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2040 Ez Form

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2040 Ez Form

2040 ez form Publication 4492 - Main Contents Table of Contents DefinitionsHurricane Katrina Disaster Area Katrina Covered Disaster Area Gulf Opportunity (GO) Zone (Core Disaster Area) Hurricane Rita Disaster Area (Rita Covered Disaster Area) Rita GO Zone Hurricane Wilma Disaster Area Wilma Covered Disaster Area Wilma GO Zone Extended Tax Deadlines Charitable Giving IncentivesTemporary Suspension of Limits on Charitable Contributions Standard Mileage Rate for Charitable Use of Vehicles Mileage Reimbursements to Charitable Volunteers Charitable Deduction for Contributions of Food Inventory Charitable Deduction for Contributions of Book Inventories to Public Schools Casualty and Theft LossesTime limit for making election. 2040 ez form Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Hurricane Distributions Repayment of Qualified Hurricane Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for IndividualsEarned Income Credit and Child Tax Credit Additional Exemption for Housing Individuals Displaced by Hurricane Katrina Education Credits Recapture of Federal Mortgage Subsidy Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Tax Relief for Temporary Relocation Additional Tax Relief for BusinessesSpecial Depreciation Allowance Increased Section 179 Deduction Work Opportunity Credit Employee Retention Credit Hurricane Katrina Housing Credit Reforestation Costs Demolition and Clean-up Costs Increase in Rehabilitation Tax Credit Request for Copy or Transcript of Tax Return How To Get Tax Help Definitions The following definitions are used throughout this publication. 2040 ez form Hurricane Katrina Disaster Area The Hurricane Katrina disaster area covers the area for which the President declared a major disaster before September 14, 2005, because of Hurricane Katrina. 2040 ez form The Hurricane Katrina disaster area covers the entire states of Alabama, Florida, Louisiana, and Mississippi. 2040 ez form Katrina Covered Disaster Area A portion of the Hurricane Katrina disaster area has been designated by the IRS as a covered disaster area. 2040 ez form The Katrina covered disaster area covers the following areas in four states. 2040 ez form Alabama. 2040 ez form   The counties of Baldwin, Bibb, Choctaw, Clarke, Colbert, Cullman, Greene, Hale, Jefferson, Lamar, Lauderdale, Marengo, Marion, Mobile, Monroe, Perry, Pickens, Sumter, Tuscaloosa, Washington, Wilcox, and Winston. 2040 ez form Florida. 2040 ez form   The counties of Bay, Broward, Collier, Escambia, Franklin, Gulf, Miami-Dade, Monroe, Okaloosa, Santa Rosa, and Walton. 2040 ez form Louisiana. 2040 ez form   All parishes. 2040 ez form Mississippi. 2040 ez form   All counties. 2040 ez form Gulf Opportunity (GO) Zone (Core Disaster Area) The GO Zone (also called the core disaster area) covers the portion of the Hurricane Katrina disaster area determined by the Federal Emergency Management Agency (FEMA) to be eligible for either individual only or both individual and public assistance from the Federal Government. 2040 ez form The GO Zone covers the following areas in three states. 2040 ez form Alabama. 2040 ez form   The counties of Baldwin, Choctaw, Clarke, Greene, Hale, Marengo, Mobile, Pickens, Sumter, Tuscaloosa, and Washington. 2040 ez form Louisiana. 2040 ez form   The parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. 2040 ez form Bernard, St. 2040 ez form Charles, St. 2040 ez form Helena, St. 2040 ez form James, St. 2040 ez form John the Baptist, St. 2040 ez form Martin, St. 2040 ez form Mary, St. 2040 ez form Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge, and West Feliciana. 2040 ez form Mississippi. 2040 ez form   The counties of Adams, Amite, Attala, Choctaw, Claiborne, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Holmes, Humphreys, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo. 2040 ez form Hurricane Rita Disaster Area (Rita Covered Disaster Area) The Hurricane Rita disaster area (also designated by the IRS as the Rita covered disaster area) covers the area for which the President declared a major disaster before October 6, 2005, because of Hurricane Rita. 2040 ez form This area covers the entire states of Louisiana and Texas. 2040 ez form Rita GO Zone The Rita GO Zone covers the portion of the Hurricane Rita disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. 2040 ez form The Rita GO Zone covers the following areas in two states. 2040 ez form Louisiana. 2040 ez form   The parishes of Acadia, Allen, Ascension, Beauregard, Calcasieu, Cameron, Evangeline, Iberia, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Plaquemines, Sabine, St. 2040 ez form Landry, St. 2040 ez form Martin, St. 2040 ez form Mary, St. 2040 ez form Tammany, Terrebonne, Vermilion, Vernon, and West Baton Rouge. 2040 ez form Texas. 2040 ez form   The counties of Angelina, Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jasper, Jefferson, Liberty, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Shelby, Trinity, Tyler, and Walker. 2040 ez form Hurricane Wilma Disaster Area The Hurricane Wilma disaster area covers the area for which the President declared a major disaster before November 14, 2005, because of Hurricane Wilma. 2040 ez form The Hurricane Wilma disaster area covers the entire state of Florida. 2040 ez form Wilma Covered Disaster Area A portion of the Hurricane Wilma disaster area has been designated by the IRS as a covered disaster area. 2040 ez form The Wilma covered disaster area covers the following counties. 2040 ez form Florida. 2040 ez form   Brevard, Broward, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Osceola, Palm Beach, Polk, St. 2040 ez form Lucie, and Sarasota. 2040 ez form Wilma GO Zone The Wilma GO Zone covers the portion of the Hurricane Wilma disaster area determined by FEMA to be eligible for either individual only or both individual and public assistance from the Federal Government. 2040 ez form The Wilma GO Zone covers the following counties. 2040 ez form Florida. 2040 ez form   Brevard, Broward, Collier, Glades, Hendry, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Palm Beach, and St. 2040 ez form Lucie. 2040 ez form Extended Tax Deadlines The IRS has extended deadlines that apply to filing returns, paying taxes, and performing certain other time-sensitive acts for certain taxpayers affected by Hurricane Katrina, Rita, or Wilma, until February 28, 2006. 2040 ez form The extension applies to deadlines (either an original or extended due date) that occur during the following periods. 2040 ez form After August 28, 2005 (August 23, 2005, for Florida affected taxpayers), and before February 28, 2006, for taxpayers affected by Hurricane Katrina. 2040 ez form After September 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Rita. 2040 ez form After October 22, 2005, and before February 28, 2006, for taxpayers affected by Hurricane Wilma. 2040 ez form Affected taxpayer. 2040 ez form   The following taxpayers are eligible for the extension. 2040 ez form Any individual whose main home is located in a covered disaster area. 2040 ez form Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 2040 ez form Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained or whose tax professional's office is in a covered disaster area. 2040 ez form The main home or principal place of business does not have to be located in the covered area. 2040 ez form Any individual visiting a county or parish in the Hurricane Katrina or Hurricane Rita covered disaster area that was injured or killed (and the estate of an individual killed) as a result of the hurricane or its aftermath. 2040 ez form Any estate or trust whose tax records needed to meet a filing or payment deadline are maintained in a covered disaster area. 2040 ez form Generally, any individual who is a worker assisting in the relief activities in a covered disaster area. 2040 ez form However, a relief worker assisting in the Wilma covered disaster area is not an affected taxpayer unless the worker is affiliated with a recognized government or philanthropic organization assisting in the relief activities. 2040 ez form The spouse of an affected taxpayer, solely with regard to a joint income tax return with that taxpayer. 2040 ez form   To ensure correct processing, affected taxpayers should write the assigned disaster designation (for example, “Hurricane Katrina”) in red ink at the top of any forms or documents filed with the IRS. 2040 ez form Affected taxpayers can also identify themselves to the IRS or ask hurricane-related questions by calling the special IRS disaster hotline at 1-866-562-5227. 2040 ez form Acts extended. 2040 ez form   Deadlines for performing the following acts are extended. 2040 ez form Filing any return of income, estate, gift, generation-skipping transfer, excise, or employment tax. 2040 ez form Paying any income, estate, gift, generation-skipping transfer, excise, or employment tax. 2040 ez form This includes making estimated tax payments. 2040 ez form Making certain contributions, distributions, recharacterizing contributions, or making a rollover to or from a qualified retirement plan. 2040 ez form Filing certain petitions with the Tax Court. 2040 ez form Filing a claim for credit or refund of any tax. 2040 ez form Bringing suit upon a claim for credit or refund. 2040 ez form Certain other acts described in Revenue Procedure 2005-27. 2040 ez form You can find Revenue Procedure 2005-27 on page 1050 of Internal Revenue Bulletin 2005-20 at www. 2040 ez form irs. 2040 ez form gov/pub/irs-irbs/irb05-20. 2040 ez form pdf. 2040 ez form Forgiveness of interest and penalties. 2040 ez form   The IRS may forgive the interest and penalties on any underpaid income, estate, gift, employment, or excise tax for the length of any extension. 2040 ez form Charitable Giving Incentives Temporary Suspension of Limits on Charitable Contributions Individuals. 2040 ez form   Qualified contributions are not subject to the overall limit on itemized deductions or the 50% adjusted gross income (AGI) limit. 2040 ez form A qualified contribution is a charitable contribution paid in cash or by check after August 27, 2005, and before January 1, 2006, to a 50% limit organization (other than certain private foundations described in section 509(a)(3)) if you make an election to have the 50% limit not apply to these contributions. 2040 ez form   Your deduction for qualified contributions is limited to your AGI minus your deduction for all other charitable contributions. 2040 ez form You can carry over any contributions you are not able to deduct for 2005 because of this limit. 2040 ez form In 2006, treat the carryover of your unused qualified contributions as a carryover of contributions subject to the 50% limit. 2040 ez form Exception. 2040 ez form   Qualified contributions do not include a contribution to a segregated fund or account for which you (or any person you appoint or designate) have or expect to have advisory privileges with respect to distributions or investments based on your contribution. 2040 ez form Corporations. 2040 ez form   A corporation may elect to deduct qualified cash contributions without regard to the 10% taxable income limit if the contributions were made after August 27, 2005, and before January 1, 2006, to a qualified charitable organization (other than certain private foundations described in section 509(a)(3)), for Hurricane Katrina, Rita, or Wilma relief efforts. 2040 ez form The corporation's deduction for these qualified contributions is limited to 100% of taxable income (as modified for the 10% limit) minus the corporation's deduction for all other charitable contributions. 2040 ez form Any qualified contributions over this limit can be carried over to the next 5 years, subject to the 10% limit. 2040 ez form Partners and shareholders. 2040 ez form   Each partner in a partnership and each shareholder in an S corporation makes a separate election to have the appropriate limit not apply. 2040 ez form More information. 2040 ez form   For more information, see Publication 526 or Publication 542, Corporations. 2040 ez form Publication 526 includes a worksheet you can use to figure your deduction if any limits apply to your charitable contributions. 2040 ez form Standard Mileage Rate for Charitable Use of Vehicles The following are special standard mileage rates in effect in 2005 and 2006 for the cost of operating your automobile for providing charitable services solely related to Hurricane Katrina. 2040 ez form 29 cents per mile for the period August 25 through August 31, 2005. 2040 ez form 34 cents per mile for the period September 1 through December 31, 2005. 2040 ez form 32 cents per mile for the period January 1 through December 31, 2006. 2040 ez form Mileage Reimbursements to Charitable Volunteers You can exclude from income amounts you receive as mileage reimbursements for the use of a private passenger automobile for the benefit of a qualified charitable organization in providing relief related to Hurricane Katrina during the period beginning on August 25, 2005, and ending on December 31, 2006. 2040 ez form You cannot claim a deduction or credit for amounts you receive as a mileage reimbursement. 2040 ez form You must keep records of miles driven, time, place (or use), and purpose of the mileage. 2040 ez form The amount you can exclude from income cannot exceed the standard business mileage rate (shown below) for expenses incurred during the following periods. 2040 ez form 40. 2040 ez form 5 cents per mile for the period August 25 through August 31, 2005. 2040 ez form 48. 2040 ez form 5 cents per mile for the period September 1 through December 31, 2005. 2040 ez form 44. 2040 ez form 5 cents per mile for the period January 1 through December 31, 2006. 2040 ez form Charitable Deduction for Contributions of Food Inventory Any taxpayer engaged in a trade or business is eligible to claim a deduction for a contribution of “apparently wholesome food” inventory to a qualified charitable organization described in section 501(c)(3) (except for private nonoperating foundations) after August 27, 2005, and before January 1, 2006. 2040 ez form “Apparently wholesome food” is food that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. 2040 ez form The deduction is equal to the lesser of: The basis of the donated food plus one-half of the gain that would have been realized if the donated food had been sold at fair market value on the date of the donation, or Two times the basis of the donated food. 2040 ez form The taxpayer must receive written certification from the donee stating: The donated food is related to the purpose or function of the donee's basis for exemption under section 501(c)(3) and is to be used solely for the care of the ill, the needy, or infants; and The food was not given in exchange for money, other property, or services. 2040 ez form For a taxpayer other than a C corporation, the deduction is limited to 10% of the taxpayer's total net income from all trades or businesses from which the food contributions were made (figured without regard to the deduction for charitable contributions). 2040 ez form For example, if a taxpayer is a sole proprietor, a shareholder in an S corporation, and a partner in a partnership, and each made a contribution of apparently wholesome food inventory, the taxpayer's deduction is limited to 10% of the taxpayer's total net income from the sole proprietorship, S corporation, and partnership (figured without regard to the deduction for charitable contributions). 2040 ez form Charitable Deduction for Contributions of Book Inventories to Public Schools A corporation (other than an S corporation) may be allowed a charitable deduction for a qualified book contribution made after August 27, 2005, and before January 1, 2006, to a public school that: Provides elementary or secondary education (kindergarten through grade 12), and Normally maintains a regular faculty and curriculum and has a regular enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. 2040 ez form . 2040 ez form The deduction is equal to the lesser of: The basis of the donated books plus one-half of the gain that would have been realized if the donated books had been sold at fair market value on the date of the donation, or Two times the basis of the donated books. 2040 ez form The corporation must receive written certification from the school stating that the donated books are suitable for the organization's educational programs and will be used for such programs. 2040 ez form Casualty and Theft Losses The following paragraphs explain changes to casualty and theft losses that were caused by Hurricane Katrina, Rita, or Wilma. 2040 ez form For more information, see Publication 547. 2040 ez form Limits on personal casualty or theft losses caused by Hurricane Katrina, Rita, or Wilma. 2040 ez form   The following losses to personal use property are not subject to the $100 or 10% of adjusted gross income limits. 2040 ez form Losses that arose in the Hurricane Katrina disaster area after August 24, 2005, and that were caused by Hurricane Katrina. 2040 ez form Losses that arose in the Hurricane Rita disaster area after September 22, 2005, and that were caused by Hurricane Rita. 2040 ez form Losses that arose in the Hurricane Wilma disaster area after October 22, 2005, and that were caused by Hurricane Wilma. 2040 ez form Qualifying losses include losses from flooding or other casualty, and from theft, that arose in the hurricane disaster area and that were caused by the hurricane. 2040 ez form Special instructions for individuals who elect to claim a Hurricane Katrina, Rita, or Wilma casualty or theft loss for 2004. 2040 ez form   Casualty and theft losses are generally deductible only in the year the casualty occurred or theft was discovered. 2040 ez form However, Hurricane Katrina, Rita, and Wilma are Presidentially declared disasters. 2040 ez form Therefore, you can elect to deduct losses from these hurricanes on your tax return for the previous year. 2040 ez form If you make this election, use the following additional instructions to complete your forms. 2040 ez form   Individuals filing or amending their 2004 tax return whose only casualty or theft losses to personal use property claimed on that return were caused by Hurricane Katrina, Rita, or Wilma should write “Hurricane Katrina,” “Hurricane Rita,” or “Hurricane Wilma” at the top of Form 1040 or 1040X. 2040 ez form They must also complete and attach the 2004 Form 4684 and write “Hurricane Katrina,”“Hurricane Rita,” or “Hurricane Wilma” on the dotted line next to line 11 and enter -0- on lines 11 and 17. 2040 ez form   Individuals filing or amending their 2004 tax return who also have casualty or theft losses to personal use property not related to Hurricane Katrina, Rita, or Wilma should disregard the caution directing taxpayers to use only one Form 4684, located above line 13, and complete lines 13 through 18 on two Forms 4684. 2040 ez form The Form 1040 or 1040X and the first Form 4684 should be prepared as explained above for Hurricane Katrina, Rita, or Wilma losses only. 2040 ez form The second Form 4684 should be prepared in the normal manner for all gains and non-Hurricane Katrina, Rita or Wilma losses. 2040 ez form If both Forms 4684 have a loss on line 18, they should carry the combined losses from that line to Schedule A (Form 1040), line 19. 2040 ez form If there is a gain on line 15 of the second Form 4684, disregard the instruction to enter it on Schedule D (Form 1040), and instead enter on Schedule A (Form 1040), line 19, the excess of the loss from the first Form 4684 over the gain on line 15 of the second Form 4684. 2040 ez form , Time limit for making election. 2040 ez form   You must make this election to claim your casualty or theft loss in 2004 by the later of the following dates. 2040 ez form The due date (without extensions) for filing your 2005 income tax return. 2040 ez form The due date (with extensions) for filing your 2004 income tax return. 2040 ez form Example. 2040 ez form If you are a calendar year individual taxpayer, you have until April 17, 2006, to amend your 2004 tax return to claim a casualty or theft loss that occurred during 2005. 2040 ez form Replacement Period for Nonrecognition of Gain Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. 2040 ez form Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a Presidentially declared disaster area). 2040 ez form However, for property that was involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, a 5-year replacement period applies if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. 2040 ez form For more information, see the Instructions for Form 4684. 2040 ez form Net Operating Losses Qualified GO Zone loss. 2040 ez form   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. 2040 ez form However, the portion of an NOL that is a qualified GO Zone loss can be carried back to the 5 tax years before the NOL year. 2040 ez form In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. 2040 ez form   A qualified GO Zone loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified GO Zone casualty loss (as defined below), Moving expenses paid or incurred after August 27, 2005, and before January 1, 2008, for the employment of an individual whose main home was in the GO Zone before August 28, 2005, who was unable to remain in that home because of Hurricane Katrina, and whose main job location (after the move) is in the GO Zone, Temporary housing expenses paid or incurred after August 27, 2005, and before January 1, 2008, to house employees of the taxpayer whose main job location is in the GO Zone, Depreciation or amortization allowable for any qualified GO Zone property (even if you elected not to claim the special GO Zone depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred after August 27, 2005, and before January 1, 2008, for any damage from Hurricane Katrina to property located in the GO Zone. 2040 ez form Qualified GO Zone casualty loss. 2040 ez form   A qualified GO Zone casualty loss is any deductible section 1231 loss of property located in the GO Zone if the loss was caused by Hurricane Katrina. 2040 ez form For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by Hurricane Katrina of property located in the GO Zone. 2040 ez form Any such loss taken into account in figuring your qualified GO Zone loss is not eligible for the election to be treated as having occurred in the previous tax year. 2040 ez form 5-year NOL carryback of certain timber losses. 2040 ez form   Generally, you can carry the portion of an NOL due to income and deductions attributable to a farming business back to the 5 tax years before the NOL year. 2040 ez form You can treat income and deductions attributable to qualified timber property as attributable to a farming business if any portion of the property is located in the GO Zone, Rita GO Zone, or Wilma GO Zone, and the income and deductions are allocable to the part of your tax year which is after the applicable date below. 2040 ez form August 27, 2005, if any portion of the property is located in the GO Zone. 2040 ez form September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). 2040 ez form October 22, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the RITA GO Zone). 2040 ez form   These rules will not apply after 2006. 2040 ez form   However, these rules apply only to a timber producer who: Held qualified timber property (defined in Publication 535, Business Expenses) on the applicable date below: August 28, 2005, if any portion of the property is located in the GO Zone, September 23, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone), or October 23, 2005, if any portion of the property is located in the Wilma GO Zone (but not in the GO Zone or the Rita GO Zone); Is not a corporation with stock publicly traded on an established securities market; Is not a real estate investment trust; and Did not hold more than 500 acres of qualified timber property on the applicable date above. 2040 ez form More information. 2040 ez form   For more information on NOLs, see Publication 536 or Publication 542, Corporations. 2040 ez form IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for taxpayers who suffered economic losses as a result of Hurricane Katrina, Rita, or Wilma. 2040 ez form Definitions Qualified hurricane distribution. 2040 ez form   A qualified hurricane distribution is any distribution you received from an eligible retirement plan if all of the following apply. 2040 ez form The distribution was made: After August 24, 2005, and before January 1, 2007, for Hurricane Katrina; After September 22, 2005, and before January 1, 2007, for Hurricane Rita; or After October 22, 2005, and before January 1, 2007, for Hurricane Wilma. 2040 ez form Your main home was located in a hurricane disaster area listed below on the date shown for that area. 2040 ez form August 28, 2005, for the Hurricane Katrina disaster area. 2040 ez form September 23, 2005, for the Hurricane Rita disaster area. 2040 ez form October 23, 2005, for the Hurricane Wilma disaster area. 2040 ez form You sustained an economic loss because of Hurricane Katrina, Rita, or Wilma and your main home was in that hurricane disaster area on the date shown in (2) above for that hurricane. 2040 ez form Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2040 ez form   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified hurricane distribution, regardless of whether the distribution was made on account of Hurricane Katrina, Rita, or Wilma. 2040 ez form Qualified hurricane distributions are permitted without regard to your need or the actual amount of your economic loss. 2040 ez form   The total of your qualified hurricane distributions from all plans is limited to $100,000. 2040 ez form If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose. 2040 ez form   A reduction or offset (after August 24, 2005, for Katrina; after September 22, 2005, for Rita; or after October 22, 2005, for Wilma) of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified hurricane distribution. 2040 ez form Eligible retirement plan. 2040 ez form   An eligible retirement plan can be any of the following. 2040 ez form A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). 2040 ez form A qualified annuity plan. 2040 ez form A tax-sheltered annuity contract. 2040 ez form A governmental section 457 deferred compensation plan. 2040 ez form A traditional, SEP, SIMPLE, or Roth IRA. 2040 ez form Main home. 2040 ez form   Generally, your main home is the home where you live most of the time. 2040 ez form A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. 2040 ez form Taxation of Qualified Hurricane Distributions Qualified hurricane distributions are included in income in equal amounts over three years. 2040 ez form However, if you elect, you can include the entire distribution in your income in the year it was received. 2040 ez form Qualified hurricane distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). 2040 ez form However, any distributions you receive in excess of the $100,000 qualified hurricane distribution limit may be subject to the additional tax on early distributions. 2040 ez form For more information, see Form 8915. 2040 ez form Repayment of Qualified Hurricane Distributions If you choose, you generally can repay any portion of a qualified hurricane distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. 2040 ez form Also, you can repay a qualified hurricane distribution made on account of a hardship from a retirement plan. 2040 ez form However, see Exceptions below for qualified hurricane distributions you cannot repay. 2040 ez form You have three years from the day after the date you received the distribution to make a repayment. 2040 ez form Amounts that are repaid are treated as a qualified rollover and are not included in income. 2040 ez form Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 2040 ez form See Form 8915 for more information on how to report repayments. 2040 ez form Exceptions. 2040 ez form   You cannot repay the following types of distributions. 2040 ez form Qualified hurricane distributions received as a beneficiary (other than a surviving spouse). 2040 ez form Required minimum distributions. 2040 ez form Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. 2040 ez form Repayment of Qualified Distributions for the Purchase or Construction of a Main Home If you received a qualified distribution to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area, you can repay that distribution before March 1, 2006, to an eligible retirement plan after August 24, 2005 (Katrina); after September 22, 2005 (Rita); or after October 22, 2005 (Wilma). 2040 ez form For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. 2040 ez form To be a qualified distribution, the distribution must meet all of the following requirements. 2040 ez form The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. 2040 ez form The distribution was received in 2005 after February 28 and before: August 29 for Hurricane Katrina; September 24 for Hurricane Rita; or October 24 for Hurricane Wilma. 2040 ez form The distribution was to be used to purchase or construct a main home in the Hurricane Katrina, Rita, or Wilma disaster area that was not purchased or constructed because of Hurricane Katrina, Rita, or Wilma. 2040 ez form Amounts that are repaid before March 1, 2006, are treated as a qualified rollover and are not included in income. 2040 ez form Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 2040 ez form A qualified distribution not repaid before March 1, 2006, may be taxable for 2005 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. 2040 ez form You must file Form 8915 if you received a qualified distribution that you repaid, in whole or in part, before March 1, 2006. 2040 ez form Loans From Qualified Plans The following benefits are available to qualified individuals. 2040 ez form Increases to the limits for distributions treated as loans from employer plans. 2040 ez form A 1-year suspension for payments due on plan loans. 2040 ez form Qualified individual. 2040 ez form   You are a qualified individual if any of the following apply. 2040 ez form Your main home on August 28, 2005, was located in the Hurricane Katrina disaster area and you had an economic loss because of Hurricane Katrina. 2040 ez form Your main home on September 23, 2005, was located in the Hurricane Rita disaster area and you had an economic loss because of Hurricane Rita. 2040 ez form Your main home on October 23, 2005, was located in the Hurricane Wilma disaster area and you had an economic loss because of Hurricane Wilma. 2040 ez form Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2040 ez form Limits on plan loans. 2040 ez form   The $50,000 limit for distributions treated as plan loans is increased to $100,000. 2040 ez form In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. 2040 ez form The higher limits apply only to loans received during the following period. 2040 ez form If your main home was located in the Hurricane Katrina disaster area, the period began on September 24, 2005, and ends on December 31, 2006. 2040 ez form If your main home was located in the Hurricane Rita or Wilma disaster area, the period began on December 21, 2005, and ends on December 31, 2006. 2040 ez form If you are a qualified individual based on Hurricane Katrina and another hurricane, use the period based on Hurricane Katrina. 2040 ez form One-year suspension of loan payments. 2040 ez form   Payments on plan loans due before 2007 may be suspended for 1 year by the plan administrator. 2040 ez form To qualify for the suspension, the due date for any loan payment must occur during the period beginning on: August 28, 2005, if your main home was located in the Hurricane Katrina disaster area. 2040 ez form September 23, 2005, if your main home was located in the Hurricane Rita disaster area. 2040 ez form October 23, 2005, if your main home was located in the Hurricane Wilma disaster area. 2040 ez form If you are a qualified individual based on more than one hurricane, use the period with the earliest beginning date. 2040 ez form Additional Tax Relief for Individuals Earned Income Credit and Child Tax Credit You can elect to use your 2004 earned income to figure your earned income credit (EIC) and additional child tax credit for 2005 if: Your 2005 earned income is less than your 2004 earned income, and At least one of the following statements is true. 2040 ez form Your main home on August 25, 2005, was in the Gulf Opportunity (GO) Zone. 2040 ez form Your main home on August 25, 2005, was in the Hurricane Katrina disaster area and you were displaced from that home because of Hurricane Katrina. 2040 ez form Your main home on September 23, 2005, was in the Rita GO Zone. 2040 ez form Your main home on September 23, 2005, was in the Hurricane Rita disaster area and you were displaced from that home because of Hurricane Rita. 2040 ez form Your main home on October 23, 2005, was in the Wilma GO Zone. 2040 ez form Your main home on October 23, 2005, was in the Hurricane Wilma disaster area and you were displaced from that home because of Hurricane Wilma. 2040 ez form Earned income. 2040 ez form    For the purpose of this election, your earned income for both the EIC and the additional child tax credit is the amount of earned income used to figure your EIC, even if you did not take the EIC and even if that amount is different than your earned income for the additional child tax credit. 2040 ez form If you are claiming only the additional child tax credit, you must figure the amount of your earned income for EIC purposes to determine your eligibility to make the election and the amount of the credit. 2040 ez form Joint returns. 2040 ez form   If you file a joint return, you qualify to make this election even if only one spouse meets the requirements. 2040 ez form If you make the election, your 2004 earned income is the sum of your 2004 earned income and your spouse's 2004 earned income. 2040 ez form Making the election. 2040 ez form   If you make the election to use your 2004 earned income, the election applies for figuring both the EIC and the additional child tax credit. 2040 ez form However, you can make the election for the additional child tax credit even if you do not take the EIC. 2040 ez form   Electing to use your 2004 earned income may increase or decrease your EIC. 2040 ez form Take the following steps to decide whether to make the election. 2040 ez form Figure your 2005 EIC using your 2004 earned income. 2040 ez form Figure your 2005 additional child tax credit using your 2004 earned income for EIC purposes. 2040 ez form Add the results of (1) and (2). 2040 ez form Figure your 2005 EIC using your 2005 earned income. 2040 ez form Figure your 2005 additional child tax credit using your 2005 earned income for additional child tax credit purposes. 2040 ez form Add the results of (4) and (5). 2040 ez form Compare the results of (3) and (6). 2040 ez form If (3) is larger than (6), it is to your benefit to make the election. 2040 ez form If (3) is equal to or smaller than (6), making the election will not help you. 2040 ez form   If you elect to use your 2004 earned income and you are claiming the EIC, enter “PYEI” and the amount of your 2004 earned income on the dotted line next to line 66a of Form 1040, on the line next to line 41a of Form 1040A, or in the space to the left of line 8a of Form 1040EZ. 2040 ez form   If you elect to use your 2004 earned income and you are claiming the additional child tax credit, enter your 2004 earned income for EIC purposes (even if you did not claim the EIC) on Form 8812, Additional Child Tax Credit, line 4a, and check the box on that line. 2040 ez form   Because Form 8812 was released before the GO Zone legislation was enacted, the instructions refer only to individuals whose main home was in the Hurricane Katrina disaster area. 2040 ez form When completing Form 8812, line 4a, use the above rules to determine your eligibility to make the election (instead of the Form 8812 instructions). 2040 ez form Getting your 2004 tax return information. 2040 ez form   If you do not have your 2004 tax records, you can get the amount of earned income used to figure your 2004 EIC by calling 1-866-562-5227. 2040 ez form You can also get this information by visiting the IRS website at www. 2040 ez form irs. 2040 ez form gov. 2040 ez form   If you prefer to figure your 2004 earned income yourself, copies or transcripts of your filed and processed tax returns can help you reconstruct your tax records. 2040 ez form See Request for Copy or Transcript of Tax Return on page 16. 2040 ez form Additional Exemption for Housing Individuals Displaced by Hurricane Katrina You may be able to claim an additional exemption amount of $500 for providing housing in your main home for each individual displaced by Hurricane Katrina. 2040 ez form The additional exemption amount is claimed on new Form 8914. 2040 ez form The additional exemption amount is allowable once per taxpayer for a specific individual in 2005 or 2006, but not in both years. 2040 ez form The maximum additional exemption amount you can claim for all displaced individuals is $2,000 ($1,000 if married filing separately). 2040 ez form The additional exemption amount you claim for displaced individuals in 2005 will reduce the $2,000 maximum for 2006. 2040 ez form If two or more taxpayers share the same main home, only one taxpayer in that main home can claim the additional exemption amount for a specific displaced individual. 2040 ez form If married filing separately, only one spouse may claim the additional exemption amount for a specific displaced individual. 2040 ez form In order for you to be considered to have provided housing, you must have a legal interest in the main home (that is, own or rent the home). 2040 ez form To qualify as a displaced individual, the individual: Must have had his or her main home in the Hurricane Katrina disaster area on August 28, 2005, and he or she must have been displaced from that home. 2040 ez form If the individual's main home was located outside the core disaster area, that home must have been damaged by Hurricane Katrina or the individual must have been evacuated from that home because of Hurricane Katrina, Must have been provided housing in your main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed, and Cannot be your spouse or dependent. 2040 ez form You cannot claim the additional exemption amount if you received rent (or any other amount) from any source for providing the housing. 2040 ez form You are permitted to receive payments or reimbursements that do not relate to normal housing costs, including the following. 2040 ez form Food, clothing, or personal items consumed or used by the displaced individual. 2040 ez form Reimbursement for the cost of any long distance telephone calls made by the displaced individual. 2040 ez form Reimbursement for the cost of gasoline for the displaced individual's use of your vehicle. 2040 ez form However, you cannot claim the additional exemption amount if you received any reimbursement for the extra costs of heat, electricity, or water used by the displaced individual. 2040 ez form Also, you must report on Form 8914 the displaced individual's social security number or individual taxpayer identification number to claim an additional exemption amount. 2040 ez form For more information, see Form 8914. 2040 ez form Education Credits The education credits have been expanded for students attending an eligible educational institution located in the Gulf Opportunity Zone (GOZ students) for any tax year beginning in 2005 or 2006. 2040 ez form The Hope credit for a GOZ student is increased to 100% of the first $2,000 in qualified education expenses and 50% of the next $2,000 of qualified education expenses for a maximum credit of $3,000 per student. 2040 ez form The lifetime learning credit rate for a GOZ student is increased from 20% to 40%. 2040 ez form The definition of qualified education expenses for a GOZ student also has been expanded. 2040 ez form In addition to tuition and fees required for the student's enrollment or attendance at an eligible educational institution, qualified education expenses for a GOZ student include the following. 2040 ez form Books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. 2040 ez form For a special needs student, expenses that are necessary for that person's enrollment or attendance at an eligible educational institution. 2040 ez form For a student who is at least a half-time student, the reasonable costs of room and board, but only to the extent that the costs are not more than the greater of the following two amounts. 2040 ez form The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. 2040 ez form The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. 2040 ez form You will need to contact the eligible educational institution for qualified room and board costs. 2040 ez form For more information, see Form 8863. 2040 ez form Recapture of Federal Mortgage Subsidy Generally, if you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. 2040 ez form However, you do not have to recapture any benefit if your mortgage loan was a qualified home improvement loan of not more than $15,000. 2040 ez form This amount is increased to $150,000 if the loan was provided before 2011 and was used to: Repair damage caused by Hurricane Katrina to a residence in the Hurricane Katrina disaster area, or Alter, repair, or improve an existing owner-occupied residence in the GO Zone, Rita GO Zone, or Wilma GO Zone. 2040 ez form Exclusion of Certain Cancellations of Indebtedness by Reason of Hurricane Katrina Generally, discharges of nonbusiness debts (such as mortgages) made after August 24, 2005, and before January 1, 2007, are excluded from income for individuals whose main home was in the Hurricane Katrina disaster area on August 25, 2005. 2040 ez form If the individual's main home was located outside the core disaster area, the individual also must have had an economic loss because of Hurricane Katrina. 2040 ez form Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 2040 ez form This relief does not apply to any debt secured by real property located outside the Hurricane Katrina disaster area. 2040 ez form You may also have to reduce certain tax attributes by the amount excluded. 2040 ez form For more information, see Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). 2040 ez form Tax Relief for Temporary Relocation Under the Gulf Opportunity Zone Act of 2005, the IRS may adjust the internal revenue laws to ensure that taxpayers do not lose a deduction or credit or experience a change of filing status in 2005 or 2006 as a result of a temporary relocation caused by Hurricane Katrina, Rita, or Wilma. 2040 ez form However, any such adjustment must ensure that an individual is not taken into account by more than one taxpayer for the same tax benefit. 2040 ez form The IRS has exercised this authority as follows. 2040 ez form In determining whether you furnished over one-half of the cost of maintaining a household, you can exclude from total household costs any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. 2040 ez form In determining whether you provided more than one-half of an individual's support, you can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma. 2040 ez form You can treat as a student an individual who enrolled in school before August 25, 2005, and who is unable to attend classes because of Hurricane Katrina, for each month of the enrollment period that individual is prevented by Hurricane Katrina from attending school as planned. 2040 ez form You can treat as a student an individual who enrolled in school before September 23, 2005, and who is unable to attend classes because of Hurricane Rita, for each month of the enrollment period that individual is prevented by Hurricane Rita from attending school as planned. 2040 ez form You can treat as a student an individual who enrolled in school before October 23, 2005, and who is unable to attend classes because of Hurricane Wilma, for each month of the enrollment period that individual is prevented by Hurricane Wilma from attending school as planned. 2040 ez form Additional Tax Relief for Businesses Special Depreciation Allowance You can take a special depreciation allowance for qualified Gulf Opportunity (GO) Zone property (as defined below) you place in service after August 27, 2005. 2040 ez form The allowance is an additional deduction of 50% of the property's depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction). 2040 ez form The special allowance applies only for the first year the property is placed in service. 2040 ez form The allowance is deductible for both the regular tax and the alternative minimum tax (AMT). 2040 ez form There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. 2040 ez form You can elect not to deduct the special GO Zone depreciation allowance for qualified property. 2040 ez form If you make this election for any property, it applies to all property in the same class placed in service during the year. 2040 ez form Qualified GO Zone property. 2040 ez form   Property that qualifies for the special GO Zone depreciation allowance includes the following. 2040 ez form Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. 2040 ez form Water utility property. 2040 ez form Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 2040 ez form (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. 2040 ez form ) Qualified leasehold improvement property. 2040 ez form Nonresidential real property and residential rental property. 2040 ez form   For more information on this property, see Publication 946. 2040 ez form Other tests to be met. 2040 ez form   To be qualified GO Zone property, the property must also meet all of the following tests. 2040 ez form You must have acquired the property, by purchase, after August 27, 2005, but only if no binding written contract for the acquisition was in effect before August 28, 2005. 2040 ez form The property must be placed in service before 2008 (2009 in the case of nonresidential real property and residential rental property). 2040 ez form Substantially all of the use of the property must be in the GO Zone and in the active conduct of your trade or business in the GO Zone. 2040 ez form The original use of the property in the GO Zone must begin with you after August 27, 2005. 2040 ez form Used property can be qualified GO Zone property if it has not previously been used within the GO Zone. 2040 ez form Also, additional capital expenditures you incurred after August 27, 2005, to recondition or rebuild your property meet the original use test if the original use of the property in the GO Zone began with you. 2040 ez form Excepted property. 2040 ez form   Qualified GO Zone property does not include any of the following. 2040 ez form Property required to be depreciated using the Alternative Depreciation System (ADS). 2040 ez form Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103. 2040 ez form Property for which you are claiming a commercial revitalization deduction. 2040 ez form Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. 2040 ez form Any gambling or animal racing property (as defined below). 2040 ez form Property in the same class as that for which you elected not to claim the special GO Zone depreciation allowance. 2040 ez form   Gambling or animal racing property is: Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing, and The portion of any real property (determined by square footage) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing, unless this portion is less than 100 square feet. 2040 ez form Recapture of special allowance. 2040 ez form   If, in any year after the year you claim the special allowance, the property ceases to be qualified GO Zone property, you may have to recapture as ordinary income any excess benefit you received from claiming the special allowance. 2040 ez form Increased Section 179 Deduction An increased section 179 deduction is allowable for qualified section 179 Gulf Opportunity (GO) Zone property (as defined later) placed in service in the GO Zone. 2040 ez form Increased dollar limit. 2040 ez form   The limit on the section 179 deduction ($105,000 for 2005, $108,000 for 2006) for qualified section 179 GO Zone property acquired after August 27, 2005, is increased by the smaller of: $100,000, or The cost of qualified section 179 GO Zone property placed in service during the year (including such property placed in service by your spouse, even if you are filing a separate return). 2040 ez form   The amount for which you can make the election is reduced if the cost of all qualified section 179 GO Zone property you placed in service during the year exceeds $420,000 for 2005 ($430,000 for 2006) increased by the smaller of: $600,000, or The cost of qualified section 179 GO Zone property placed in service during the year. 2040 ez form Qualified section 179 GO Zone property. 2040 ez form   Qualified section 179 GO Zone property is section 179 property that is qualified GO Zone property (explained earlier under Special Depreciation Allowance). 2040 ez form Section 179 property does not include nonresidential real property or residential rental property. 2040 ez form For more information, including the requirements that must be met for property to qualify for the section 179 deduction, see chapter 2 of Publication 946. 2040 ez form Work Opportunity Credit For the work opportunity credit, the definition of “targeted group employee” has been expanded to include a Hurricane Katrina employee. 2040 ez form Hurricane Katrina employee. 2040 ez form   A Hurricane Katrina employee is: A person who, on August 28, 2005, had a main home in the core disaster area and, within a two-year period beginning on that date, is hired to perform services principally in the core disaster area; or A person who, on August 28, 2005, had a main home in the core disaster area, was displaced from that main home as a result of Hurricane Katrina, and was hired during the period beginning on August 28, 2005, and ending on December 31, 2005. 2040 ez form Qualified wages. 2040 ez form   Generally, qualified wages do not include wages you paid to a targeted group employee who worked for you previously. 2040 ez form However, wages will qualify if: You paid them to an employee who is a Hurricane Katrina employee, The employee was not in your employment on August 28, 2005, and This is your first hire of the employee as a Hurricane Katrina employee after August 28, 2005. 2040 ez form   For more information, see Form 5884. 2040 ez form Certification requirements. 2040 ez form   An employee must provide to the employer reasonable evidence that he or she is a Hurricane Katrina employee. 2040 ez form An employer may accept a completed Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits, as such evidence. 2040 ez form The certification requirements described in Form 8850 do not apply to a Hurricane Katrina employee. 2040 ez form Do not send any Forms 8850 that have only box 1 checked to the state employment security agency. 2040 ez form Instead, the employer should keep these Forms 8850 with the employer's other records. 2040 ez form For more information, see Form 8850 and its instructions. 2040 ez form Employee Retention Credit An eligible employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone, the Rita GO Zone, or the Wilma GO Zone can claim the employee retention credit. 2040 ez form The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). 2040 ez form Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 2040 ez form Use Form 5884-A to claim the credit. 2040 ez form See the following rules and definitions for each hurricane. 2040 ez form Employers affected by Hurricane Katrina. 2040 ez form   The following definitions apply to employers affected by Hurricane Katrina. 2040 ez form Eligible employer. 2040 ez form   For this purpose, an eligible employer is any employer who conducted an active trade or business on August 28, 2005, in the GO Zone and whose trade or business was inoperable on any day after August 28, 2005, and before January 1, 2006, because of damage caused by Hurricane Katrina. 2040 ez form Eligible employee. 2040 ez form   For this purpose, an eligible employee is an employee whose principal place of employment on August 28, 2005, with such eligible employer was in the GO Zone. 2040 ez form An employee is not an eligible employee for purposes of Hurricane Katrina if the employee is treated as an eligible employee for the work opportunity credit. 2040 ez form Employers affected by Hurricane Rita. 2040 ez form   The following definitions apply to employers affected by Hurricane Rita. 2040 ez form Eligible employer. 2040 ez form   For this purpose, an eligible employer is any employer who conducted an active trade or business on September 23, 2005, in the Rita GO Zone and whose trade or business was inoperable on any day after September 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Rita. 2040 ez form Eligible employee. 2040 ez form   For this purpose, an eligible employee is an employee whose principal place of employment on September 23, 2005, with such eligible employer was in the Rita GO Zone. 2040 ez form An employee is not an eligible employee for purposes of Hurricane Rita if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina employee retention credit. 2040 ez form Employers affected by Hurricane Wilma. 2040 ez form   The following definitions apply to employers affected by Hurricane Wilma. 2040 ez form Eligible employer. 2040 ez form   For this purpose, an eligible employer is any employer who conducted an active trade or business on October 23, 2005, in the Wilma GO Zone and whose trade or business was inoperable on any day after October 23, 2005, and before January 1, 2006, because of damage caused by Hurricane Wilma. 2040 ez form Eligible employee. 2040 ez form   For this purpose, an eligible employee is an employee whose principal place of employment on October 23, 2005, with such eligible employer was in the Wilma GO Zone. 2040 ez form An employee is not an eligible employee for purposes of Hurricane Wilma if the employee is treated as an eligible employee for the work opportunity credit or the Hurricane Katrina or Rita employee retention credit. 2040 ez form Qualified wages. 2040 ez form   Qualified wages are wages you paid or incurred before January 1, 2006, (up to $6,000 per employee) for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable hurricane, and ending on the date your trade or business resumed significant operations at that place. 2040 ez form In addition, the wages must have been paid or incurred after the following date. 2040 ez form August 28, 2005, for Hurricane Katrina. 2040 ez form September 23, 2005, for Hurricane Rita. 2040 ez form October 23, 2005, for Hurricane Wilma. 2040 ez form    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. 2040 ez form    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). 2040 ez form Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. 2040 ez form Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. 2040 ez form   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. 2040 ez form For a special rule that applies to railroad employees, see section 51(h)(1)(B). 2040 ez form   Qualified wages do not include the following. 2040 ez form Wages paid to your dependent or a related individual. 2040 ez form See section 51(i)(1). 2040 ez form Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. 2040 ez form Wages for services of replacement workers during a strike or lockout. 2040 ez form   For more information, see Form 5884-A. 2040 ez form Hurricane Katrina Housing Credit An employer who conducted an active trade or business in the Gulf Opportunity (GO) Zone can claim the Hurricane Katrina housing credit. 2040 ez form The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from January 1, 2006, through July 1, 2006. 2040 ez form The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). 2040 ez form Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 2040 ez form The employer must use Form 5884-A to claim the credit. 2040 ez form A qualified employee is an individual who had a main home in the GO Zone on August 28, 2005, and who performs substantially all employment services in the GO Zone for the employer furnishing the lodging. 2040 ez form The employee cannot be your dependent or a related individual. 2040 ez form See section 51(i)(1). 2040 ez form For more information, see Form 5884-A. 2040 ez form Reforestation Costs You may be able to elect to deduct a limited amount of reforestation costs for each qualified timber property. 2040 ez form The deduction for any tax year generally is limited to $10,000 ($5,000 if married filing separately, $0 for a trust). 2040 ez form However, this limit is increased if you paid or incurred reforestation costs after the applicable date below and any portion of the qualified timber property is located in one of the following areas. 2040 ez form August 27, 2005, if any portion of the property is located in the GO Zone. 2040 ez form September 22, 2005, if any portion of the property is located in the Rita GO Zone (but not in the GO Zone). 2040 ez form October 22, 2005, if any portion of the property is located in the Wilma GO Zone. 2040 ez form The limit for each qualified timber property is increased by the smaller of: $10,000 ($5,000 if married filing separately, $0 for a trust), or The amount of reforestation costs you paid or incurred after the applicable date for the qualified timber property, any portion of which is located in the zone described above. 2040 ez form The increase in the limit applies only to costs paid or incurred before 2008. 2040 ez form However, these rules do not apply to any timber producer who: Held more than 500 acres of qualified timber property at any time during the tax year, Is a corporation with stock publicly traded on an established securities market, or Is a real estate investment trust. 2040 ez form For more information about the election to deduct reforestation costs, see chapter 8 in Publication 535, Business Expenses. 2040 ez form Demolition and Clean-up Costs You can elect to deduct 50% of any qualified GO Zone clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. 2040 ez form Qualified GO Zone clean-up costs are any amounts paid or incurred after August 27, 2005, and before January 1, 2008, for the removal of debris from, or the demolition of structures on, real property located in the GO Zone that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. 2040 ez form Increase in Rehabilitation Tax Credit The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred after August 27, 2005, and before January 1, 2009, on buildings located in the GO Zone as follows. 2040 ez form For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%. 2040 ez form For certified historic structures, the credit percentage is increased from 20% to 26%. 2040 ez form For more information, see Form 3468, Investment Credit. 2040 ez form Request for Copy or Transcript of Tax Return Request for copy of tax return. 2040 ez form   You can use Form 4506 to order a copy of your tax return. 2040 ez form Generally, there is a $39. 2040 ez form 00 fee for requesting each copy of a tax return. 2040 ez form If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, the fee will be waived if the assigned disaster designation (for example, “Hurricane Katrina”) is written in red across the top of the form when filed. 2040 ez form Request for transcript of tax return. 2040 ez form   You can use Form 4506-T to order a free transcript of your tax return. 2040 ez form A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. 2040 ez form You can also call 1-800-829-1040 to order a transcript. 2040 ez form How To Get Tax Help Special IRS assistance. 2040 ez form   The IRS is providing special help for those affected by Hurricane Katrina, Rita, or Wilma, as well as survivors and personal representatives of the victims. 2040 ez form We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by Hurricane Katrina, Rita, or Wilma, or who have other tax issues related to the hurricanes. 2040 ez form Call 1-866-562-5227 Monday through Friday In English-7 a. 2040 ez form m. 2040 ez form to 10 p. 2040 ez form m. 2040 ez form local time In Spanish-8 a. 2040 ez form m. 2040 ez form to 9:30 p. 2040 ez form m. 2040 ez form local time   The IRS website at www. 2040 ez form irs. 2040 ez form gov has notices and other tax relief information. 2040 ez form Check it periodically for any new guidance. 2040 ez form Other help from the IRS. 2040 ez form   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. 2040 ez form By selecting the method that is best for you, you will have quick and easy access to tax help. 2040 ez form Contacting your Taxpayer Advocate. 2040 ez form   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. 2040 ez form   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. 2040 ez form While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. 2040 ez form   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778. 2040 ez form Call, write, or fax the Taxpayer Advocate office in your area. 2040 ez form Call 1-800-829-4059 if you are a TTY/TDD user. 2040 ez form Visit www. 2040 ez form irs. 2040 ez form gov/advocate. 2040 ez form   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). 2040 ez form Free tax services. 2040 ez form   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 2040 ez form It contains a list of free tax publications and an index of tax topics. 2040 ez form It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 2040 ez form Internet. 2040 ez form You can access the IRS website 24 hours a day, 7 days a week, at www. 2040 ez form irs. 2040 ez form gov to: E-file your return. 2040 ez form Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 2040 ez form Check the status of your refund. 2040 ez form Click on Where's My Refund. 2040 ez form Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 2040 ez form Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 2040 ez form Download forms, instructions, and publications. 2040 ez form Order IRS products online. 2040 ez form Research your tax questions online. 2040 ez form Search publications online by topic or keyword. 2040 ez form View Internal Revenue Bulletins (IRBs) published in the last few years. 2040 ez form Figure your withholdin
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Administration for Children and Families (ACF)

The ACF funds state, territory, local, and tribal organizations to provide family assistance (welfare), child support, child care, Head Start, child welfare, and other programs relating to children and families.

The 2040 Ez Form

2040 ez form 28. 2040 ez form   Miscellaneous Deductions Table of Contents What's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses What's New Standard mileage rate. 2040 ez form  The 2013 rate for business use of a vehicle is 56½ cents per mile. 2040 ez form Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). 2040 ez form You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. 2040 ez form This chapter covers the following topics. 2040 ez form Deductions subject to the 2% limit. 2040 ez form Deductions not subject to the 2% limit. 2040 ez form Expenses you cannot deduct. 2040 ez form You must keep records to verify your deductions. 2040 ez form You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. 2040 ez form For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. 2040 ez form Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). 2040 ez form You can claim the amount of expenses that is more than 2% of your adjusted gross income. 2040 ez form You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. 2040 ez form Your adjusted gross income is the amount on Form 1040, line 38. 2040 ez form Generally, you apply the 2% limit after you apply any other deduction limit. 2040 ez form For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed in chapter 26) before you apply the 2% limit. 2040 ez form Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). 2040 ez form Unreimbursed employee expenses (line 21). 2040 ez form Tax preparation fees (line 22). 2040 ez form Other expenses (line 23). 2040 ez form Unreimbursed Employee Expenses (Line 21) Generally, you can deduct on Schedule A (Form 1040), line 21, 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. 2040 ez form An expense is ordinary if it is common and accepted in your trade, business, or profession. 2040 ez form An expense is necessary if it is appropriate and helpful to your business. 2040 ez form An expense does not have to be required to be considered necessary. 2040 ez form Examples of unreimbursed employee expenses are listed next. 2040 ez form The list is followed by discussions of additional unreimbursed employee expenses. 2040 ez form Business bad debt of an employee. 2040 ez form Education that is work related. 2040 ez form (See chapter 27. 2040 ez form ) Legal fees related to your job. 2040 ez form Licenses and regulatory fees. 2040 ez form Malpractice insurance premiums. 2040 ez form Medical examinations required by an employer. 2040 ez form Occupational taxes. 2040 ez form Passport for a business trip. 2040 ez form Subscriptions to professional journals and trade magazines related to your work. 2040 ez form Travel, transportation, entertainment, and gifts related to your work. 2040 ez form (See chapter 26. 2040 ez form ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. 2040 ez form Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer that are attributable to the pay you received from that employer. 2040 ez form 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. 2040 ez form For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. 2040 ez form 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. 2040 ez form Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. 2040 ez form Lobbying and political activities. 2040 ez form   You may not be able to deduct that part of your dues that is for certain lobbying and political activities. 2040 ez form See Dues used for lobbying under Nondeductible Expenses, later. 2040 ez form 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. 2040 ez form If you file Form 1040A, you can deduct these expenses on line 16. 2040 ez form If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. 2040 ez form However, neither spouse can deduct more than $250 of his or her qualified expenses. 2040 ez form 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. 2040 ez form 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. 2040 ez form The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. 2040 ez form See Publication 587 for more detailed information and a worksheet. 2040 ez form 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. 2040 ez form 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. 2040 ez form Employment and outplacement agency fees. 2040 ez form   You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. 2040 ez form Employer pays you back. 2040 ez form   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. 2040 ez form (See Recoveries in chapter 12. 2040 ez form ) Employer pays the employment agency. 2040 ez form   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. 2040 ez form Résumé. 2040 ez form   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. 2040 ez form Travel and transportation expenses. 2040 ez form   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. 2040 ez form You can deduct the travel expenses if the trip is primarily to look for a new job. 2040 ez form 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. 2040 ez form   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. 2040 ez form   You can choose to use the standard mileage rate to figure your car expenses. 2040 ez form The 2013 rate for business use of a vehicle is 56½ cents per mile. 2040 ez form See chapter 26 for more information. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form Research Expenses of a College Professor If you are a college professor, you can deduct research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. 2040 ez form 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. 2040 ez form However, you cannot deduct the cost of travel as a form of education. 2040 ez form 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. 2040 ez form You can depreciate the cost of tools that have a useful life substantially beyond the tax year. 2040 ez form For more information about depreciation, see Publication 946. 2040 ez form Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. 2040 ez form You can also deduct assessments for benefit payments to unemployed union members. 2040 ez form However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. 2040 ez form Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. 2040 ez form You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. 2040 ez form See Lobbying Expenses under Nondeductible Expenses, later. 2040 ez form Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. 2040 ez form You must wear them as a condition of your employment. 2040 ez form The clothes are not suitable for everyday wear. 2040 ez form It is not enough that you wear distinctive clothing. 2040 ez form The clothing must be specifically required by your employer. 2040 ez form Nor is it enough that you do not, in fact, wear your work clothes away from work. 2040 ez form The clothing must not be suitable for taking the place of your regular clothing. 2040 ez form 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. 2040 ez form ). 2040 ez form Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. 2040 ez form 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. 2040 ez form Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. 2040 ez form Protective clothing. 2040 ez form   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. 2040 ez form   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. 2040 ez form Military uniforms. 2040 ez form   You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. 2040 ez form 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. 2040 ez form In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. 2040 ez form   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. 2040 ez form   You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. 2040 ez form Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. 2040 ez form Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. 2040 ez form These fees include the cost of tax preparation software programs and tax publications. 2040 ez form They also include any fee you paid for electronic filing of your return. 2040 ez form Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. 2040 ez form On Schedule A (Form 1040), line 23, you can deduct 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. 2040 ez form You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonably and closely related to these purposes. 2040 ez form Some of these other expenses are explained in the following discussions. 2040 ez form If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. 2040 ez form Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. 2040 ez form 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. 2040 ez form First report the loss in Section B of Form 4684, Casualties and Thefts. 2040 ez form You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. 2040 ez form 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. 2040 ez form For other casualty and theft losses, see chapter 25. 2040 ez form 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. 2040 ez form 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. 2040 ez form The fees are deductible in the year paid. 2040 ez form 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). 2040 ez form You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. 2040 ez form But if you work as an employee and also use the computer in that work, see Publication 946. 2040 ez form 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. 2040 ez form Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. 2040 ez form 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. 2040 ez form For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. 2040 ez form 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. 2040 ez form But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. 2040 ez form You must add the fee to the cost of the property. 2040 ez form You cannot deduct the fee you pay to a broker to sell securities. 2040 ez form You can use the fee only to figure gain or loss from the sale. 2040 ez form See the Instructions for Form 8949 for information on how to report the fee. 2040 ez form Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. 2040 ez form A hobby is not a business because it is not carried on to make a profit. 2040 ez form See Activity not for profit in chapter 12 under Other Income. 2040 ez form Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. 2040 ez form Deductions of pass-through entities are passed through to the partners or shareholders. 2040 ez form The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. 2040 ez form Example. 2040 ez form You are a member of an investment club that is formed solely to invest in securities. 2040 ez form The club is treated as a partnership. 2040 ez form The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. 2040 ez form In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. 2040 ez form 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. 2040 ez form Publicly offered mutual funds. 2040 ez form   Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. 2040 ez form 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. 2040 ez form   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). 2040 ez form This net figure is the amount you report on your return as income. 2040 ez form You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. 2040 ez form Information returns. 2040 ez form   You should receive information returns from pass-through entities. 2040 ez form Partnerships and S corporations. 2040 ez form   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. 2040 ez form Nonpublicly offered mutual funds. 2040 ez form   These funds will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing your share of gross income and investment expenses. 2040 ez form You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). 2040 ez form See Tax Preparation Fees , earlier. 2040 ez form Loss on Deposits For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in chapter 25. 2040 ez form 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. 2040 ez form If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. 2040 ez form If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. 2040 ez form Repayments of Social Security Benefits For information on how to deduct your repayments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 11. 2040 ez form 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. 2040 ez form You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. 2040 ez form Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. 2040 ez form 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. 2040 ez form Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your individual retirement arrangement (IRA) are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. 2040 ez form For more information about IRAs, see chapter 17. 2040 ez form Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. 2040 ez form They are not subject to the 2% limit. 2040 ez form Report these items on Schedule A (Form 1040), line 28. 2040 ez form List of Deductions Each of the following items is discussed in detail after the list (except where indicated). 2040 ez form Amortizable premium on taxable bonds. 2040 ez form Casualty and theft losses from income- producing property. 2040 ez form Federal estate tax on income in respect of a decedent. 2040 ez form Gambling losses up to the amount of gambling winnings. 2040 ez form Impairment-related work expenses of persons with disabilities. 2040 ez form Loss from other activities from Schedule K-1 (Form 1065-B), box 2. 2040 ez form Losses from Ponzi-type investment schemes. 2040 ez form See Losses from Ponzi-type investment schemes under Theft in chapter 25. 2040 ez form Repayments of more than $3,000 under a claim of right. 2040 ez form Unrecovered investment in an annuity. 2040 ez form 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. 2040 ez form You can elect to amortize the premium on taxable bonds. 2040 ez form The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. 2040 ez form Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. 2040 ez form For more information, see Amortizable Premium on Taxable Bonds in Publication 529, and Bond Premium Amortization in chapter 3 of Publication 550, Investment Income and Expenses. 2040 ez form 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). 2040 ez form First, report the loss in Form 4684, Section B. 2040 ez form You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. 2040 ez form 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. 2040 ez form For more information on casualty and theft losses, see chapter 25. 2040 ez form 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. 2040 ez form 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. 2040 ez form See Publication 559 for more information. 2040 ez form 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. 2040 ez form You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. 2040 ez form You cannot deduct gambling losses that are more than your winnings. 2040 ez form You cannot reduce your gambling winnings by your gambling losses and report the difference. 2040 ez form 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. 2040 ez form Therefore, your records should show your winnings separately from your losses. 2040 ez form Diary of winnings and losses. 2040 ez form You must keep an accurate diary or similar record of your losses and winnings. 2040 ez form Your diary should contain at least the following information. 2040 ez form The date and type of your specific wager or wagering activity. 2040 ez form The name and address or location of the gambling establishment. 2040 ez form The names of other persons present with you at the gambling establishment. 2040 ez form The amount(s) you won or lost. 2040 ez form See Publication 529 for more information. 2040 ez form 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. 2040 ez form Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work. 2040 ez form Self-employed. 2040 ez form   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. 2040 ez form 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. 2040 ez form It is not subject to the passive activity limitations. 2040 ez form 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. 2040 ez form See Repayments in chapter 12 for more information. 2040 ez form 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. 2040 ez form 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. 2040 ez form See chapter 10 for more information about the tax treatment of pensions and annuities. 2040 ez form Nondeductible Expenses Examples of nondeductible expenses are listed next. 2040 ez form The list is followed by discussions of additional nondeductible expenses. 2040 ez form List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. 2040 ez form Burial or funeral expenses, including the cost of a cemetery lot. 2040 ez form Capital expenses. 2040 ez form Fees and licenses, such as car licenses, marriage licenses, and dog tags. 2040 ez form Hobby losses, but see Hobby Expenses , earlier. 2040 ez form Home repairs, insurance, and rent. 2040 ez form Illegal bribes and kickbacks. 2040 ez form See Bribes and kickbacks in chapter 11 of Publication 535. 2040 ez form Losses from the sale of your home, furniture, personal car, etc. 2040 ez form Personal disability insurance premiums. 2040 ez form Personal, living, or family expenses. 2040 ez form The value of wages never received or lost vacation time. 2040 ez form Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. 2040 ez form See chapter 37. 2040 ez form Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. 2040 ez form These include qualification and registration fees for primary elections. 2040 ez form Legal fees. 2040 ez form   You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. 2040 ez form 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. 2040 ez form Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. 2040 ez form This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. 2040 ez form 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. 2040 ez form Dues paid to airline, hotel, and luncheon clubs are not deductible. 2040 ez form Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). 2040 ez form 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. 2040 ez form Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. 2040 ez form This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). 2040 ez form Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. 2040 ez form 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. 2040 ez form Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. 2040 ez form However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. 2040 ez form See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. 2040 ez form Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. 2040 ez form Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. 2040 ez form You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. 2040 ez form See chapter 18 for information on alimony. 2040 ez form Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. 2040 ez form 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. 2040 ez form Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. 2040 ez form Dues used for lobbying. 2040 ez form   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. 2040 ez form See Lobbying Expenses in Publication 529 for information on exceptions. 2040 ez form Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. 2040 ez form 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. 2040 ez form See chapter 25. 2040 ez form Example. 2040 ez form A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2040 ez form The diamond falls from the ring and is never found. 2040 ez form The loss of the diamond is a casualty. 2040 ez form Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. 2040 ez form See chapter 26 for information on deductible expenses while traveling away from home. 2040 ez form Meals While Working Late You cannot deduct the cost of meals while working late. 2040 ez form However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you are traveling away from home. 2040 ez form See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. 2040 ez form Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. 2040 ez form Custody of children. 2040 ez form Breach of promise to marry suit. 2040 ez form Civil or criminal charges resulting from a personal relationship. 2040 ez form Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. 2040 ez form Preparation of a title (or defense or perfection of a title). 2040 ez form Preparation of a will. 2040 ez form Property claims or property settlement in a divorce. 2040 ez form You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. 2040 ez form Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. 2040 ez form Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. 2040 ez form Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. 2040 ez form Accounting certificate fees paid for the initial right to practice accounting. 2040 ez form Bar exam fees and incidental expenses in securing initial admission to the bar. 2040 ez form Medical and dental license fees paid to get initial licensing. 2040 ez form Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. 2040 ez form 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. 2040 ez form 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. 2040 ez form 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. 2040 ez form You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. 2040 ez form Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. 2040 ez form You cannot deduct interest on a debt incurred or continued to buy or carry  tax-exempt securities. 2040 ez form If you have expenses to produce both taxable and tax-exempt income, but you cannot identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct. 2040 ez form Example. 2040 ez form During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. 2040 ez form In earning this income, you had total expenses of $500 during the year. 2040 ez form You cannot identify the amount of each expense item that is for each income item. 2040 ez form Therefore, 80% ($4,800/$6,000) of the expense is for the taxable interest and 20% ($1,200/$6,000) is for the tax-exempt interest. 2040 ez form You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). 2040 ez form Travel Expenses for Another Individual You generally cannot deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. 2040 ez form See chapter 26 for more information on deductible travel expenses. 2040 ez form Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. 2040 ez form However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions. 2040 ez form Wristwatches You cannot deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties. 2040 ez form Prev  Up  Next   Home   More Online Publications