items Photographs of missing children in IRS publications, Reminders Physical examination, Physical Examination Physical therapy, Therapy Plastic surgery, Cosmetic Surgery Pregnancy test kit, Pregnancy Test Kit Premiums (see Health insurance) Prepaid insurance premiums, Prepaid Insurance Premiums Prosthesis, Artificial Limb Psychiatric care, Psychiatric Care Psychoanalysis, Psychoanalysis Psychologists, Psychologist Publications (see Tax help) R Radial keratotomy, Eye Surgery Recordkeeping, What Tax Form Do You Use? Rehabilitation facilities, Nursing Home Reimbursements, How Do You Treat Reimbursements?, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Excess includible in income More than one policy (Worksheet C), More than one policy. Taxact 2011 sign in One policy (Worksheet B), Worksheet B. Taxact 2011 sign in Excess Reimbursement Includible in Income When You Have Only One Policy Excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Health Reimbursement Arrangement (HRA), Health reimbursement arrangement (HRA). Taxact 2011 sign in Insurance, Insurance Reimbursement, What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Medical expenses not deducted, What If You Receive Insurance Reimbursement in a Later Year? More than one policy, More than one policy. Taxact 2011 sign in Received in later year, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Rental property Improvements to, Improvements to property rented by a person with a disability. Taxact 2011 sign in Reporting Health coverage tax credit, How To Take the Credit Impairment-related work expenses, Where to report. Taxact 2011 sign in Medical and dental expenses, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Medical deduction (see Form 1040, Schedule A) Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons S Sale of medical equipment or property, Sale of Medical Equipment or Property Adjusted basis (Worksheet D), Worksheet D. Taxact 2011 sign in Adjusted Basis of Medical Equipment or Property Sold Schedules (see Form 1040) Seeing-eye dogs, Guide Dog or Other Service Animal Self-employed persons Health coverage tax credit, How To Take the Credit Health insurance costs, Health Insurance Costs for Self-Employed Persons Senior housing, Nursing Home Separate returns Community property states, Community property states. Taxact 2011 sign in Medical and dental expenses, Separate returns. Taxact 2011 sign in Separated taxpayers Health coverage tax credit, Legally separated. Taxact 2011 sign in Medical expenses of child, Child of divorced or separated parents. Taxact 2011 sign in Service animals, Guide Dog or Other Service Animal Sick leave Used to pay health insurance premiums, Unused Sick Leave Used To Pay Premiums Special education, Special Education Spouse's medical expenses, Spouse Deceased spouse, What if you pay medical expenses of a deceased spouse or dependent? Sterilization, Sterilization Stop-smoking programs, Stop-Smoking Programs Surgery (see Operations) Swimming lessons, Dancing Lessons T Tables and figures Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Taxact 2011 sign in Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Taxact 2011 sign in One policy (Worksheet B), Worksheet B. Taxact 2011 sign in Excess Reimbursement Includible in Income When You Have Only One Policy Reimbursements, excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Tax help, How To Get Tax Help Teeth Artificial, Artificial Teeth Dental treatment, Dental Treatment Whitening, Teeth Whitening Telephone, Telephone Television, Television Therapy, Therapy Transplants, Transplants Travel and transportation expenses, Transportation Car expenses, Car expenses. Taxact 2011 sign in Includible expenses, You can include:, Transportation expenses you cannot include. Taxact 2011 sign in Parking fees and tolls, Car expenses. Taxact 2011 sign in Trips, Trips TTY/TDD information, How To Get Tax Help Tuition, Tuition V Vasectomy, Vasectomy Veterinary fees, Veterinary Fees Vision correction surgery, Eye Surgery Visually impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Vitamins or minerals, Nutritional Supplements Voluntary Employee's Beneficiary Association (VEBA) Qualified health insurance, Voluntary Employee's Beneficiary Association (VEBA) W Weight-loss programs, Weight-Loss Program, Weight-Loss Program What's new COBRA continuous coverage, What's New Health coverage tax credit, What's New Standard medical mileage rate, What's New Wheelchairs, Wheelchair Wigs, Wig Work expenses Disabled dependent care, Disabled Dependent Care Expenses Impairment-related, Impairment-Related Work Expenses Workers' compensation, Workers' compensation. Taxact 2011 sign in Worksheets Capital expenses (Worksheet A), Capital expense worksheet. Taxact 2011 sign in Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Taxact 2011 sign in Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Taxact 2011 sign in One policy (Worksheet B), Worksheet B. Taxact 2011 sign in Excess Reimbursement Includible in Income When You Have Only One Policy X X-rays, X-ray Prev  Up     Home   More Online Publications