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Filing 1040ez Publication 1544 - Main Content Table of Contents Why Report These Payments? Who Must File Form 8300?What Payments Must Be Reported? What Is Cash? Taxpayer Identification Number (TIN) What Is a Related Transaction? What About Suspicious Transactions? When, Where, and What To File Examples Penalties How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Filing 1040ez Why Report These Payments? Drug dealers and smugglers often use large cash payments to “launder” money from illegal activities. Filing 1040ez Laundering means converting “dirty” or illegally-gained money to “clean” money. Filing 1040ez The government can often trace this laundered money through the payments you report. Filing 1040ez Laws passed by Congress require you to report these payments. Filing 1040ez Your compliance with these laws provides valuable information that can stop those who evade taxes and those who profit from the drug trade and other criminal activities. Filing 1040ez The USA PATRIOT Act of 2001 increased the scope of these laws to help trace funds used for terrorism. Filing 1040ez Who Must File Form 8300? Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. Filing 1040ez For example, you may have to file Form 8300 if you are a dealer in jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker; an attorney; a real estate broker; an insurance company; or a travel agency. Filing 1040ez Special rules for clerks of federal or state courts are discussed later under Bail received by court clerks. Filing 1040ez However, you do not have to file Form 8300 if the transaction is not related to your trade or business. Filing 1040ez For example, if you own a jewelry store and sell your personal automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction. Filing 1040ez Transaction defined. Filing 1040ez A “transaction” occurs when: Goods, services, or property are sold; Property is rented; Cash is exchanged for other cash; A contribution is made to a trust or escrow account; A loan is made or repaid; or Cash is converted to a negotiable instrument, such as a check or a bond. Filing 1040ez Person defined. Filing 1040ez A “person” includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. Filing 1040ez Exempt organizations, including employee plans, are also “persons. Filing 1040ez ” However, exempt organizations do not have to file Form 8300 for a more-than-$10,000 charitable cash contribution they receive since it is not received in the course of a trade or business. Filing 1040ez Foreign transactions. Filing 1040ez You do not have to file Form 8300 if the entire transaction (including the receipt of cash) takes place outside of: The 50 states, The District of Columbia, Puerto Rico, or A possession or territory of the United States. Filing 1040ez However, you must file Form 8300 if any part of the transaction (including the receipt of cash) occurs in Puerto Rico or a possession or territory of the United States and you are subject to the Internal Revenue Code. Filing 1040ez Bail received by court clerks. Filing 1040ez Any clerk of a federal or state court who receives more than $10,000 in cash as bail for an individual charged with any of the following criminal offenses must file Form 8300: Any federal offense involving a controlled substance, Racketeering, Money laundering, and Any state offense substantially similar to (1), (2), or (3) above. Filing 1040ez For more information about the rules that apply to court clerks, see Section 1. Filing 1040ez 6050I-2 of the Income Tax Regulations. Filing 1040ez What Payments Must Be Reported? You must file Form 8300 to report cash paid to you if it is: Over $10,000, Received as: One lump sum of over $10,000, Installment payments that cause the total cash received within 1 year of the initial payment to total more than $10,000, or Other previously unreportable payments that cause the total cash received within a 12-month period to total more than $10,000, Received in the course of your trade or business, Received from the same buyer (or agent), and Received in a single transaction or in related transactions (defined later). Filing 1040ez What Is Cash? Cash is: The coins and currency of the United States (and any other country), and A cashier's check, bank draft, traveler's check, or money order you receive, if it has a face amount of $10,000 or less and you receive it in: A designated reporting transaction (defined later), or Any transaction in which you know the payer is trying to avoid the reporting of the transaction on Form 8300. Filing 1040ez Cash may include a cashier's check even if it is called a “treasurer's check” or “bank check. Filing 1040ez ” Cash does not include a check drawn on an individual's personal account. Filing 1040ez A cashier's check, bank draft, traveler's check, or money order with a face amount of more than $10,000 is not treated as cash. Filing 1040ez These items are not defined as cash and you do not have to file Form 8300 when you receive them because, if they were bought with currency, the bank or other financial institution that issued them must file a report on FinCEN Form 104. Filing 1040ez Example 1. Filing 1040ez You are a coin dealer. Filing 1040ez Bob Green buys gold coins from you for $13,200. Filing 1040ez He pays for them with $6,200 in U. Filing 1040ez S. Filing 1040ez currency and a cashier's check having a face amount of $7,000. Filing 1040ez The cashier's check is treated as cash. Filing 1040ez You have received more than $10,000 cash and must file Form 8300 for this transaction. Filing 1040ez Example 2. Filing 1040ez You are a retail jeweler. Filing 1040ez Mary North buys an item of jewelry from you for $12,000. Filing 1040ez She pays for it with a personal check payable to you in the amount of $9,600 and traveler's checks totaling $2,400. Filing 1040ez Because the personal check is not treated as cash, you have not received more than $10,000 cash in the transaction. Filing 1040ez You do not have to file Form 8300. Filing 1040ez Example 3. Filing 1040ez You are a boat dealer. Filing 1040ez Emily Jones buys a boat from you for $16,500. Filing 1040ez She pays for it with a cashier's check payable to you in the amount of $16,500. Filing 1040ez The cashier's check is not treated as cash because its face amount is more than $10,000. Filing 1040ez You do not have to file Form 8300 for this transaction. Filing 1040ez Designated Reporting Transaction A designated reporting transaction is the retail sale of any of the following: A consumer durable, such as an automobile or boat. Filing 1040ez A consumer durable is property, other than land or buildings, that: Is suitable for personal use, Can reasonably be expected to last at least 1 year under ordinary use, Has a sales price of more than $10,000, and Can be seen or touched (tangible property). Filing 1040ez For example, a $20,000 car is a consumer durable, but a $20,000 dump truck or factory machine is not. Filing 1040ez The car is a consumer durable even if you sell it to a buyer who will use it in a business. Filing 1040ez A collectible (for example, a work of art, rug, antique, metal, gem, stamp, or coin). Filing 1040ez Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction (or related transactions) is more than $10,000. Filing 1040ez To figure the total sales price of all items sold for a trip or entertainment event, you include the sales price of items such as airfare, hotel rooms, and admission tickets. Filing 1040ez Example. Filing 1040ez You are a travel agent. Filing 1040ez Ed Johnson asks you to charter a passenger airplane to take a group to a sports event in another city. Filing 1040ez He also asks you to book hotel rooms and admission tickets for the group. Filing 1040ez In payment, he gives you two money orders, each for $6,000. Filing 1040ez You have received more than $10,000 cash in this designated reporting transaction. Filing 1040ez You must file Form 8300. Filing 1040ez Retail sale. Filing 1040ez The term “retail sale” means any sale made in the course of a trade or business that consists mainly of making sales to ultimate consumers. Filing 1040ez Thus, if your business consists mainly of making sales to ultimate consumers, all sales you make in the course of that business are retail sales. Filing 1040ez This includes any sales of items that will be resold. Filing 1040ez Broker or intermediary. Filing 1040ez A designated reporting transaction includes the retail sale of items (1), (2), or (3) of the preceding list, even if the funds are received by a broker or other intermediary, rather than directly by the seller. Filing 1040ez Exceptions to Definition of Cash A cashier's check, bank draft, traveler's check, or money order you received in a designated reporting transaction is not treated as cash if one of the following exceptions applies. Filing 1040ez Exception for certain bank loans. Filing 1040ez A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is the proceeds from a bank loan. Filing 1040ez As proof that it is from a bank loan, you may rely on a copy of the loan document, a written statement or lien instruction from the bank, or similar proof. Filing 1040ez Example. Filing 1040ez You are a car dealer. Filing 1040ez Mandy White buys a new car from you for $11,500. Filing 1040ez She pays you with $2,000 of U. Filing 1040ez S. Filing 1040ez currency and a cashier's check for $9,500 payable to you and her. Filing 1040ez You can tell that the cashier's check is the proceeds of a bank loan because it includes instructions to you to have a lien put on the car as security for the loan. Filing 1040ez For this reason, the cashier's check is not treated as cash. Filing 1040ez You do not have to file Form 8300 for the transaction. Filing 1040ez Exception for certain installment sales. Filing 1040ez A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is received in payment on a promissory note or an installment sales contract (including a lease that is considered a sale for federal tax purposes). Filing 1040ez However, this exception applies only if: You use similar notes or contracts in other sales to ultimate consumers in the ordinary course of your trade or business, and The total payments for the sale that you receive on or before the 60th day after the sale are 50% or less of the purchase price. Filing 1040ez Exception for certain down payment plans. Filing 1040ez A cashier's check, bank draft, traveler's check, or money order is not treated as cash if you received it in payment for a consumer durable or collectible, and all three of the following statements are true. Filing 1040ez You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the date of sale. Filing 1040ez You receive it more than 60 days before the date of sale. Filing 1040ez You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Filing 1040ez Exception for travel and entertainment. Filing 1040ez A cashier's check, bank draft, traveler's check, or money order received for travel or entertainment is not treated as cash if all three of the following statements are true. Filing 1040ez You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the earliest date that any travel or entertainment item (such as airfare) is furnished for the trip or entertainment event. Filing 1040ez You receive it more than 60 days before the date on which the final payment is due. Filing 1040ez You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Filing 1040ez Taxpayer Identification Number (TIN) You must furnish the correct TIN of the person or persons from whom you receive the cash. Filing 1040ez If the transaction is conducted on the behalf of another person or persons, you must furnish the TIN of that person or persons. Filing 1040ez If you do not know a person's TIN, you have to ask for it. Filing 1040ez You may be subject to penalties for an incorrect or missing TIN. Filing 1040ez There are three types of TINs. Filing 1040ez The TIN for an individual, including a sole proprietor, is the individual's social security number (SSN). Filing 1040ez The TIN for a nonresident alien individual who needs a TIN but is not eligible to get an SSN is an IRS individual taxpayer identification number (ITIN). Filing 1040ez An ITIN has nine digits, similar to an SSN. Filing 1040ez The TIN for other persons, including corporations, partnerships, and estates, is the employer identification number (EIN). Filing 1040ez Exception. Filing 1040ez You are not required to provide the TIN of a person who is a nonresident alien individual or a foreign organization if that person or foreign organization: Does not have income effectively connected with the conduct of a U. Filing 1040ez S. Filing 1040ez trade or business; Does not have an office or place of business, or a fiscal or paying agent in the United States; Does not file a federal tax return; Does not furnish a withholding certificate described in §1. Filing 1040ez 1441-1(e)(2) or (3) or 1. Filing 1040ez 1441-5(c)(2)(iv) or (3)(iii) to the extent required under 1. Filing 1040ez 1441-1(e)(4)(vii); Does not have to furnish a TIN on any return, statement, or other document as required by the income tax regulations under section 897 or 1445; or In the case of a nonresident alien individual, the individual has not chosen to file a joint federal income tax return with a spouse who is a U. Filing 1040ez S. Filing 1040ez citizen or resident. Filing 1040ez What Is a Related Transaction? Any transactions between a buyer (or an agent of the buyer) and a seller that occur within a 24-hour period are related transactions. Filing 1040ez If you receive over $10,000 in cash during two or more transactions with one buyer in a 24-hour period, you must treat the transactions as one transaction and report the payments on Form 8300. Filing 1040ez For example, if you sell two products for $6,000 each to the same customer in 1 day and the customer pays you in cash, these are related transactions. Filing 1040ez Because they total $12,000 (more than $10,000), you must file Form 8300. Filing 1040ez More than 24 hours between transactions. Filing 1040ez Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. Filing 1040ez For example, you are a travel agent. Filing 1040ez A client pays you $8,000 in cash for a trip. Filing 1040ez Two days later, the same client pays you $3,000 more in cash to include another person on the trip. Filing 1040ez These are related transactions, and you must file Form 8300 to report them. Filing 1040ez What About Suspicious Transactions? If you receive $10,000 or less in cash, you may voluntarily file Form 8300 if the transaction appears to be suspicious. Filing 1040ez A transaction is suspicious if it appears that a person is trying to cause you not to file Form 8300 or is trying to cause you to file a false or incomplete Form 8300, or if there is a sign of possible illegal activity. Filing 1040ez If you are suspicious, you are encouraged to call the local IRS Criminal Investigation Division as soon as possible. Filing 1040ez Or, you can call the FinCEN Financial Institution Hotline toll free at 1-866-556-3974. Filing 1040ez When, Where, and What To File The amount you receive and when you receive it determine when you must file. Filing 1040ez Generally, you must file Form 8300 within 15 days after receiving a payment. Filing 1040ez If the Form 8300 due date (the 15th or last day you can timely file the form) falls on a Saturday, Sunday, or legal holiday, it is delayed until the next day that is not a Saturday, Sunday, or legal holiday. Filing 1040ez More than one payment. Filing 1040ez In some transactions, the buyer may arrange to pay you in cash installment payments. Filing 1040ez If the first payment is more than $10,000, you must file Form 8300 within 15 days. Filing 1040ez If the first payment is not more than $10,000, you must add the first payment and any later payments made within 1 year of the first payment. Filing 1040ez When the total cash payments are more than $10,000, you must file Form 8300 within 15 days. Filing 1040ez After you file Form 8300, you must start a new count of cash payments received from that buyer. Filing 1040ez If you receive more than $10,000 in additional cash payments from that buyer within a 12-month period, you must file another Form 8300. Filing 1040ez You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. Filing 1040ez If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. Filing 1040ez Example. Filing 1040ez On January 10, you receive a cash payment of $11,000. Filing 1040ez You receive additional cash payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. Filing 1040ez By January 25, you must file a Form 8300 for the $11,000 payment. Filing 1040ez By May 27, you must file an additional Form 8300 for the additional payments that total $15,000. Filing 1040ez Amending a Report? If you are amending a report, check box 1a at the top of Form 8300. Filing 1040ez Complete the form in its entirety (Parts I-IV) and include the amended information. Filing 1040ez Do not attach a copy of the original report. Filing 1040ez Where to file. Filing 1040ez Mail the form to the address given in the Form 8300 instructions. Filing 1040ez Required statement to buyer. Filing 1040ez You must give a written or electronic statement to each person named on any Form 8300 you must file. Filing 1040ez You can give the statement electronically only if the recipient agrees to receive it in that format. Filing 1040ez The statement must show the name and address of your business, the name and phone number of a contact person, and the total amount of reportable cash you received from the person during the year. Filing 1040ez It must state that you are also reporting this information to the IRS. Filing 1040ez You must send this statement to the buyer by January 31 of the year after the year in which you received the cash that caused you to file the form. Filing 1040ez You must keep a copy of every Form 8300 you file for 5 years. Filing 1040ez Examples Example 1. Filing 1040ez Pat Brown is the sales manager for Small Town Cars. Filing 1040ez On January 6, 2009, Jane Smith buys a new car from Pat and pays $18,000 in cash. Filing 1040ez Pat asks for identification from Jane to get the necessary information to complete Form 8300. Filing 1040ez A filled-in form is shown in this publication. Filing 1040ez Pat must mail the form to the address shown in the form's instructions by January 21, 2009. Filing 1040ez He must also send a statement to Jane by January 31, 2010. Filing 1040ez Example 2. Filing 1040ez Using the same facts given in Example 1, suppose Jane had arranged to make cash payments of $6,000 each on January 6, February 6, and March 6. Filing 1040ez Pat would have to file a Form 8300 by February 26 (17 days after receiving total cash payments within 1 year over $10,000 because February 21, 2009, is a Saturday). Filing 1040ez Pat would not have to report the remaining $6,000 cash payment because it is not more than $10,000. Filing 1040ez However, he could report it if he felt it was a suspicious transaction. Filing 1040ez Penalties There are civil penalties for failure to: File a correct Form 8300 by the date it is due, and Provide the required statement to those named in the Form 8300. Filing 1040ez If you intentionally disregard the requirement to file a correct Form 8300 by the date it is due, the penalty is the greater of: $25,000, or The amount of cash you received and were required to report (up to $100,000). Filing 1040ez There are criminal penalties for: Willful failure to file Form 8300, Willfully filing a false or fraudulent Form 8300, Stopping or trying to stop Form 8300 from being filed, and Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300. Filing 1040ez If you willfully fail to file Form 8300, you can be fined up to $250,000 for individuals ($500,000 for corporations) or sentenced to up to 5 years in prison, or both. Filing 1040ez These dollar amounts are based on Section 3571 of Title 18 of the U. Filing 1040ez S. Filing 1040ez Code. Filing 1040ez The penalties for failure to file may also apply to any person (including a payer) who attempts to interfere with or prevent the seller (or business) from filing a correct Form 8300. Filing 1040ez This includes any attempt to structure the transaction in a way that would make it seem unnecessary to file Form 8300. Filing 1040ez Structuring means breaking up a large cash transaction into small cash transactions. Filing 1040ez How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Filing 1040ez By selecting the method that is best for you, you will have quick and easy access to tax help. Filing 1040ez Free help with your return. Filing 1040ez Free help in preparing your return is available nationwide from IRS-certified volunteers. Filing 1040ez The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Filing 1040ez Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Filing 1040ez To find the nearest VITA or TCE site, visit IRS. Filing 1040ez gov or call 1-800-906-9887 or 1-800-829-1040. Filing 1040ez As part of the TCE program, AARP offers the Tax-Aide counseling program. Filing 1040ez To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Filing 1040ez aarp. Filing 1040ez org/money/taxaide. Filing 1040ez For more information on these programs, go to IRS. Filing 1040ez gov and enter keyword “VITA” in the upper right-hand corner. Filing 1040ez Internet. Filing 1040ez You can access the IRS website at IRS. Filing 1040ez gov 24 hours a day, 7 days a week to: Check the status of your 2011 refund. Filing 1040ez Go to IRS. Filing 1040ez gov and click on Where's My Refund. Filing 1040ez Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Filing 1040ez If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Filing 1040ez Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Filing 1040ez E-file your return. Filing 1040ez Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Filing 1040ez Download forms, including talking tax forms, instructions, and publications. Filing 1040ez Order IRS products online. Filing 1040ez Research your tax questions online. Filing 1040ez Search publications online by topic or keyword. Filing 1040ez Use the online Internal Revenue Code, regulations, or other official guidance. Filing 1040ez View Internal Revenue Bulletins (IRBs) published in the last few years. Filing 1040ez Figure your withholding allowances using the withholding calculator online at www. Filing 1040ez irs. Filing 1040ez gov/individuals. Filing 1040ez Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Filing 1040ez irs. Filing 1040ez gov/individuals. Filing 1040ez Sign up to receive local and national tax news by email. Filing 1040ez Get information on starting and operating a small business. Filing 1040ez Phone. Filing 1040ez Many services are available by phone. Filing 1040ez Ordering forms, instructions, and publications. Filing 1040ez Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Filing 1040ez You should receive your order within 10 days. Filing 1040ez Asking tax questions. Filing 1040ez Call the IRS with your tax questions at 1-800-829-1040. Filing 1040ez Solving problems. Filing 1040ez You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Filing 1040ez An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Filing 1040ez Call your local Taxpayer Assistance Center for an appointment. Filing 1040ez To find the number, go to www. Filing 1040ez irs. Filing 1040ez gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Filing 1040ez TTY/TDD equipment. Filing 1040ez If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Filing 1040ez TeleTax topics. Filing 1040ez Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Filing 1040ez Refund information. Filing 1040ez You can check the status of your refund on the new IRS phone app. Filing 1040ez Download the free IRS2Go app by visiting the iTunes app store or the Android Marketplace. Filing 1040ez IRS2Go is a new way to provide you with information and tools. Filing 1040ez To check the status of your refund by phone, call 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Filing 1040ez Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Filing 1040ez If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Filing 1040ez Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Filing 1040ez If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Filing 1040ez Other refund information. Filing 1040ez To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Filing 1040ez Evaluating the quality of our telephone services. Filing 1040ez To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Filing 1040ez One method is for a second IRS representative to listen in on or record random telephone calls. Filing 1040ez Another is to ask some callers to complete a short survey at the end of the call. Filing 1040ez Walk-in. Filing 1040ez Many products and services are available on a walk-in basis. Filing 1040ez Products. Filing 1040ez You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Filing 1040ez Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Filing 1040ez Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Filing 1040ez Services. Filing 1040ez You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Filing 1040ez An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Filing 1040ez If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Filing 1040ez No appointment is necessary—just walk in. Filing 1040ez If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Filing 1040ez A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Filing 1040ez If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Filing 1040ez All other issues will be handled without an appointment. Filing 1040ez To find the number of your local office, go to www. Filing 1040ez irs. Filing 1040ez gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Filing 1040ez Mail. Filing 1040ez You can send your order for forms, instructions, and publications to the address below. Filing 1040ez You should receive a response within 10 days after your request is received. Filing 1040ez Internal Revenue Service 1201 N. Filing 1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Filing 1040ez The Taxpayer Advocate Service (TAS) is your voice at the IRS. Filing 1040ez Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Filing 1040ez We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Filing 1040ez Remember, the worst thing you can do is nothing at all. Filing 1040ez TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Filing 1040ez You face (or your business is facing) an immediate threat of adverse action. Filing 1040ez You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Filing 1040ez If you qualify for our help, we’ll do everything we can to get your problem resolved. Filing 1040ez You will be assigned to one advocate who will be with you at every turn. Filing 1040ez We have offices in every state, the District of Columbia, and Puerto Rico. Filing 1040ez Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Filing 1040ez And our services are always free. Filing 1040ez As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Filing 1040ez Our tax toolkit at www. Filing 1040ez TaxpayerAdvocate. Filing 1040ez irs. Filing 1040ez gov can help you understand these rights. Filing 1040ez If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Filing 1040ez irs. Filing 1040ez gov/advocate. Filing 1040ez You can also call our toll-free number at 1-877-777-4778. Filing 1040ez TAS also handles large-scale or systemic problems that affect many taxpayers. Filing 1040ez If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Filing 1040ez irs. Filing 1040ez gov/advocate. Filing 1040ez Low Income Taxpayer Clinics (LITCs). Filing 1040ez Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Filing 1040ez Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Filing 1040ez These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Filing 1040ez Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Filing 1040ez For more information and to find a clinic near you, see the LITC page on www. Filing 1040ez irs. Filing 1040ez gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Filing 1040ez This publication is also available by calling 1-800-829-3676 or at your local IRS office. Filing 1040ez Free tax services. Filing 1040ez Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Filing 1040ez Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Filing 1040ez The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Filing 1040ez The majority of the information and services listed in this publication are available to you free of charge. Filing 1040ez If there is a fee associated with a resource or service, it is listed in the publication. Filing 1040ez Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Filing 1040ez DVD for tax products. Filing 1040ez You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Filing 1040ez Prior-year forms, instructions, and publications. Filing 1040ez Tax Map: an electronic research tool and finding aid. Filing 1040ez Tax law frequently asked questions. Filing 1040ez Tax Topics from the IRS telephone response system. Filing 1040ez Internal Revenue Code—Title 26 of the U. Filing 1040ez S. Filing 1040ez Code. Filing 1040ez Links to other Internet based Tax Research Materials. Filing 1040ez Fill-in, print, and save features for most tax forms. Filing 1040ez Internal Revenue Bulletins. Filing 1040ez Toll-free and email technical support. Filing 1040ez Two releases during the year. Filing 1040ez – The first release will ship the beginning of January. Filing 1040ez – The final release will ship the beginning of March. Filing 1040ez Purchase the DVD from National Technical Information Service (NTIS) at www. Filing 1040ez irs. Filing 1040ez gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Filing 1040ez This image is too large to be displayed in the current screen. Filing 1040ez Please click the link to view the image. Filing 1040ez Fill-in Form 8300 Prev Up Next Home More Online Publications
Reminder To Home-Based Businesses: Simplified Option for Claiming Home Office Deduction Now Available; May Deduct up to $1,500; Saves 1.6 Million Hours A Year
IRS YouTube Video:
Simplified Home Office Deduction: English / Spanish / ASL
IR-2014-24, March 7, 2014
WASHINGTON — The Internal Revenue Service today reminded people with home-based businesses that this year for the first time they can choose a new simplified option for claiming the deduction for business use of a home.
In tax year 2011, the most recent year for which figures are available, some 3.3 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction) totaling nearly $10 billion.
The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.
The new option is available starting with the 2013 return taxpayers are filing now. Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Instead, taxpayers claiming the optional deduction need only complete a short worksheet in the tax instructions and enter the result on their return. Self-employed individuals claim the home office deduction on Schedule C Line 30, farmers claim it on Schedule F Line 32 and eligible employees claim it on Schedule A Line 21.
Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible.
Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.
Further details on the home office deduction and the new option can be found in Publication 587, posted on IRS.gov.
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Page Last Reviewed or Updated: 07-Mar-2014
The Filing 1040ez
Filing 1040ez 28. Filing 1040ez 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. Filing 1040ez The 2013 rate for business use of a vehicle is 56½ cents per mile. Filing 1040ez Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Filing 1040ez You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Filing 1040ez This chapter covers the following topics. Filing 1040ez Deductions subject to the 2% limit. Filing 1040ez Deductions not subject to the 2% limit. Filing 1040ez Expenses you cannot deduct. Filing 1040ez You must keep records to verify your deductions. Filing 1040ez You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Filing 1040ez For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Filing 1040ez 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). Filing 1040ez You can claim the amount of expenses that is more than 2% of your adjusted gross income. Filing 1040ez You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Filing 1040ez Your adjusted gross income is the amount on Form 1040, line 38. Filing 1040ez Generally, you apply the 2% limit after you apply any other deduction limit. Filing 1040ez 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. Filing 1040ez Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Filing 1040ez Unreimbursed employee expenses (line 21). Filing 1040ez Tax preparation fees (line 22). Filing 1040ez Other expenses (line 23). Filing 1040ez 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. Filing 1040ez An expense is ordinary if it is common and accepted in your trade, business, or profession. Filing 1040ez An expense is necessary if it is appropriate and helpful to your business. Filing 1040ez An expense does not have to be required to be considered necessary. Filing 1040ez Examples of unreimbursed employee expenses are listed next. Filing 1040ez The list is followed by discussions of additional unreimbursed employee expenses. Filing 1040ez Business bad debt of an employee. Filing 1040ez Education that is work related. Filing 1040ez (See chapter 27. Filing 1040ez ) Legal fees related to your job. Filing 1040ez Licenses and regulatory fees. Filing 1040ez Malpractice insurance premiums. Filing 1040ez Medical examinations required by an employer. Filing 1040ez Occupational taxes. Filing 1040ez Passport for a business trip. Filing 1040ez Subscriptions to professional journals and trade magazines related to your work. Filing 1040ez Travel, transportation, entertainment, and gifts related to your work. Filing 1040ez (See chapter 26. Filing 1040ez ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Filing 1040ez 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. Filing 1040ez Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Filing 1040ez Lobbying and political activities. Filing 1040ez You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Filing 1040ez See Dues used for lobbying under Nondeductible Expenses, later. Filing 1040ez 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. Filing 1040ez If you file Form 1040A, you can deduct these expenses on line 16. Filing 1040ez If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Filing 1040ez However, neither spouse can deduct more than $250 of his or her qualified expenses. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Filing 1040ez See Publication 587 for more detailed information and a worksheet. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez Employment and outplacement agency fees. Filing 1040ez You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Filing 1040ez Employer pays you back. Filing 1040ez 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. Filing 1040ez (See Recoveries in chapter 12. Filing 1040ez ) Employer pays the employment agency. Filing 1040ez 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. Filing 1040ez Résumé. Filing 1040ez 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. Filing 1040ez Travel and transportation expenses. Filing 1040ez 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. Filing 1040ez You can deduct the travel expenses if the trip is primarily to look for a new job. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez You can choose to use the standard mileage rate to figure your car expenses. Filing 1040ez The 2013 rate for business use of a vehicle is 56½ cents per mile. Filing 1040ez See chapter 26 for more information. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez However, you cannot deduct the cost of travel as a form of education. Filing 1040ez 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. Filing 1040ez You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Filing 1040ez For more information about depreciation, see Publication 946. Filing 1040ez Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Filing 1040ez You can also deduct assessments for benefit payments to unemployed union members. Filing 1040ez However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Filing 1040ez Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Filing 1040ez You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Filing 1040ez See Lobbying Expenses under Nondeductible Expenses, later. Filing 1040ez Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Filing 1040ez You must wear them as a condition of your employment. Filing 1040ez The clothes are not suitable for everyday wear. Filing 1040ez It is not enough that you wear distinctive clothing. Filing 1040ez The clothing must be specifically required by your employer. Filing 1040ez Nor is it enough that you do not, in fact, wear your work clothes away from work. Filing 1040ez The clothing must not be suitable for taking the place of your regular clothing. Filing 1040ez 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. Filing 1040ez ). Filing 1040ez Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Filing 1040ez 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. Filing 1040ez Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Filing 1040ez Protective clothing. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez Military uniforms. Filing 1040ez You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Filing 1040ez 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. Filing 1040ez In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Filing 1040ez 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. Filing 1040ez You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Filing 1040ez Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Filing 1040ez Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Filing 1040ez These fees include the cost of tax preparation software programs and tax publications. Filing 1040ez They also include any fee you paid for electronic filing of your return. Filing 1040ez Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez Some of these other expenses are explained in the following discussions. Filing 1040ez If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Filing 1040ez Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Filing 1040ez 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. Filing 1040ez First report the loss in Section B of Form 4684, Casualties and Thefts. Filing 1040ez You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Filing 1040ez 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. Filing 1040ez For other casualty and theft losses, see chapter 25. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez The fees are deductible in the year paid. Filing 1040ez 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). Filing 1040ez You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Filing 1040ez But if you work as an employee and also use the computer in that work, see Publication 946. Filing 1040ez 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. Filing 1040ez Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Filing 1040ez 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. Filing 1040ez For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Filing 1040ez 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. Filing 1040ez But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Filing 1040ez You must add the fee to the cost of the property. Filing 1040ez You cannot deduct the fee you pay to a broker to sell securities. Filing 1040ez You can use the fee only to figure gain or loss from the sale. Filing 1040ez See the Instructions for Form 8949 for information on how to report the fee. Filing 1040ez Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Filing 1040ez A hobby is not a business because it is not carried on to make a profit. Filing 1040ez See Activity not for profit in chapter 12 under Other Income. Filing 1040ez Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Filing 1040ez Deductions of pass-through entities are passed through to the partners or shareholders. Filing 1040ez The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Filing 1040ez Example. Filing 1040ez You are a member of an investment club that is formed solely to invest in securities. Filing 1040ez The club is treated as a partnership. Filing 1040ez The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Filing 1040ez In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Filing 1040ez 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. Filing 1040ez Publicly offered mutual funds. Filing 1040ez Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Filing 1040ez 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. Filing 1040ez 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). Filing 1040ez This net figure is the amount you report on your return as income. Filing 1040ez You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Filing 1040ez Information returns. Filing 1040ez You should receive information returns from pass-through entities. Filing 1040ez Partnerships and S corporations. Filing 1040ez 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. Filing 1040ez Nonpublicly offered mutual funds. Filing 1040ez 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. Filing 1040ez You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Filing 1040ez See Tax Preparation Fees , earlier. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Filing 1040ez If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Filing 1040ez Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez For more information about IRAs, see chapter 17. Filing 1040ez Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Filing 1040ez They are not subject to the 2% limit. Filing 1040ez Report these items on Schedule A (Form 1040), line 28. Filing 1040ez List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Filing 1040ez Amortizable premium on taxable bonds. Filing 1040ez Casualty and theft losses from income- producing property. Filing 1040ez Federal estate tax on income in respect of a decedent. Filing 1040ez Gambling losses up to the amount of gambling winnings. Filing 1040ez Impairment-related work expenses of persons with disabilities. Filing 1040ez Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Filing 1040ez Losses from Ponzi-type investment schemes. Filing 1040ez See Losses from Ponzi-type investment schemes under Theft in chapter 25. Filing 1040ez Repayments of more than $3,000 under a claim of right. Filing 1040ez Unrecovered investment in an annuity. Filing 1040ez 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. Filing 1040ez You can elect to amortize the premium on taxable bonds. Filing 1040ez The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Filing 1040ez Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Filing 1040ez 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. Filing 1040ez 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). Filing 1040ez First, report the loss in Form 4684, Section B. Filing 1040ez You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Filing 1040ez 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. Filing 1040ez For more information on casualty and theft losses, see chapter 25. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez See Publication 559 for more information. Filing 1040ez 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. Filing 1040ez You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Filing 1040ez You cannot deduct gambling losses that are more than your winnings. Filing 1040ez You cannot reduce your gambling winnings by your gambling losses and report the difference. Filing 1040ez 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. Filing 1040ez Therefore, your records should show your winnings separately from your losses. Filing 1040ez Diary of winnings and losses. Filing 1040ez You must keep an accurate diary or similar record of your losses and winnings. Filing 1040ez Your diary should contain at least the following information. Filing 1040ez The date and type of your specific wager or wagering activity. Filing 1040ez The name and address or location of the gambling establishment. Filing 1040ez The names of other persons present with you at the gambling establishment. Filing 1040ez The amount(s) you won or lost. Filing 1040ez See Publication 529 for more information. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez Self-employed. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez It is not subject to the passive activity limitations. Filing 1040ez 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. Filing 1040ez See Repayments in chapter 12 for more information. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez See chapter 10 for more information about the tax treatment of pensions and annuities. Filing 1040ez Nondeductible Expenses Examples of nondeductible expenses are listed next. Filing 1040ez The list is followed by discussions of additional nondeductible expenses. Filing 1040ez List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Filing 1040ez Burial or funeral expenses, including the cost of a cemetery lot. Filing 1040ez Capital expenses. Filing 1040ez Fees and licenses, such as car licenses, marriage licenses, and dog tags. Filing 1040ez Hobby losses, but see Hobby Expenses , earlier. Filing 1040ez Home repairs, insurance, and rent. Filing 1040ez Illegal bribes and kickbacks. Filing 1040ez See Bribes and kickbacks in chapter 11 of Publication 535. Filing 1040ez Losses from the sale of your home, furniture, personal car, etc. Filing 1040ez Personal disability insurance premiums. Filing 1040ez Personal, living, or family expenses. Filing 1040ez The value of wages never received or lost vacation time. Filing 1040ez Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Filing 1040ez See chapter 37. Filing 1040ez Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Filing 1040ez These include qualification and registration fees for primary elections. Filing 1040ez Legal fees. Filing 1040ez You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Filing 1040ez 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. Filing 1040ez Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Filing 1040ez This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Filing 1040ez 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. Filing 1040ez Dues paid to airline, hotel, and luncheon clubs are not deductible. Filing 1040ez Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Filing 1040ez 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. Filing 1040ez Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Filing 1040ez This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Filing 1040ez Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Filing 1040ez 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. Filing 1040ez Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Filing 1040ez However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Filing 1040ez See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Filing 1040ez Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Filing 1040ez Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Filing 1040ez You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Filing 1040ez See chapter 18 for information on alimony. Filing 1040ez Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Filing 1040ez 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. Filing 1040ez Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Filing 1040ez Dues used for lobbying. Filing 1040ez 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. Filing 1040ez See Lobbying Expenses in Publication 529 for information on exceptions. Filing 1040ez Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Filing 1040ez 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. Filing 1040ez See chapter 25. Filing 1040ez Example. Filing 1040ez A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Filing 1040ez The diamond falls from the ring and is never found. Filing 1040ez The loss of the diamond is a casualty. Filing 1040ez Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Filing 1040ez See chapter 26 for information on deductible expenses while traveling away from home. Filing 1040ez Meals While Working Late You cannot deduct the cost of meals while working late. Filing 1040ez 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. Filing 1040ez See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Filing 1040ez Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Filing 1040ez Custody of children. Filing 1040ez Breach of promise to marry suit. Filing 1040ez Civil or criminal charges resulting from a personal relationship. Filing 1040ez Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Filing 1040ez Preparation of a title (or defense or perfection of a title). Filing 1040ez Preparation of a will. Filing 1040ez Property claims or property settlement in a divorce. Filing 1040ez You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Filing 1040ez Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Filing 1040ez Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Filing 1040ez Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Filing 1040ez Accounting certificate fees paid for the initial right to practice accounting. Filing 1040ez Bar exam fees and incidental expenses in securing initial admission to the bar. Filing 1040ez Medical and dental license fees paid to get initial licensing. Filing 1040ez Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Filing 1040ez Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Filing 1040ez You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. Filing 1040ez 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. Filing 1040ez Example. Filing 1040ez During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Filing 1040ez In earning this income, you had total expenses of $500 during the year. Filing 1040ez You cannot identify the amount of each expense item that is for each income item. Filing 1040ez 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. Filing 1040ez You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Filing 1040ez 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. Filing 1040ez See chapter 26 for more information on deductible travel expenses. Filing 1040ez Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Filing 1040ez 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. Filing 1040ez 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. Filing 1040ez Prev Up Next Home More Online Publications