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1040ez Tax Forms

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1040ez Tax Forms

1040ez tax forms 13. 1040ez tax forms   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. 1040ez tax forms It is divided into the following sections. 1040ez tax forms Cost basis. 1040ez tax forms Adjusted basis. 1040ez tax forms Basis other than cost. 1040ez tax forms Your basis is the amount of your investment in property for tax purposes. 1040ez tax forms Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. 1040ez tax forms Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. 1040ez tax forms If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. 1040ez tax forms Only the basis allocated to the business or investment use of the property can be depreciated. 1040ez tax forms Your original basis in property is adjusted (increased or decreased) by certain events. 1040ez tax forms For example, if you make improvements to the property, increase your basis. 1040ez tax forms If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. 1040ez tax forms Keep accurate records of all items that affect the basis of your property. 1040ez tax forms For more information on keeping records, see chapter 1. 1040ez tax forms Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. 1040ez tax forms The cost is the amount you pay in cash, debt obligations, other property, or services. 1040ez tax forms Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). 1040ez tax forms In addition, the basis of real estate and business assets may include other items. 1040ez tax forms Loans with low or no interest. 1040ez tax forms    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. 1040ez tax forms You generally have unstated interest if your interest rate is less than the applicable federal rate. 1040ez tax forms   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. 1040ez tax forms Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. 1040ez tax forms If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. 1040ez tax forms Lump sum purchase. 1040ez tax forms   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. 1040ez tax forms Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. 1040ez tax forms Figure the basis of each asset by multiplying the lump sum by a fraction. 1040ez tax forms The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. 1040ez tax forms    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. 1040ez tax forms Fair market value (FMV). 1040ez tax forms   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. 1040ez tax forms Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. 1040ez tax forms Assumption of mortgage. 1040ez tax forms   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. 1040ez tax forms Settlement costs. 1040ez tax forms   Your basis includes the settlement fees and closing costs you paid for buying the property. 1040ez tax forms (A fee for buying property is a cost that must be paid even if you buy the property for cash. 1040ez tax forms ) Do not include fees and costs for getting a loan on the property in your basis. 1040ez tax forms   The following are some of the settlement fees or closing costs you can include in the basis of your property. 1040ez tax forms Abstract fees (abstract of title fees). 1040ez tax forms Charges for installing utility services. 1040ez tax forms Legal fees (including fees for the title search and preparation of the sales contract and deed). 1040ez tax forms Recording fees. 1040ez tax forms Survey fees. 1040ez tax forms Transfer taxes. 1040ez tax forms Owner's title insurance. 1040ez tax forms Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. 1040ez tax forms   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. 1040ez tax forms   The following are some of the settlement fees and closing costs you cannot include in the basis of property. 1040ez tax forms Casualty insurance premiums. 1040ez tax forms Rent for occupancy of the property before closing. 1040ez tax forms Charges for utilities or other services related to occupancy of the property before closing. 1040ez tax forms Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. 1040ez tax forms Fees for refinancing a mortgage. 1040ez tax forms Real estate taxes. 1040ez tax forms   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. 1040ez tax forms You cannot deduct them as an expense. 1040ez tax forms    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. 1040ez tax forms Do not include that amount in the basis of your property. 1040ez tax forms If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. 1040ez tax forms Points. 1040ez tax forms   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. 1040ez tax forms Generally, you deduct the points over the term of the loan. 1040ez tax forms For more information on how to deduct points, see chapter 23. 1040ez tax forms Points on home mortgage. 1040ez tax forms   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. 1040ez tax forms If certain requirements are met, you can deduct the points in full for the year in which they are paid. 1040ez tax forms Reduce the basis of your home by any seller-paid points. 1040ez tax forms Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. 1040ez tax forms The result is the adjusted basis. 1040ez tax forms Increases to Basis Increase the basis of any property by all items properly added to a capital account. 1040ez tax forms Examples of items that increase basis are shown in Table 13-1. 1040ez tax forms These include the items discussed below. 1040ez tax forms Improvements. 1040ez tax forms   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. 1040ez tax forms For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. 1040ez tax forms Assessments for local improvements. 1040ez tax forms   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. 1040ez tax forms Do not deduct them as taxes. 1040ez tax forms However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. 1040ez tax forms Example. 1040ez tax forms Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. 1040ez tax forms Add the assessment to your property's basis. 1040ez tax forms In this example, the assessment is a depreciable asset. 1040ez tax forms Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. 1040ez tax forms Examples of items that decrease basis are shown in Table 13-1. 1040ez tax forms These include the items discussed below. 1040ez tax forms Table 13-1. 1040ez tax forms Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. 1040ez tax forms   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. 1040ez tax forms    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. 1040ez tax forms   For more information on casualty and theft losses, see chapter 25. 1040ez tax forms Depreciation and section 179 deduction. 1040ez tax forms   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. 1040ez tax forms   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. 1040ez tax forms Example. 1040ez tax forms You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. 1040ez tax forms You added an improvement to the duplex that cost $10,000. 1040ez tax forms In February last year, the duplex was damaged by fire. 1040ez tax forms Up to that time, you had been allowed depreciation of $23,000. 1040ez tax forms You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. 1040ez tax forms You deducted a casualty loss of $1,000 on your income tax return for last year. 1040ez tax forms You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. 1040ez tax forms You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. 1040ez tax forms Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. 1040ez tax forms Your basis in the land is its original cost of $5,000. 1040ez tax forms Easements. 1040ez tax forms   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. 1040ez tax forms It reduces the basis of the affected part of the property. 1040ez tax forms If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. 1040ez tax forms   If the gain is on a capital asset, see chapter 16 for information about how to report it. 1040ez tax forms If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. 1040ez tax forms Exclusion of subsidies for energy conservation measures. 1040ez tax forms   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. 1040ez tax forms Reduce the basis of the property for which you received the subsidy by the excluded amount. 1040ez tax forms For more information about this subsidy, see chapter 12. 1040ez tax forms Postponed gain from sale of home. 1040ez tax forms    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. 1040ez tax forms For more information on the rules for the sale of a home, see chapter 15. 1040ez tax forms Basis Other Than Cost There are many times when you cannot use cost as basis. 1040ez tax forms In these cases, the fair market value or the adjusted basis of the property can be used. 1040ez tax forms Fair market value (FMV) and adjusted basis were discussed earlier. 1040ez tax forms Property Received for Services If you receive property for your services, include the FMV of the property in income. 1040ez tax forms The amount you include in income becomes your basis. 1040ez tax forms If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. 1040ez tax forms Restricted property. 1040ez tax forms   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. 1040ez tax forms However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. 1040ez tax forms Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). 1040ez tax forms For more information, see Restricted Property in Publication 525. 1040ez tax forms Bargain purchases. 1040ez tax forms   A bargain purchase is a purchase of an item for less than its FMV. 1040ez tax forms If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. 1040ez tax forms Your basis in the property is its FMV (your purchase price plus the amount you include in income). 1040ez tax forms   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. 1040ez tax forms However, your basis in the property is still its FMV. 1040ez tax forms See Employee Discounts in Publication 15-B. 1040ez tax forms Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. 1040ez tax forms A taxable gain or deductible loss also is known as a recognized gain or loss. 1040ez tax forms If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. 1040ez tax forms Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. 1040ez tax forms Similar or related property. 1040ez tax forms   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. 1040ez tax forms Decrease the basis by the following. 1040ez tax forms Any loss you recognize on the involuntary conversion. 1040ez tax forms Any money you receive that you do not spend on similar property. 1040ez tax forms Increase the basis by the following. 1040ez tax forms Any gain you recognize on the involuntary conversion. 1040ez tax forms Any cost of acquiring the replacement property. 1040ez tax forms Money or property not similar or related. 1040ez tax forms    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. 1040ez tax forms Example. 1040ez tax forms The state condemned your property. 1040ez tax forms The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. 1040ez tax forms You realized a gain of $5,000 ($31,000 − $26,000). 1040ez tax forms You bought replacement property similar in use to the converted property for $29,000. 1040ez tax forms You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. 1040ez tax forms Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. 1040ez tax forms The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. 1040ez tax forms   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. 1040ez tax forms Basis for depreciation. 1040ez tax forms   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. 1040ez tax forms For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. 1040ez tax forms Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. 1040ez tax forms If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. 1040ez tax forms See Nontaxable Trades in chapter 14. 1040ez tax forms Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. 1040ez tax forms To qualify as a like-kind exchange, the property traded and the property received must be both of the following. 1040ez tax forms Qualifying property. 1040ez tax forms Like-kind property. 1040ez tax forms The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. 1040ez tax forms If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. 1040ez tax forms Qualifying property. 1040ez tax forms   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. 1040ez tax forms Like-kind property. 1040ez tax forms   There must be an exchange of like-kind property. 1040ez tax forms Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. 1040ez tax forms The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. 1040ez tax forms Example. 1040ez tax forms You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. 1040ez tax forms The dealer allows you $2,000 on the old truck, and you pay $4,800. 1040ez tax forms This is a like-kind exchange. 1040ez tax forms The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). 1040ez tax forms If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). 1040ez tax forms The basis of the new truck is the price you pay the dealer. 1040ez tax forms Partially nontaxable exchanges. 1040ez tax forms   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. 1040ez tax forms The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. 1040ez tax forms Decrease the basis by the following amounts. 1040ez tax forms Any money you receive. 1040ez tax forms Any loss you recognize on the exchange. 1040ez tax forms Increase the basis by the following amounts. 1040ez tax forms Any additional costs you incur. 1040ez tax forms Any gain you recognize on the exchange. 1040ez tax forms If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. 1040ez tax forms Allocation of basis. 1040ez tax forms   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. 1040ez tax forms The rest is the basis of the like-kind property. 1040ez tax forms More information. 1040ez tax forms   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. 1040ez tax forms Basis for depreciation. 1040ez tax forms   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. 1040ez tax forms For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. 1040ez tax forms Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. 1040ez tax forms The same rule applies to a transfer by your former spouse that is incident to divorce. 1040ez tax forms However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. 1040ez tax forms If the property transferred to you is a series E, series EE, or series I U. 1040ez tax forms S. 1040ez tax forms savings bond, the transferor must include in income the interest accrued to the date of transfer. 1040ez tax forms Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. 1040ez tax forms For more information on these bonds, see chapter 7. 1040ez tax forms At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. 1040ez tax forms For more information about the transfer of property from a spouse, see chapter 14. 1040ez tax forms Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. 1040ez tax forms FMV less than donor's adjusted basis. 1040ez tax forms   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. 1040ez tax forms Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. 1040ez tax forms Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. 1040ez tax forms See Adjusted Basis , earlier. 1040ez tax forms Example. 1040ez tax forms You received an acre of land as a gift. 1040ez tax forms At the time of the gift, the land had an FMV of $8,000. 1040ez tax forms The donor's adjusted basis was $10,000. 1040ez tax forms After you received the property, no events occurred to increase or decrease your basis. 1040ez tax forms If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. 1040ez tax forms If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. 1040ez tax forms If the sales price is between $8,000 and $10,000, you have neither gain nor loss. 1040ez tax forms Business property. 1040ez tax forms   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. 1040ez tax forms FMV equal to or greater than donor's adjusted basis. 1040ez tax forms   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. 1040ez tax forms Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. 1040ez tax forms   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. 1040ez tax forms See Adjusted Basis , earlier. 1040ez tax forms   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. 1040ez tax forms Figure the increase by multiplying the gift tax paid by a fraction. 1040ez tax forms The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. 1040ez tax forms   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. 1040ez tax forms The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 1040ez tax forms Example. 1040ez tax forms In 2013, you received a gift of property from your mother that had an FMV of $50,000. 1040ez tax forms Her adjusted basis was $20,000. 1040ez tax forms The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). 1040ez tax forms She paid a gift tax of $7,320 on the property. 1040ez tax forms Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . 1040ez tax forms 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. 1040ez tax forms If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. 1040ez tax forms However, your basis cannot exceed the FMV of the gift at the time it was given to you. 1040ez tax forms Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. 1040ez tax forms The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. 1040ez tax forms The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. 1040ez tax forms The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. 1040ez tax forms If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. 1040ez tax forms For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. 1040ez tax forms Property inherited from a decedent who died in 2010. 1040ez tax forms   If you inherited property from a decedent who died in 2010, special rules may apply. 1040ez tax forms For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. 1040ez tax forms Community property. 1040ez tax forms   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. 1040ez tax forms When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. 1040ez tax forms For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. 1040ez tax forms Example. 1040ez tax forms You and your spouse owned community property that had a basis of $80,000. 1040ez tax forms When your spouse died, half the FMV of the community interest was includible in your spouse's estate. 1040ez tax forms The FMV of the community interest was $100,000. 1040ez tax forms The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). 1040ez tax forms The basis of the other half to your spouse's heirs is also $50,000. 1040ez tax forms For more information about community property, see Publication 555, Community Property. 1040ez tax forms Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. 1040ez tax forms To do so, you must figure its basis for depreciation at the time of the change. 1040ez tax forms An example of changing property held for personal use to business or rental use would be renting out your former personal residence. 1040ez tax forms Basis for depreciation. 1040ez tax forms   The basis for depreciation is the lesser of the following amounts. 1040ez tax forms The FMV of the property on the date of the change. 1040ez tax forms Your adjusted basis on the date of the change. 1040ez tax forms Example. 1040ez tax forms Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. 1040ez tax forms You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. 1040ez tax forms Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. 1040ez tax forms Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). 1040ez tax forms On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. 1040ez tax forms The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). 1040ez tax forms Sale of property. 1040ez tax forms   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. 1040ez tax forms Gain. 1040ez tax forms   The basis for figuring a gain is your adjusted basis in the property when you sell the property. 1040ez tax forms Example. 1040ez tax forms Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. 1040ez tax forms Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). 1040ez tax forms Loss. 1040ez tax forms   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. 1040ez tax forms Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . 1040ez tax forms Example. 1040ez tax forms Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. 1040ez tax forms In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. 1040ez tax forms Reduce that amount ($180,000) by the depreciation deductions ($37,500). 1040ez tax forms The basis for loss is $142,500 ($180,000 − $37,500). 1040ez tax forms Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. 1040ez tax forms If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. 1040ez tax forms You must adjust the basis of stocks for certain events that occur after purchase. 1040ez tax forms For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. 1040ez tax forms This rule applies only when the additional stock received is identical to the stock held. 1040ez tax forms Also reduce your basis when you receive nontaxable distributions. 1040ez tax forms They are a return of capital. 1040ez tax forms Example. 1040ez tax forms In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. 1040ez tax forms In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. 1040ez tax forms In 2013 XYZ declared a 2-for-1 stock split. 1040ez tax forms You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. 1040ez tax forms Other basis. 1040ez tax forms   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. 1040ez tax forms For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. 1040ez tax forms Identifying stocks or bonds sold. 1040ez tax forms   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. 1040ez tax forms If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. 1040ez tax forms For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. 1040ez tax forms Mutual fund shares. 1040ez tax forms   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. 1040ez tax forms For more information, see Publication 550. 1040ez tax forms Bond premium. 1040ez tax forms   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. 1040ez tax forms See Bond Premium Amortization in chapter 3 of Publication 550 for more information. 1040ez tax forms Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. 1040ez tax forms Original issue discount (OID) on debt instruments. 1040ez tax forms   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. 1040ez tax forms See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. 1040ez tax forms Tax-exempt obligations. 1040ez tax forms    OID on tax-exempt obligations is generally not taxable. 1040ez tax forms However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. 1040ez tax forms The accrued OID is added to the basis of the obligation to determine your gain or loss. 1040ez tax forms See chapter 4 of Publication 550. 1040ez tax forms Prev  Up  Next   Home   More Online Publications
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The 1040ez Tax Forms

1040ez tax forms Publication 529 - Main Content Table of Contents Deductions Subject to the 2% LimitUnreimbursed Employee Expenses Tax Preparation Fees Other Expenses Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses How To ReportWho can use Form 2106-EZ. 1040ez tax forms Computer used in a home office. 1040ez tax forms Example How To Get Tax HelpLow Income Taxpayer Clinics Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). 1040ez tax forms You can claim the amount of expenses that is more than 2% of your adjusted gross income. 1040ez tax forms You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. 1040ez tax forms Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. 1040ez tax forms Generally, you apply the 2% limit after you apply any other deduction limit. 1040ez tax forms For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging ) before you apply the 2% limit. 1040ez tax forms Deductions subject to the 2% limit are discussed in the following three categories. 1040ez tax forms Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). 1040ez tax forms Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). 1040ez tax forms Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). 1040ez tax forms Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 1040ez tax forms You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. 1040ez tax forms An expense is ordinary if it is common and accepted in your trade, business, or profession. 1040ez tax forms An expense is necessary if it is appropriate and helpful to your business. 1040ez tax forms An expense does not have to be required to be considered necessary. 1040ez tax forms You may be able to deduct the following items as unreimbursed employee expenses. 1040ez tax forms Business bad debt of an employee. 1040ez tax forms Business liability insurance premiums. 1040ez tax forms Damages paid to a former employer for breach of an employment contract. 1040ez tax forms Depreciation on a computer your employer requires you to use in your work. 1040ez tax forms Dues to a chamber of commerce if membership helps you do your job. 1040ez tax forms Dues to professional societies. 1040ez tax forms Educator expenses. 1040ez tax forms Home office or part of your home used regularly and exclusively in your work. 1040ez tax forms Job search expenses in your present occupation. 1040ez tax forms Laboratory breakage fees. 1040ez tax forms Legal fees related to your job. 1040ez tax forms Licenses and regulatory fees. 1040ez tax forms Malpractice insurance premiums. 1040ez tax forms Medical examinations required by an employer. 1040ez tax forms Occupational taxes. 1040ez tax forms Passport for a business trip. 1040ez tax forms Repayment of an income aid payment received under an employer's plan. 1040ez tax forms Research expenses of a college professor. 1040ez tax forms Rural mail carriers' vehicle expenses. 1040ez tax forms Subscriptions to professional journals and trade magazines related to your work. 1040ez tax forms Tools and supplies used in your work. 1040ez tax forms Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. 1040ez tax forms Union dues and expenses. 1040ez tax forms Work clothes and uniforms if required and not suitable for everyday use. 1040ez tax forms Work-related education. 1040ez tax forms Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. 1040ez tax forms Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. 1040ez tax forms A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. 1040ez tax forms Example. 1040ez tax forms You make a bona fide loan to the corporation you work for. 1040ez tax forms It fails to pay you back. 1040ez tax forms You had to make the loan in order to keep your job. 1040ez tax forms You have a business bad debt as an employee. 1040ez tax forms More information. 1040ez tax forms   For more information on business bad debts, see chapter 10 in Publication 535. 1040ez tax forms For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. 1040ez tax forms Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. 1040ez tax forms Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. 1040ez tax forms Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: For the convenience of your employer, and Required as a condition of your employment. 1040ez tax forms For the convenience of your employer. 1040ez tax forms   This means that your use of the computer is for a substantial business reason of your employer. 1040ez tax forms You must consider all facts in making this determination. 1040ez tax forms Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. 1040ez tax forms Required as a condition of your employment. 1040ez tax forms   This means that you cannot properly perform your duties without the computer. 1040ez tax forms Whether you can properly perform your duties without it depends on all the facts and circumstances. 1040ez tax forms It is not necessary that your employer explicitly requires you to use your computer. 1040ez tax forms But neither is it enough that your employer merely states that your use of the item is a condition of your employment. 1040ez tax forms Example. 1040ez tax forms You are an engineer with an engineering firm. 1040ez tax forms You occasionally take work home at night rather than work late at the office. 1040ez tax forms You own and use a computer that is similar to the one you use at the office to complete your work at home. 1040ez tax forms Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. 1040ez tax forms Which depreciation method to use. 1040ez tax forms   The depreciation method you use depends on whether you meet the more-than-50%-use test. 1040ez tax forms More-than-50%-use test met. 1040ez tax forms   You meet this test if you use the computer more than 50% in your work. 1040ez tax forms If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). 1040ez tax forms In addition, you may be able to take the section 179 deduction for the year you place the item in service. 1040ez tax forms More-than-50%-use test not met. 1040ez tax forms   If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). 1040ez tax forms You also cannot claim the section 179 deduction. 1040ez tax forms (But if you use your computer in a home office, see the exception below. 1040ez tax forms ) Investment use. 1040ez tax forms   Your use of a computer in connection with investments (described later under Other Expenses ) does not count as use in your work. 1040ez tax forms However, you can combine your investment use with your work use in figuring your depreciation deduction. 1040ez tax forms Exception for computer used in a home office. 1040ez tax forms   The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office . 1040ez tax forms You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. 1040ez tax forms You also may be able to take a section 179 deduction for the year you place the computer in service. 1040ez tax forms See Computer used in a home office under How To Report, later. 1040ez tax forms More information. 1040ez tax forms   For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. 1040ez tax forms Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. 1040ez tax forms Reporting your depreciation deduction. 1040ez tax forms    See How To Report, later, for information about reporting a deduction for depreciation. 1040ez tax forms You must keep records to prove your percentage of business and investment use. 1040ez tax forms Dues to Chambers of Commerce and Professional Societies You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. 1040ez tax forms Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. 1040ez tax forms Lobbying and political activities. 1040ez tax forms    You may not be able to deduct that part of your dues that is for certain lobbying and political activities. 1040ez tax forms See Lobbying Expenses under Nondeductible Expenses, later. 1040ez tax forms Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. 1040ez tax forms If you file Form 1040A, you can deduct these expenses on line 16. 1040ez tax forms If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. 1040ez tax forms However, neither spouse can deduct more than $250 of his or her qualified expenses. 1040ez tax forms Eligible educator. 1040ez tax forms   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. 1040ez tax forms Qualified expenses. 1040ez tax forms   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. 1040ez tax forms An ordinary expense is one that is common and accepted in your educational field. 1040ez tax forms A necessary expense is one that is helpful and appropriate for your profession as an educator. 1040ez tax forms An expense does not have to be required to be considered necessary. 1040ez tax forms   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. 1040ez tax forms You must reduce your qualified expenses by the following amounts. 1040ez tax forms Excludable U. 1040ez tax forms S. 1040ez tax forms series EE and I savings bond interest from Form 8815. 1040ez tax forms Nontaxable qualified state tuition program earnings. 1040ez tax forms Nontaxable earnings from Coverdell education savings accounts. 1040ez tax forms Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. 1040ez tax forms Educator expenses over limit. 1040ez tax forms   If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. 1040ez tax forms Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. 1040ez tax forms You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. 1040ez tax forms The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. 1040ez tax forms Principal place of business. 1040ez tax forms   If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. 1040ez tax forms   Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. 1040ez tax forms You should keep records that will give the information needed to figure the deduction according to these rules. 1040ez tax forms Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. 1040ez tax forms More information. 1040ez tax forms   See Publication 587 for more detailed information and a worksheet for figuring the deduction. 1040ez tax forms Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. 1040ez tax forms You cannot deduct these expenses if: You are looking for a job in a new occupation, There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. 1040ez tax forms Employment and outplacement agency fees. 1040ez tax forms    You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. 1040ez tax forms Employer pays you back. 1040ez tax forms   If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. 1040ez tax forms See Recoveries in Publication 525. 1040ez tax forms Employer pays the employment agency. 1040ez tax forms   If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. 1040ez tax forms Résumé. 1040ez tax forms   You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. 1040ez tax forms Travel and transportation expenses. 1040ez tax forms   If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. 1040ez tax forms You can deduct the travel expenses if the trip is primarily to look for a new job. 1040ez tax forms The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. 1040ez tax forms   Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. 1040ez tax forms    You can choose to use the standard mileage rate to figure your car expenses. 1040ez tax forms The 2013 rate for business use of a vehicle is 56½ cents per mile. 1040ez tax forms See Publication 463 for more information on travel and car expenses. 1040ez tax forms Legal Fees You can deduct legal fees related to doing or keeping your job. 1040ez tax forms Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. 1040ez tax forms Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. 1040ez tax forms If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. 1040ez tax forms Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. 1040ez tax forms If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. 1040ez tax forms Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. 1040ez tax forms You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. 1040ez tax forms However, you cannot deduct the cost of travel as a form of education. 1040ez tax forms Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. 1040ez tax forms See chapter 4 of Publication 463 for more information. 1040ez tax forms Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. 1040ez tax forms You can depreciate the cost of tools that have a useful life substantially beyond the tax year. 1040ez tax forms For more information about depreciation, see Publication 946. 1040ez tax forms Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. 1040ez tax forms Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. 1040ez tax forms Travel expenses. 1040ez tax forms   Travel expenses are those incurred while traveling away from home for your employer. 1040ez tax forms You can deduct travel expenses paid or incurred in connection with a temporary work assignment. 1040ez tax forms Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. 1040ez tax forms   Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc. 1040ez tax forms ), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. 1040ez tax forms   Travel expenses are discussed more fully in chapter 1 of Publication 463. 1040ez tax forms Temporary work assignment. 1040ez tax forms    If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. 1040ez tax forms Indefinite work assignment. 1040ez tax forms   If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. 1040ez tax forms If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. 1040ez tax forms Federal crime investigation and prosecution. 1040ez tax forms   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. 1040ez tax forms This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. 1040ez tax forms   To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. 1040ez tax forms Armed Forces reservists traveling more than 100 miles from home. 1040ez tax forms   If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. 1040ez tax forms The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. 1040ez tax forms The balance, if any, is reported on Schedule A. 1040ez tax forms   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. 1040ez tax forms   For more information on travel expenses, see Publication 463. 1040ez tax forms Local transportation expenses. 1040ez tax forms   Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. 1040ez tax forms They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. 1040ez tax forms   You can choose to use the standard mileage rate to figure your car expenses. 1040ez tax forms The 2013 rate for business use of a vehicle is 56½ cents per mile. 1040ez tax forms    In general, the costs of commuting between your residence and your place of business are nondeductible. 1040ez tax forms Work at two places in a day. 1040ez tax forms   If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. 1040ez tax forms Temporary work location. 1040ez tax forms   You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. 1040ez tax forms The work location is outside the metropolitan area where you live and normally work. 1040ez tax forms You have at least one regular work location (other than your home) for the same trade or business. 1040ez tax forms (If this applies, the distance between your home and the temporary work location does not matter. 1040ez tax forms )   For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. 1040ez tax forms It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. 1040ez tax forms If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. 1040ez tax forms For more information, see chapter 1 of Publication 463. 1040ez tax forms Home office. 1040ez tax forms   You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. 1040ez tax forms (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter. 1040ez tax forms ) See Home Office , earlier, for a discussion on the use of your home as your principal place of business. 1040ez tax forms Meals and entertainment. 1040ez tax forms   Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. 1040ez tax forms However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. 1040ez tax forms   You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. 1040ez tax forms You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. 1040ez tax forms Meals when subject to “hours of service” limits. 1040ez tax forms   You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. 1040ez tax forms You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. 1040ez tax forms Gift expenses. 1040ez tax forms   You can generally deduct up to $25 of business gifts you give to any one individual during the year. 1040ez tax forms The following items do not count toward the $25 limit. 1040ez tax forms Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. 1040ez tax forms Signs, racks, and promotional materials to be displayed on the business premises of the recipient. 1040ez tax forms Local lodging. 1040ez tax forms   If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. 1040ez tax forms   If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. 1040ez tax forms Additional information. 1040ez tax forms    See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. 1040ez tax forms Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. 1040ez tax forms You can also deduct assessments for benefit payments to unemployed union members. 1040ez tax forms However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. 1040ez tax forms Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. 1040ez tax forms You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. 1040ez tax forms See Lobbying Expenses under Nondeductible Expenses, later. 1040ez tax forms Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. 1040ez tax forms You must wear them as a condition of your employment. 1040ez tax forms The clothes are not suitable for everyday wear. 1040ez tax forms It is not enough that you wear distinctive clothing. 1040ez tax forms The clothing must be specifically required by your employer. 1040ez tax forms Nor is it enough that you do not, in fact, wear your work clothes away from work. 1040ez tax forms The clothing must not be suitable for taking the place of your regular clothing. 1040ez tax forms Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc. 1040ez tax forms ). 1040ez tax forms Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. 1040ez tax forms However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. 1040ez tax forms Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. 1040ez tax forms Protective clothing. 1040ez tax forms   You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. 1040ez tax forms   Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. 1040ez tax forms Military uniforms. 1040ez tax forms   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. 1040ez tax forms However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. 1040ez tax forms In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. 1040ez tax forms   If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. 1040ez tax forms   If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. 1040ez tax forms However, you can deduct the cost of insignia, shoulder boards, and related items. 1040ez tax forms    You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. 1040ez tax forms Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. 1040ez tax forms It maintains or improves skills required in your present work. 1040ez tax forms It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. 1040ez tax forms You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. 1040ez tax forms If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. 1040ez tax forms If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. 1040ez tax forms Travel as education. 1040ez tax forms   You cannot deduct the cost of travel that in itself constitutes a form of education. 1040ez tax forms For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. 1040ez tax forms More information. 1040ez tax forms    See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. 1040ez tax forms Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. 1040ez tax forms Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. 1040ez tax forms Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. 1040ez tax forms Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. 1040ez tax forms These fees include the cost of tax preparation software programs and tax publications. 1040ez tax forms They also include any fee you paid for electronic filing of your return. 1040ez tax forms See Tax preparation fees under How To Report, later. 1040ez tax forms Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. 1040ez tax forms On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary expenses that you pay: To produce or collect income that must be included in your gross income, To manage, conserve, or maintain property held for producing such income, or To determine, contest, pay, or claim a refund of any tax. 1040ez tax forms You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. 1040ez tax forms These other expenses include the following items. 1040ez tax forms Appraisal fees for a casualty loss or charitable contribution. 1040ez tax forms Casualty and theft losses from property used in performing services as an employee. 1040ez tax forms Clerical help and office rent in caring for investments. 1040ez tax forms Depreciation on home computers used for investments. 1040ez tax forms Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. 1040ez tax forms Fees to collect interest and dividends. 1040ez tax forms Hobby expenses, but generally not more than hobby income. 1040ez tax forms Indirect miscellaneous deductions from pass-through entities. 1040ez tax forms Investment fees and expenses. 1040ez tax forms Legal fees related to producing or collecting taxable income or getting tax advice. 1040ez tax forms Loss on deposits in an insolvent or bankrupt financial institution. 1040ez tax forms Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. 1040ez tax forms Repayments of income. 1040ez tax forms Repayments of social security benefits. 1040ez tax forms Safe deposit box rental, except for storing jewelry and other personal effects. 1040ez tax forms Service charges on dividend reinvestment plans. 1040ez tax forms Tax advice fees. 1040ez tax forms Trustee's fees for your IRA, if separately billed and paid. 1040ez tax forms If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses, later, under Nondeductible Expenses. 1040ez tax forms Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. 1040ez tax forms Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. 1040ez tax forms First report the loss in Section B of Form 4684, Casualties and Thefts. 1040ez tax forms You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. 1040ez tax forms To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. 1040ez tax forms For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. 1040ez tax forms Clerical Help and Office Rent You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. 1040ez tax forms Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. 1040ez tax forms The fees are deductible on the return for the year in which you paid them. 1040ez tax forms For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. 1040ez tax forms Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). 1040ez tax forms You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. 1040ez tax forms But if you work as an employee and also use the computer in that work, see Depreciation on Computers under Unreimbursed Employee Expenses, earlier. 1040ez tax forms For more information on depreciation, see Publication 946. 1040ez tax forms Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. 1040ez tax forms Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. 1040ez tax forms The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. 1040ez tax forms For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. 1040ez tax forms Fees To Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. 1040ez tax forms But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. 1040ez tax forms You must add the fee to the cost of the property. 1040ez tax forms You cannot deduct the fee you pay to a broker to sell securities. 1040ez tax forms You can use the fee only to figure gain or loss from the sale. 1040ez tax forms See the instructions for Schedule D (Form 1040) for information on how to report the fee. 1040ez tax forms Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. 1040ez tax forms A hobby is not a business because it is not carried on to make a profit. 1040ez tax forms See Not-for-Profit Activities in chapter 1 of Publication 535. 1040ez tax forms Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. 1040ez tax forms Deductions of pass-through entities are passed through to the partners or shareholders. 1040ez tax forms The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. 1040ez tax forms Example. 1040ez tax forms You are a member of an investment club that is formed solely to invest in securities. 1040ez tax forms The club is treated as a partnership. 1040ez tax forms The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. 1040ez tax forms In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. 1040ez tax forms However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. 1040ez tax forms Publicly offered mutual funds. 1040ez tax forms   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. 1040ez tax forms A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. 1040ez tax forms   A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). 1040ez tax forms This net figure is the amount you report on your return as income. 1040ez tax forms You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. 1040ez tax forms Information returns. 1040ez tax forms   You should receive information returns from pass-through entities. 1040ez tax forms Partnerships and S corporations. 1040ez tax forms   These entities issue Schedule K-1, which lists the items and amounts you must report, and identifies the tax return schedules and lines to use. 1040ez tax forms Nonpublicly offered mutual funds. 1040ez tax forms   These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. 1040ez tax forms You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. 1040ez tax forms Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. 1040ez tax forms Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. 1040ez tax forms You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. 1040ez tax forms You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. 1040ez tax forms You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). 1040ez tax forms See Tax Preparation Fees, earlier. 1040ez tax forms Unlawful discrimination claims. 1040ez tax forms   You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U. 1040ez tax forms S. 1040ez tax forms Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. 1040ez tax forms However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. 1040ez tax forms See Publication 525 for more information. 1040ez tax forms Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. 1040ez tax forms If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. 1040ez tax forms If elected, the casualty loss is subject to certain deduction limitations. 1040ez tax forms The election is made on Form 4684. 1040ez tax forms Once you make this choice, you cannot change it without IRS approval. 1040ez tax forms If none of the deposit is federally insured, you can deduct the loss in either of the following ways. 1040ez tax forms As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). 1040ez tax forms Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. 1040ez tax forms This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. 1040ez tax forms As a casualty loss. 1040ez tax forms Report it on Form 4684 first and then on Schedule A (Form 1040). 1040ez tax forms See Publication 547 for details. 1040ez tax forms As a nonbusiness bad debt. 1040ez tax forms Report it on Schedule D (Form 1040). 1040ez tax forms If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. 1040ez tax forms Exception. 1040ez tax forms   You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. 1040ez tax forms For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. 1040ez tax forms Actual loss different from estimated loss. 1040ez tax forms   If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. 1040ez tax forms See Recoveries in Publication 525. 1040ez tax forms If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. 1040ez tax forms Choice not made. 1040ez tax forms   If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. 1040ez tax forms See Nonbusiness Bad Debts in chapter 4 of Publication 550. 1040ez tax forms Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. 1040ez tax forms For more information, see Publication 590, Individual Retirement Arrangements (IRAs). 1040ez tax forms Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. 1040ez tax forms If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. 1040ez tax forms If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. 1040ez tax forms Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. 1040ez tax forms The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. 1040ez tax forms The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. 1040ez tax forms It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). 1040ez tax forms If the deduction is more than $3,000, you will have to use a special computation to figure your tax. 1040ez tax forms See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional information. 1040ez tax forms Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. 1040ez tax forms You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. 1040ez tax forms Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. 1040ez tax forms These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. 1040ez tax forms Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. 1040ez tax forms Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. 1040ez tax forms They are not subject to the 2% limit. 1040ez tax forms Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. 1040ez tax forms List of Deductions Amortizable premium on taxable bonds. 1040ez tax forms Casualty and theft losses from income-producing property. 1040ez tax forms Federal estate tax on income in respect of a decedent. 1040ez tax forms Gambling losses up to the amount of gambling winnings. 1040ez tax forms Impairment-related work expenses of persons with disabilities. 1040ez tax forms Loss from other activities from Schedule K-1 (Form 1065-B), box 2. 1040ez tax forms Losses from Ponzi-type investment schemes. 1040ez tax forms Repayments of more than $3,000 under a claim of right. 1040ez tax forms Unrecovered investment in an annuity. 1040ez tax forms Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. 1040ez tax forms You can elect to amortize the premium on taxable bonds. 1040ez tax forms The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. 1040ez tax forms Pre-1998 election to amortize bond premium. 1040ez tax forms   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. 1040ez tax forms Bonds acquired after October 22, 1986, and before 1988. 1040ez tax forms   The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. 1040ez tax forms Bonds acquired before October 23, 1986. 1040ez tax forms   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. 1040ez tax forms Deduction for excess premium. 1040ez tax forms   On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. 1040ez tax forms If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. 1040ez tax forms However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. 1040ez tax forms If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. 1040ez tax forms    Pre-1998 choice to amortize bond premium. 1040ez tax forms If you made the choice to amortize the premium on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your interest income only for bonds acquired during 1998 and later years. 1040ez tax forms More information. 1040ez tax forms    For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. 1040ez tax forms Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). 1040ez tax forms First report the loss in Section B of Form 4684. 1040ez tax forms You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. 1040ez tax forms To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. 1040ez tax forms For more information on casualty and theft losses, see Publication 547. 1040ez tax forms Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. 1040ez tax forms Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. 1040ez tax forms See Publication 559 for information about figuring the amount of this deduction. 1040ez tax forms Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. 1040ez tax forms You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. 1040ez tax forms You cannot deduct gambling losses that are more than your winnings. 1040ez tax forms Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). 1040ez tax forms You cannot reduce your gambling winnings by your gambling losses and report the difference. 1040ez tax forms You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. 1040ez tax forms Therefore, your records should show your winnings separately from your losses. 1040ez tax forms Diary of winnings and losses. 1040ez tax forms You must keep an accurate diary or similar record of your losses and winnings. 1040ez tax forms Your diary should contain at least the following information. 1040ez tax forms The date and type of your specific wager or wagering activity. 1040ez tax forms The name and address or location of the gambling establishment. 1040ez tax forms The names of other persons present with you at the gambling establishment. 1040ez tax forms The amount(s) you won or lost. 1040ez tax forms Proof of winnings and losses. 1040ez tax forms   In addition to your diary, you should also have other documentation. 1040ez tax forms You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. 1040ez tax forms   For specific wagering transactions, you can use the following items to support your winnings and losses. 1040ez tax forms    These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. 1040ez tax forms They are not all-inclusive. 1040ez tax forms Your tax liability depends on your particular facts and circumstances. 1040ez tax forms Keno. 1040ez tax forms   Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. 1040ez tax forms Slot machines. 1040ez tax forms   A record of the machine number and all winnings by date and time the machine was played. 1040ez tax forms Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc. 1040ez tax forms ). 1040ez tax forms   The number of the table at which you were playing. 1040ez tax forms Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. 1040ez tax forms Bingo. 1040ez tax forms   A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. 1040ez tax forms Supplemental records include any receipts from the casino, parlor, etc. 1040ez tax forms Racing (horse, harness, dog, etc. 1040ez tax forms ). 1040ez tax forms   A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. 1040ez tax forms Supplemental records include unredeemed tickets and payment records from the racetrack. 1040ez tax forms Lotteries. 1040ez tax forms   A record of ticket purchases, dates, winnings, and losses. 1040ez tax forms Supplemental records include unredeemed tickets, payment slips, and winnings statements. 1040ez tax forms Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. 1040ez tax forms Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. 1040ez tax forms Example. 1040ez tax forms You are blind. 1040ez tax forms You must use a reader to do your work. 1040ez tax forms You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. 1040ez tax forms The reader's services are only for your work. 1040ez tax forms You can deduct your expenses for the reader as impairment-related work expenses. 1040ez tax forms Self-employed. 1040ez tax forms   If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. 1040ez tax forms See Impairment-related work expenses. 1040ez tax forms , later under How To Report. 1040ez tax forms Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U. 1040ez tax forms S. 1040ez tax forms trade or business). 1040ez tax forms It is not subject to the passive activity limitations. 1040ez tax forms Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. 1040ez tax forms See Publication 463 for more information. 1040ez tax forms Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. 1040ez tax forms If you are an employee, complete Form 2106 or Form 2106-EZ. 1040ez tax forms See Publication 463 for more information. 1040ez tax forms Losses From Ponzi-type Investment Schemes These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. 1040ez tax forms You figure the deductible loss in Section B of Form 4684. 1040ez tax forms However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. 1040ez tax forms Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 1040ez tax forms You do not need to complete Appendix A. 1040ez tax forms See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. 1040ez tax forms Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid, or take a credit against your tax. 1040ez tax forms See Repayments in Publication 525 for more information. 1040ez tax forms Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. 1040ez tax forms If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. 1040ez tax forms See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. 1040ez tax forms Nondeductible Expenses You cannot deduct the following expenses. 1040ez tax forms List of Nondeductible Expenses Adoption expenses. 1040ez tax forms Broker's commissions. 1040ez tax forms Burial or funeral expenses, including the cost of a cemetery lot. 1040ez tax forms Campaign expenses. 1040ez tax forms Capital expenses. 1040ez tax forms Check-writing fees. 1040ez tax forms Club dues. 1040ez tax forms Commuting expenses. 1040ez tax forms Fees and licenses, such as car licenses, marriage licenses, and dog tags. 1040ez tax forms Fines and penalties, such as parking tickets. 1040ez tax forms Health spa expenses. 1040ez tax forms Hobby losses—but see Hobby Expenses, earlier. 1040ez tax forms Home repairs, insurance, and rent. 1040ez tax forms Home security system. 1040ez tax forms Illegal bribes and kickbacks—see Bribes and kickbacks in chapter 11 of Publication 535. 1040ez tax forms Investment-related seminars. 1040ez tax forms Life insurance premiums paid by the insured. 1040ez tax forms Lobbying expenses. 1040ez tax forms Losses from the sale of your home, furniture, personal car, etc. 1040ez tax forms Lost or misplaced cash or property. 1040ez tax forms Lunches with co-workers. 1040ez tax forms Meals while working late. 1040ez tax forms Medical expenses as business expenses other than medical examinations required by your employer. 1040ez tax forms Personal disability insurance premiums. 1040ez tax forms Personal legal expenses. 1040ez tax forms Personal, living, or family expenses. 1040ez tax forms Political contributions. 1040ez tax forms Professional accreditation fees. 1040ez tax forms Professional reputation, expenses to improve. 1040ez tax forms Relief fund contributions. 1040ez tax forms Residential telephone line. 1040ez tax forms Stockholders' meeting, expenses of attending. 1040ez tax forms Tax-exempt income, expenses of earning or collecting. 1040ez tax forms The value of wages never received or lost vacation time. 1040ez tax forms Travel expenses for another individual. 1040ez tax forms Voluntary unemployment benefit fund contributions. 1040ez tax forms Wristwatches. 1040ez tax forms Adoption Expenses You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. 1040ez tax forms For details, see Form 8839, Qualified Adoption Expenses. 1040ez tax forms Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. 1040ez tax forms Instead, these fees must be added to the taxpayer's cost of the securities. 1040ez tax forms Commissions paid on the sale are deductible as business expenses only by dealers. 1040ez tax forms Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. 1040ez tax forms These include qualification and registration fees for primary elections. 1040ez tax forms Legal fees. 1040ez tax forms   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. 1040ez tax forms Capital Expenses You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. 1040ez tax forms If you use such property in your work, you may be able to take a depreciation deduction. 1040ez tax forms See Publication 946. 1040ez tax forms If the property is a car used in your work, also see Publication 463. 1040ez tax forms Check-Writing Fees on Personal Account If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. 1040ez tax forms Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. 1040ez tax forms This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. 1040ez tax forms You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. 1040ez tax forms Dues paid to airline, hotel, and luncheon clubs are not deductible. 1040ez tax forms Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). 1040ez tax forms If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items, such as the rent on a trailer to carry the items. 1040ez tax forms Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. 1040ez tax forms This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). 1040ez tax forms Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. 1040ez tax forms Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. 1040ez tax forms Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. 1040ez tax forms However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. 1040ez tax forms See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. 1040ez tax forms Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. 1040ez tax forms Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. 1040ez tax forms You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. 1040ez tax forms See Publication 504, Divorced or Separated Individuals, for information on alimony. 1040ez tax forms Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. 1040ez tax forms These include expenses to: Influence legislation, Participate, or intervene, in any political campaign for, or against, any candidate for public office, Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. 1040ez tax forms Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. 1040ez tax forms Covered executive branch official. 1040ez tax forms   A covered executive branch official, for the purpose of (4) above, is any of the following officials. 1040ez tax forms The President. 1040ez tax forms The Vice President. 1040ez tax forms 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. 1040ez tax forms Any individual serving in a position in Level I of the Executive Schedule under section 5312 of Title 5, United States Code, any other individual designated by the President as having Cabinet-level status, and any immediate deputy of one of these individuals. 1040ez tax forms Dues used for lobbying. 1040ez tax forms   If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you cannot deduct that part. 1040ez tax forms Exceptions. 1040ez tax forms   You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business. 1040ez tax forms You can deduct expenses for attempting to influence the legislation of any local council or similar governing body (local legislation). 1040ez tax forms An Indian tribal government is considered a local council or similar governing body. 1040ez tax forms You can deduct in-house expenses for influencing legislation or communicating directly with a covered executive branch official if the expenses for the tax year are not more than $2,000 (not counting overhead expenses). 1040ez tax forms If you are a professional lobbyist, you can deduct the expenses you incur in the trade or business of lobbying on behalf of another person. 1040ez tax forms Payments by the other person to you for lobbying activities cannot be deducted. 1040ez tax forms Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. 1040ez tax forms However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. 1040ez tax forms See Publication 547. 1040ez tax forms Example. 1040ez tax forms A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 1040ez tax forms The diamond falls from the ring and is never found. 1040ez tax forms The loss of the diamond is a casualty. 1040ez tax forms Lunches With Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. 1040ez tax forms See Publication 463 for information on deductible expenses while traveling away from home. 1040ez tax forms Meals While Working Late You cannot deduct the cost of meals while working late. 1040ez tax forms However, you may be able to claim a deduction if the cost of the meals is a deductible entertainment expense, or if you are traveling away from home. 1040ez tax forms See Publication 463 for information on deductible entertainment expenses and expenses while traveling away from home. 1040ez tax forms Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. 1040ez tax forms Custody of children. 1040ez tax forms Breach of promise to marry suit. 1040ez tax forms Civil or criminal charges resulting from a personal relationship. 1040ez tax forms Damages for personal injury (except certain whistleblower claims and unlawful discrimination claims). 1040ez tax forms For more information about unlawful discrimination claims, see Deductions Subject to the 2% Limit, earlier. 1040ez tax forms Preparation of a title (or defense or perfection of a title). 1040ez tax forms Preparation of a will. 1040ez tax forms Property claims or property settlement in a divorce. 1040ez tax forms You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. 1040ez tax forms Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. 1040ez tax forms Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. 1040ez tax forms Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. 1040ez tax forms Accounting certificate fees paid for the initial right to practice accounting. 1040ez tax forms Bar exam fees and incidental expenses in securing initial admission to the bar. 1040ez tax forms Medical and dental license fees paid to get initial licensing. 1040ez tax forms Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. 1040ez tax forms Relief Fund Contributions You cannot deduct contributions paid to a private plan that pays benefits to any covered employee who cannot work because of any injury or illness not related to the job. 1040ez tax forms Residential Telephone Service You cannot deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it is used in a trade or business. 1040ez tax forms Stockholders' Meetings You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. 1040ez tax forms You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. 1040ez tax forms Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. 1040ez tax forms You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. 1040ez tax forms If you have expenses to p