Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File State Return

How To Amend Tax ReturnsIncome Tax Forms For 2012Irs Tax Extension FormsTax Planning Us 1040ezFile State Tax OnlyFree State Tax EfilingFiling Amended Tax Return OnlineEzformTax Planning Us 1040aFree File 2010 Taxes1040nr OnlineEz Form 1040H&r Block Amended ReturnFree Form 1040ez OnlineHrblockWhere Can I File State Taxes Free OnlineTaxcut SoftwareFree Online 1040ez Filing1040ez For 2010 Tax YearFree FileIrsHow To File State Income Tax For FreeIrs InstructionsFiling An Amended Tax Return 20131040x Form 2010Irs 1040x FormCollege Students Filing TaxesHow To Do A 1040x FormState Income Tax Rates1040 Ez FormsFree Federal And State Efile1040ez WorksheetTax Return Preparation State Income TaxesCorporate Tax Software1040nr Tax CalculatorForm 1040 EzFile 1040ez OnlineFile State Taxes Only Online1040ez 2010 Tax FormStudents Exempt From Income Tax

File State Return

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

Small Business Forms and Publications

Now you can select and download multiple small business and self-employed forms and publications or you can call (800) 829-3676 to order forms and publications through the mail. If you are an aspiring entrepreneur and are unsure of which tax publications may be relevant to you, please consult our Starting a Business section, which provides an overview of your federal tax responsibilities. Please note: This list is not all-inclusive, so please visit Forms and Publications for other tax publications. Adobe Acrobat Reader is required to open the PDF files.

Order multiple copies of information returns and employer forms

Forms

Publications

Visit the Business Structures page for structure specific forms and publications recommendations.

Rate the Small Business and Self-Employed Web Site

Page Last Reviewed or Updated: 19-Mar-2014

The File State Return

File state return 9. File state return   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. File state return Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. File state return Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. File state return Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. File state return It also covers the following topics. File state return Personal use of dwelling unit (including vacation home). File state return Depreciation. File state return Limits on rental losses. File state return How to report your rental income and expenses. File state return If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. File state return If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. File state return If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. File state return See Publication 527, Residential Rental Property, for more information. File state return Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. File state return Rental income is any payment you receive for the use or occupation of property. File state return In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. File state return When to report. File state return   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. File state return You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. File state return You constructively receive income when it is made available to you, for example, by being credited to your bank account. File state return   For more information about when you constructively receive income, see Accounting Methods in chapter 1. File state return Advance rent. File state return   Advance rent is any amount you receive before the period that it covers. File state return Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. File state return Example. File state return You sign a 10-year lease to rent your property. File state return In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. File state return You must include $10,000 in your income in the first year. File state return Canceling a lease. File state return   If your tenant pays you to cancel a lease, the amount you receive is rent. File state return Include the payment in your income in the year you receive it regardless of your method of accounting. File state return Expenses paid by tenant. File state return   If your tenant pays any of your expenses, the payments are rental income. File state return Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. File state return See Rental Expenses , later, for more information. File state return Property or services. File state return   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. File state return   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. File state return Security deposits. File state return   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. File state return But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. File state return   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. File state return Include it in your income when you receive it. File state return Part interest. File state return   If you own a part interest in rental property, you must report your part of the rental income from the property. File state return Rental of property also used as your home. File state return   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. File state return However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. File state return See Personal Use of Dwelling Unit (Including Vacation Home) , later. File state return Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. File state return It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. File state return Depreciation , which you can also deduct from your rental income, is discussed later. File state return Personal use of rental property. File state return   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. File state return Also, your rental expense deductions may be limited. File state return See Personal Use of Dwelling Unit (Including Vacation Home) , later. File state return Part interest. File state return   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. File state return When to deduct. File state return   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. File state return Depreciation. File state return   You can begin to depreciate rental property when it is ready and available for rent. File state return See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. File state return Pre-rental expenses. File state return   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. File state return Uncollected rent. File state return   If you are a cash-basis taxpayer, do not deduct uncollected rent. File state return Because you have not included it in your income, it is not deductible. File state return Vacant rental property. File state return   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. File state return However, you cannot deduct any loss of rental income for the period the property is vacant. File state return Vacant while listed for sale. File state return   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. File state return If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. File state return Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. File state return Improvements. File state return   You must capitalize any expense you pay to improve your rental property. File state return An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. File state return Betterments. File state return   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. File state return Restoration. File state return   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. File state return Adaptation. File state return   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. File state return Separate the costs of repairs and improvements, and keep accurate records. File state return You will need to know the cost of improvements when you sell or depreciate your property. File state return The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. File state return Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. File state return Insurance premiums paid in advance. File state return   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. File state return You cannot deduct the total premium in the year you pay it. File state return Legal and other professional fees. File state return   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. File state return For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. File state return You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. File state return Local benefit taxes. File state return   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. File state return These charges are nondepreciable capital expenditures, and must be added to the basis of your property. File state return However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. File state return Local transportation expenses. File state return    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. File state return However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. File state return See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. File state return   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. File state return For 2013, the standard mileage rate for business use is 56. File state return 5 cents per mile. File state return For more information, see chapter 26. File state return    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. File state return In addition, you must complete Form 4562, Part V, and attach it to your tax return. File state return Rental of equipment. File state return   You can deduct the rent you pay for equipment that you use for rental purposes. File state return However, in some cases, lease contracts are actually purchase contracts. File state return If so, you cannot deduct these payments. File state return You can recover the cost of purchased equipment through depreciation. File state return Rental of property. File state return   You can deduct the rent you pay for property that you use for rental purposes. File state return If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. File state return Travel expenses. File state return   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. File state return You must properly allocate your expenses between rental and nonrental activities. File state return You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. File state return You recover the cost of improvements by taking depreciation. File state return For information on travel expenses, see chapter 26. File state return    To deduct travel expenses, you must keep records that follow the rules in chapter 26. File state return   See Rental Expenses in Publication 527 for more information. File state return Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. File state return You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. File state return You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. File state return However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). File state return Example. File state return Your tax year is the calendar year. File state return You moved from your home in May and started renting it out on June 1. File state return You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. File state return Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. File state return Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. File state return You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). File state return You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. File state return There is no change in the types of expenses deductible for the personal-use part of your property. File state return Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). File state return You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. File state return You do not have to divide the expenses that belong only to the rental part of your property. File state return For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. File state return If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. File state return You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. File state return How to divide expenses. File state return   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. File state return You can use any reasonable method for dividing the expense. File state return It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. File state return The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. File state return Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. File state return You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. File state return For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. File state return Where to report. File state return   Report your not-for-profit rental income on Form 1040, line 21. File state return For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. File state return   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. File state return You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. File state return Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. File state return In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. File state return Only your rental expenses may be deducted on Schedule E (Form 1040). File state return Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). File state return You must also determine if the dwelling unit is considered a home. File state return The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. File state return Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. File state return There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. File state return Dwelling unit. File state return   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. File state return It also includes all structures or other property belonging to the dwelling unit. File state return A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. File state return   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. File state return Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. File state return Example. File state return   You rent a room in your home that is always available for short-term occupancy by paying customers. File state return You do not use the room yourself, and you allow only paying customers to use the room. File state return The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. File state return Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. File state return When dividing your expenses, follow these rules. File state return Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. File state return This rule does not apply when determining whether you used the unit as a home. File state return Any day that the unit is available for rent but not actually rented is not a day of rental use. File state return Example. File state return Your beach cottage was available for rent from June 1 through August 31 (92 days). File state return During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. File state return The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. File state return Your family also used the cottage during the last 2 weeks of May (14 days). File state return The cottage was not used at all before May 17 or after August 31. File state return You figure the part of the cottage expenses to treat as rental expenses as follows. File state return The cottage was used for rental a total of 85 days (92 − 7). File state return The days it was available for rent but not rented (7 days) are not days of rental use. File state return The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. File state return You used the cottage for personal purposes for 14 days (the last 2 weeks in May). File state return The total use of the cottage was 99 days (14 days personal use + 85 days rental use). File state return Your rental expenses are 85/99 (86%) of the cottage expenses. File state return Note. File state return When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. File state return Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. File state return Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. File state return If you have a net loss, you may not be able to deduct all of the rental expenses. File state return See Dwelling Unit Used as a Home, next. File state return Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. File state return You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. File state return See What is a day of personal use , later. File state return Fair rental price. File state return   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. File state return The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. File state return   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. File state return Instead, count it as a day of personal use in applying both (1) and (2) above. File state return What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. File state return You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). File state return However, see Days used as a main home before or after renting , later. File state return A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. File state return Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. File state return ), and lineal descendants (children, grandchildren, etc. File state return ). File state return Anyone under an arrangement that lets you use some other dwelling unit. File state return Anyone at less than a fair rental price. File state return Main home. File state return   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. File state return Shared equity financing agreement. File state return   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. File state return Donation of use of property. File state return   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. File state return Examples. File state return   The following examples show how to determine days of personal use. File state return Example 1. File state return You and your neighbor are co-owners of a condominium at the beach. File state return Last year, you rented the unit to vacationers whenever possible. File state return The unit was not used as a main home by anyone. File state return Your neighbor used the unit for 2 weeks last year; you did not use it at all. File state return Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. File state return Example 2. File state return You and your neighbors are co-owners of a house under a shared equity financing agreement. File state return Your neighbors live in the house and pay you a fair rental price. File state return Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. File state return This is because your neighbors rent the house as their main home under a shared equity financing agreement. File state return Example 3. File state return You own a rental property that you rent to your son. File state return Your son does not own any interest in this property. File state return He uses it as his main home and pays you a fair rental price. File state return Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. File state return Example 4. File state return You rent your beach house to Joshua. File state return Joshua rents his cabin in the mountains to you. File state return You each pay a fair rental price. File state return You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. File state return Days used for repairs and maintenance. File state return   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. File state return Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. File state return Days used as a main home before or after renting. File state return   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. File state return Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. File state return You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. File state return However, this special rule does not apply when dividing expenses between rental and personal use. File state return Examples. File state return   The following examples show how to determine whether you used your rental property as a home. File state return Example 1. File state return You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. File state return You rented the basement apartment at a fair rental price to college students during the regular school year. File state return You rented to them on a 9-month lease (273 days). File state return You figured 10% of the total days rented to others at a fair rental price is 27 days. File state return During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. File state return Your basement apartment was used as a home because you used it for personal purposes for 30 days. File state return Rent-free use by your brothers is considered personal use. File state return Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). File state return Example 2. File state return You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). File state return Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. File state return You figured 10% of the total days rented to others at a fair rental price is 3 days. File state return The room was used as a home because you used it for personal purposes for 21 days. File state return That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). File state return Example 3. File state return You own a condominium apartment in a resort area. File state return You rented it at a fair rental price for a total of 170 days during the year. File state return For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. File state return Your family actually used the apartment for 10 of those days. File state return Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. File state return You figured 10% of the total days rented to others at a fair rental price is 16 days. File state return Your family also used the apartment for 7 other days during the year. File state return You used the apartment as a home because you used it for personal purposes for 17 days. File state return That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). File state return Minimal rental use. File state return   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. File state return See Used as a home but rented less than 15 days , later, for more information. File state return Limit on deductions. File state return   Renting a dwelling unit that is considered a home is not a passive activity. File state return Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. File state return The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. File state return Any expenses carried forward to the next year will be subject to any limits that apply for that year. File state return This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. File state return   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. File state return Reporting Income and Deductions Property not used for personal purposes. File state return   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. File state return Property used for personal purposes. File state return   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. File state return Not used as a home. File state return   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. File state return Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . File state return The expenses for personal use are not deductible as rental expenses. File state return   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. File state return Used as a home but rented less than 15 days. File state return   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). File state return You are not required to report the rental income and rental expenses from this activity. File state return The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). File state return See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. File state return Used as a home and rented 15 days or more. File state return   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. File state return Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . File state return The expenses for personal use are not deductible as rental expenses. File state return   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. File state return You do not need to use Worksheet 9-1. File state return   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. File state return To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. File state return Depreciation You recover the cost of income-producing property through yearly tax deductions. File state return You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. File state return Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. File state return You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. File state return You can deduct depreciation only on the part of your property used for rental purposes. File state return Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. File state return You may have to use Form 4562 to figure and report your depreciation. File state return See How To Report Rental Income and Expenses , later. File state return Alternative minimum tax (AMT). File state return    If you use accelerated depreciation, you may be subject to the AMT. File state return Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). File state return Claiming the correct amount of depreciation. File state return   You should claim the correct amount of depreciation each tax year. File state return If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. File state return   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. File state return S Individual Income Tax Return. File state return If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. File state return See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. File state return Changing your accounting method to deduct unclaimed depreciation. File state return   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. File state return In some instances, that consent is automatic. File state return For more information, see chapter 1 of Publication 946. File state return Land. File state return   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. File state return The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. File state return More information. File state return   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. File state return Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. File state return You must consider these rules in the order shown below. File state return At-risk rules. File state return These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. File state return This applies only if the real property was placed in service after 1986. File state return Passive activity limits. File state return Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. File state return However, there are exceptions. File state return At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. File state return Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. File state return In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. File state return You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. File state return See Publication 925 for more information. File state return Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. File state return For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. File state return Limits on passive activity deductions and credits. File state return    Deductions or losses from passive activities are limited. File state return You generally cannot offset income, other than passive income, with losses from passive activities. File state return Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. File state return Any excess loss or credit is carried forward to the next tax year. File state return   For a detailed discussion of these rules, see Publication 925. File state return    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. File state return Real estate professionals. File state return   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. File state return For a detailed discussion of the requirements, see Publication 527. File state return For a detailed discussion of material participation, see Publication 925. File state return Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. File state return Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. File state return Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. File state return This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. File state return Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. File state return Active participation. File state return   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. File state return Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. File state return Maximum special allowance. File state return   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. File state return   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. File state return If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. File state return   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. File state return More information. File state return   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. File state return How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). File state return However, do not use that schedule to report a not-for-profit activity. File state return See Not Rented for Profit, earlier. File state return Providing substantial services. File state return   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). File state return Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. File state return For information, see Publication 334, Tax Guide for Small Business. File state return You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. File state return   Use Form 1065, U. File state return S. File state return Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). File state return Qualified joint venture. File state return   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. File state return This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. File state return For more information, see Publication 527. File state return Form 1098, Mortgage Interest Statement. File state return    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. File state return If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. File state return Attach a statement to your return showing the name and address of the other person. File state return In the left margin of Schedule E, next to line 13, enter “See attached. File state return ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. File state return , you normally report your rental income and expenses on Schedule E, Part I. File state return List your total income, expenses, and depreciation for each rental property. File state return Be sure to enter the number of fair rental and personal use days on line 2. File state return If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. File state return Complete lines 1 and 2 for each property. File state return However, fill in lines 23a through 26 on only one Schedule E. File state return On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. File state return To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. File state return If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. File state return Form 6198, At-Risk Limitations. File state return See At-Risk Rules , earlier. File state return Also see Publication 925. File state return Form 8582, Passive Activity Loss Limitations. File state return See Passive Activity Limits , earlier. File state return Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. File state return If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. File state return Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). File state return Worksheet 9-1. File state return Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. File state return Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . File state return ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. File state return Rental Use Percentage A. File state return Total days available for rent at fair rental price A. File state return       B. File state return Total days available for rent (line A) but not rented B. File state return       C. File state return Total days of rental use. File state return Subtract line B from line A C. File state return       D. File state return Total days of personal use (including days rented at less than fair rental price) D. File state return       E. File state return Total days of rental and personal use. File state return Add lines C and D E. File state return       F. File state return Percentage of expenses allowed for rental. File state return Divide line C by line E     F. File state return   PART II. File state return Allowable Rental Expenses 1. File state return Enter rents received 1. File state return   2a. File state return Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. File state return       b. File state return Enter the rental portion of real estate taxes b. File state return       c. File state return Enter the rental portion of deductible casualty and theft losses (see instructions) c. File state return       d. File state return Enter direct rental expenses (see instructions) d. File state return       e. File state return Fully deductible rental expenses. File state return Add lines 2a–2d. File state return Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. File state return   3. File state return Subtract line 2e from line 1. File state return If zero or less, enter -0- 3. File state return   4a. File state return Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. File state return       b. File state return Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. File state return       c. File state return Carryover of operating expenses from 2012 worksheet c. File state return       d. File state return Add lines 4a–4c d. File state return       e. File state return Allowable expenses. File state return Enter the smaller of line 3 or line 4d (see instructions) 4e. File state return   5. File state return Subtract line 4e from line 3. File state return If zero or less, enter -0- 5. File state return   6a. File state return Enter the rental portion of excess casualty and theft losses (see instructions) 6a. File state return       b. File state return Enter the rental portion of depreciation of the dwelling unit b. File state return       c. File state return Carryover of excess casualty losses and depreciation from 2012 worksheet c. File state return       d. File state return Add lines 6a–6c d. File state return       e. File state return Allowable excess casualty and theft losses and depreciation. File state return Enter the smaller of  line 5 or line 6d (see instructions) 6e. File state return   PART III. File state return Carryover of Unallowed Expenses to Next Year 7a. File state return Operating expenses to be carried over to next year. File state return Subtract line 4e from line 4d 7a. File state return   b. File state return Excess casualty and theft losses and depreciation to be carried over to next year. File state return  Subtract line 6e from line 6d b. File state return   Worksheet 9-1 Instructions. File state return Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. File state return Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. File state return Line 2a. File state return Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. File state return Do not include interest on a loan that did not benefit the dwelling unit. File state return For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. File state return Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. File state return Include the rental portion of this interest in the total you enter on line 2a of the worksheet. File state return   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. File state return See the Schedule A instructions. File state return However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. File state return See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. File state return Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. File state return   Note. File state return Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. File state return Instead, figure the personal portion on a separate Schedule A. File state return If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. File state return           Line 2c. File state return Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. File state return To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. File state return If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. File state return On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. File state return Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. File state return   Note. File state return Do not file this Form 4684 or use it to figure your personal losses on Schedule A. File state return Instead, figure the personal portion on a separate Form 4684. File state return           Line 2d. File state return Enter the total of your rental expenses that are directly related only to the rental activity. File state return These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. File state return Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. File state return           Line 2e. File state return You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. File state return Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. File state return           Line 4b. File state return On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. File state return If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. File state return Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). File state return           Line 4e. File state return You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. File state return *           Line 6a. File state return To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. File state return   A. File state return Enter the amount from Form 4684, line 10       B. File state return Enter the rental portion of line A       C. File state return Enter the amount from line 2c of this worksheet       D. File state return Subtract line C from line B. File state return Enter the result here and on line 6a of this worksheet               Line 6e. File state return You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. File state return * *Allocating the limited deduction. File state return If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. File state return Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. File state return Prev  Up  Next   Home   More Online Publications