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Filing Taxes 2014

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Filing Taxes 2014

Filing taxes 2014 11. Filing taxes 2014   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. Filing taxes 2014 Kickbacks. Filing taxes 2014 Form 1099-MISC. Filing taxes 2014 Exception. Filing taxes 2014 Tax preparation fees. Filing taxes 2014 Covered executive branch official. Filing taxes 2014 Exceptions to denial of deduction. Filing taxes 2014 Indirect political contributions. Filing taxes 2014 Type of deduction. Filing taxes 2014 Repayment—$3,000 or less. Filing taxes 2014 Repayment—over $3,000. Filing taxes 2014 Method 1. Filing taxes 2014 Method 2. Filing taxes 2014 Repayment does not apply. Filing taxes 2014 Year of deduction (or credit). Filing taxes 2014 Telephone. Filing taxes 2014 What's New Standard mileage rate. Filing taxes 2014  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. Filing taxes 2014 5 cents per mile. Filing taxes 2014 For more information, see Car and truck expenses under Miscellaneous Expenses. Filing taxes 2014 Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. Filing taxes 2014 Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. Filing taxes 2014 Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. Filing taxes 2014 If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. Filing taxes 2014 To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Filing taxes 2014 Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. Filing taxes 2014 For more information on travel, meals, and entertainment, including deductibility, see Publication 463. Filing taxes 2014 Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. Filing taxes 2014 If the expenses are substantiated, you can deduct the allowable amount on your tax return. Filing taxes 2014 Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. Filing taxes 2014 For example, you can deduct 100% of the cost of meals on your business books and records. Filing taxes 2014 However, only 50% of these costs are allowed by law as a tax deduction. Filing taxes 2014 How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. Filing taxes 2014 If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. Filing taxes 2014 If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. Filing taxes 2014 If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. Filing taxes 2014 See Table 11-1 , Reporting Reimbursements. Filing taxes 2014 Accountable Plans An accountable plan requires your employees to meet all of the following requirements. Filing taxes 2014 Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. Filing taxes 2014 An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. Filing taxes 2014 The advance is reasonably calculated not to exceed the amount of anticipated expenses. Filing taxes 2014 You make the advance within a reasonable period of time of your employee paying or incurring the expense. Filing taxes 2014 If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. Filing taxes 2014 Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. Filing taxes 2014 Adequate accounting. Filing taxes 2014   Your employees must adequately account to you for their travel, meals, and entertainment expenses. Filing taxes 2014 They must give you documentary evidence of their travel, mileage, and other employee business expenses. Filing taxes 2014 This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. Filing taxes 2014 Excess reimbursement or allowance. Filing taxes 2014   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. Filing taxes 2014 The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. Filing taxes 2014 Reasonable period of time. Filing taxes 2014   A reasonable period of time depends on the facts and circumstances. Filing taxes 2014 Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Filing taxes 2014 You give an advance within 30 days of the time the employee pays or incurs the expense. Filing taxes 2014 Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. Filing taxes 2014 Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. Filing taxes 2014 You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. Filing taxes 2014 How to deduct. Filing taxes 2014   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. Filing taxes 2014 Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. Filing taxes 2014 If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). Filing taxes 2014   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. Filing taxes 2014 S. Filing taxes 2014 Corporation Income Tax Return. Filing taxes 2014 If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. Filing taxes 2014 Table 11-1. Filing taxes 2014 Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. Filing taxes 2014 Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Filing taxes 2014 Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. Filing taxes 2014 Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Filing taxes 2014 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Filing taxes 2014 Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. Filing taxes 2014 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Filing taxes 2014 A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. Filing taxes 2014 No reimbursement plan The entire amount as wages in box 1. Filing taxes 2014 Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. Filing taxes 2014 In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Filing taxes 2014 Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. Filing taxes 2014 Federal rate. Filing taxes 2014   The federal rate can be figured using any one of the following methods. Filing taxes 2014 For car expenses: The standard mileage rate. Filing taxes 2014 A fixed and variable rate (FAVR). Filing taxes 2014 For per diem amounts: The regular federal per diem rate. Filing taxes 2014 The standard meal allowance. Filing taxes 2014 The high-low rate. Filing taxes 2014 Car allowance. Filing taxes 2014   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. Filing taxes 2014 Beginning in 2013, the standard business mileage rate is 56. Filing taxes 2014 5 cents per mile. Filing taxes 2014   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. Filing taxes 2014 This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. Filing taxes 2014 ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. Filing taxes 2014 ). Filing taxes 2014 For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. Filing taxes 2014 irs. Filing taxes 2014 gov/irb/2010-51_IRB/ar14. Filing taxes 2014 html and Notice 2012-72, available at www. Filing taxes 2014 irs. Filing taxes 2014 gov/irb/2012-50_IRB/ar10. Filing taxes 2014 html. Filing taxes 2014 Per diem allowance. Filing taxes 2014   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. Filing taxes 2014 Regular federal per diem rate. Filing taxes 2014   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. Filing taxes 2014 It has two components: Lodging expense, and Meal and incidental expense (M&IE). Filing taxes 2014 The rates are different for different locations. Filing taxes 2014 Publication 1542 lists the rates in the continental United States. Filing taxes 2014 Standard meal allowance. Filing taxes 2014   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. Filing taxes 2014 You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). Filing taxes 2014 Internet access. Filing taxes 2014    Per diem rates are available on the Internet. Filing taxes 2014 You can access per diem rates at www. Filing taxes 2014 gsa. Filing taxes 2014 gov/perdiemrates. Filing taxes 2014 High-low method. Filing taxes 2014   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Filing taxes 2014 It eliminates the need to keep a current list of the per diem rate for each city. Filing taxes 2014   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. Filing taxes 2014 All other areas have a per diem amount of $163 ($52 for M&IE). Filing taxes 2014 The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. Filing taxes 2014   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). Filing taxes 2014 The rate for all other locations increased to $170 ($52 for M&IE). Filing taxes 2014 For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. Filing taxes 2014 However, you must use the same rate for all employees reimbursed under the high-low method. Filing taxes 2014   For more information about the high-low method, see Notice 2013-65, available at www. Filing taxes 2014 irs. Filing taxes 2014 gov/irb/2013-44_IRB/ar13. Filing taxes 2014 html. Filing taxes 2014 See Publication 1542 (available on the Internet at IRS. Filing taxes 2014 gov) for the current per diem rates for all locations. Filing taxes 2014 Reporting per diem and car allowances. Filing taxes 2014   The following discussion explains how to report per diem and car allowances. Filing taxes 2014 The manner in which you report them depends on how the allowance compares to the federal rate. Filing taxes 2014 See Table 11-1. Filing taxes 2014 Allowance less than or equal to the federal rate. Filing taxes 2014   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. Filing taxes 2014 Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). Filing taxes 2014 See How to deduct under Accountable Plans, earlier. Filing taxes 2014 Allowance more than the federal rate. Filing taxes 2014   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. Filing taxes 2014   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. Filing taxes 2014 Deduct it as travel expenses (as explained above). Filing taxes 2014 This part of the allowance is treated as reimbursed under an accountable plan. Filing taxes 2014   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. Filing taxes 2014 Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Filing taxes 2014 This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. Filing taxes 2014 Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. Filing taxes 2014 The deduction limit applies even if you reimburse them for 100% of the expenses. Filing taxes 2014 Application of the 50% limit. Filing taxes 2014   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. Filing taxes 2014 It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. Filing taxes 2014 The deduction limit may also apply to meals you furnish on your premises to your employees. Filing taxes 2014 Related expenses. Filing taxes 2014   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. Filing taxes 2014 Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. Filing taxes 2014 However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. Filing taxes 2014 Amount subject to 50% limit. Filing taxes 2014   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. Filing taxes 2014 The per diem allowance. Filing taxes 2014 The federal rate for M&IE. Filing taxes 2014   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. Filing taxes 2014 If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. Filing taxes 2014 Meal expenses when subject to “hours of service” limits. Filing taxes 2014   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. Filing taxes 2014   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. Filing taxes 2014 De minimis (minimal) fringe benefit. Filing taxes 2014   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. Filing taxes 2014 See Publication 15-B for additional information on de minimis fringe benefits. Filing taxes 2014 Company cafeteria or executive dining room. Filing taxes 2014   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. Filing taxes 2014 This includes the cost of maintaining the facilities for providing the food and beverages. Filing taxes 2014 These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). Filing taxes 2014 Employee activities. Filing taxes 2014   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. Filing taxes 2014 The benefit must be primarily for your employees who are not highly compensated. Filing taxes 2014   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. Filing taxes 2014 Owned a 10% or more interest in the business during the year or the preceding year. Filing taxes 2014 An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Filing taxes 2014 Received more than $115,000 in pay for the preceding year. Filing taxes 2014 You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. Filing taxes 2014   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. Filing taxes 2014 Meals or entertainment treated as compensation. Filing taxes 2014   The 50% limit does not apply to either of the following. Filing taxes 2014 Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. Filing taxes 2014 Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. Filing taxes 2014 Sales of meals or entertainment. Filing taxes 2014   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. Filing taxes 2014 For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. Filing taxes 2014 The 50% limit does not apply to this expense. Filing taxes 2014 Providing meals or entertainment to general public to promote goodwill. Filing taxes 2014   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Filing taxes 2014 The 50% limit does not apply to this expense. Filing taxes 2014 Director, stockholder, or employee meetings. Filing taxes 2014   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. Filing taxes 2014 You can provide some minor social activities, but the main purpose of the meeting must be your company's business. Filing taxes 2014 These expenses are subject to the 50% limit. Filing taxes 2014 Trade association meetings. Filing taxes 2014   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. Filing taxes 2014 These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. Filing taxes 2014 Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. Filing taxes 2014 All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. Filing taxes 2014 The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Filing taxes 2014 You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. Filing taxes 2014 Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. Filing taxes 2014 Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. Filing taxes 2014 Advertising expenses. Filing taxes 2014   You generally can deduct reasonable advertising expenses that are directly related to your business activities. Filing taxes 2014 Generally, you cannot deduct amounts paid to influence legislation (i. Filing taxes 2014 e. Filing taxes 2014 , lobbying). Filing taxes 2014 See Lobbying expenses , later. Filing taxes 2014   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. Filing taxes 2014 For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. Filing taxes 2014 S. Filing taxes 2014 Savings Bonds, or to participate in similar causes is usually deductible. Filing taxes 2014 Anticipated liabilities. Filing taxes 2014   Anticipated liabilities or reserves for anticipated liabilities are not deductible. Filing taxes 2014 For example, assume you sold 1-year TV service contracts this year totaling $50,000. Filing taxes 2014 From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. Filing taxes 2014 You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. Filing taxes 2014 You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. Filing taxes 2014 Bribes and kickbacks. Filing taxes 2014   Engaging in the payment of bribes or kickbacks is a serious criminal matter. Filing taxes 2014 Such activity could result in criminal prosecution. Filing taxes 2014 Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. Filing taxes 2014   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. Filing taxes 2014 Meaning of “generally enforced. Filing taxes 2014 ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. Filing taxes 2014 For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. Filing taxes 2014 Kickbacks. Filing taxes 2014   A kickback is a payment for referring a client, patient, or customer. Filing taxes 2014 The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. Filing taxes 2014 In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. Filing taxes 2014   For example, the Yard Corporation is in the business of repairing ships. Filing taxes 2014 It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. Filing taxes 2014 Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. Filing taxes 2014 These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. Filing taxes 2014 Form 1099-MISC. Filing taxes 2014   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. Filing taxes 2014 See Form 1099-MISC for more information. Filing taxes 2014 Car and truck expenses. Filing taxes 2014   The costs of operating a car, truck, or other vehicle in your business are deductible. Filing taxes 2014 For more information on how to figure your deduction, see Publication 463. Filing taxes 2014 Charitable contributions. Filing taxes 2014   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Filing taxes 2014 If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. Filing taxes 2014 However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. Filing taxes 2014 See the Instructions for Form 1120 for more information. Filing taxes 2014 Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Filing taxes 2014 Example. Filing taxes 2014 You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. Filing taxes 2014 The purpose of the ad was to encourage readers to buy your products. Filing taxes 2014 Your payment is not a charitable contribution. Filing taxes 2014 You can deduct it as an advertising expense. Filing taxes 2014 Example. Filing taxes 2014 You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. Filing taxes 2014 Your payment is not a charitable contribution. Filing taxes 2014 You can deduct it as a business expense. Filing taxes 2014 See Publication 526 for a discussion of donated inventory, including capital gain property. Filing taxes 2014 Club dues and membership fees. Filing taxes 2014   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. Filing taxes 2014 This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Filing taxes 2014 Exception. Filing taxes 2014   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Filing taxes 2014 Boards of trade. Filing taxes 2014 Business leagues. Filing taxes 2014 Chambers of commerce. Filing taxes 2014 Civic or public service organizations. Filing taxes 2014 Professional organizations such as bar associations and medical associations. Filing taxes 2014 Real estate boards. Filing taxes 2014 Trade associations. Filing taxes 2014 Credit card convenience fees. Filing taxes 2014   Credit card companies charge a fee to businesses who accept their cards. Filing taxes 2014 This fee when paid or incurred by the business can be deducted as a business expense. Filing taxes 2014 Damages recovered. Filing taxes 2014   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. Filing taxes 2014 You must include this compensation in your income. Filing taxes 2014 However, you may be able to take a special deduction. Filing taxes 2014 The deduction applies only to amounts recovered for actual economic injury, not any additional amount. Filing taxes 2014 The deduction is the smaller of the following. Filing taxes 2014 The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. Filing taxes 2014 Your losses from the injury you have not deducted. Filing taxes 2014 Demolition expenses or losses. Filing taxes 2014   Amounts paid or incurred to demolish a structure are not deductible. Filing taxes 2014 These amounts are added to the basis of the land where the demolished structure was located. Filing taxes 2014 Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. Filing taxes 2014 Education expenses. Filing taxes 2014   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Filing taxes 2014 See Education Expenses in chapter 2. Filing taxes 2014   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. Filing taxes 2014 You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. Filing taxes 2014 For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. Filing taxes 2014   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. Filing taxes 2014 This is true even if the education maintains or improves skills presently required in your business. Filing taxes 2014 For more information on education expenses, see Publication 970. Filing taxes 2014 Franchise, trademark, trade name. Filing taxes 2014   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). Filing taxes 2014   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. Filing taxes 2014   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. Filing taxes 2014 Impairment-related expenses. Filing taxes 2014   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. Filing taxes 2014   You are disabled if you have either of the following. Filing taxes 2014 A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. Filing taxes 2014 A physical or mental impairment that substantially limits one or more of your major life activities. Filing taxes 2014   The expense qualifies as a business expense if all the following apply. Filing taxes 2014 Your work clearly requires the expense for you to satisfactorily perform that work. Filing taxes 2014 The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. Filing taxes 2014 Their treatment is not specifically provided for under other tax law provisions. Filing taxes 2014 Example. Filing taxes 2014 You are blind. Filing taxes 2014 You must use a reader to do your work, both at and away from your place of work. Filing taxes 2014 The reader's services are only for your work. Filing taxes 2014 You can deduct your expenses for the reader as a business expense. Filing taxes 2014 Internet-related expenses. Filing taxes 2014   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. Filing taxes 2014 If you are starting a business you may have to amortize these expenses as start-up costs. Filing taxes 2014 For more information about amortizing start-up and organizational costs, see chapter 8. Filing taxes 2014 Interview expense allowances. Filing taxes 2014   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. Filing taxes 2014 You can deduct the reimbursements as a business expense. Filing taxes 2014 However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. Filing taxes 2014 Legal and professional fees. Filing taxes 2014   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. Filing taxes 2014 However, usually legal fees you pay to acquire business assets are not deductible. Filing taxes 2014 These costs are added to the basis of the property. Filing taxes 2014   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. Filing taxes 2014 If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. Filing taxes 2014 The result is the portion of the invoice attributable to business expenses. Filing taxes 2014 The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). Filing taxes 2014   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. Filing taxes 2014 However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. Filing taxes 2014 See Publication 529, Miscellaneous Deductions. Filing taxes 2014 Tax preparation fees. Filing taxes 2014   The cost of hiring a tax professional, such as a C. Filing taxes 2014 P. Filing taxes 2014 A. Filing taxes 2014 , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. Filing taxes 2014 Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. Filing taxes 2014   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. Filing taxes 2014 Licenses and regulatory fees. Filing taxes 2014   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. Filing taxes 2014 Some licenses and fees may have to be amortized. Filing taxes 2014 See chapter 8 for more information. Filing taxes 2014 Lobbying expenses. Filing taxes 2014   Generally, lobbying expenses are not deductible. Filing taxes 2014 Lobbying expenses include amounts paid or incurred for any of the following activities. Filing taxes 2014 Influencing legislation. Filing taxes 2014 Participating in or intervening in any political campaign for, or against, any candidate for public office. Filing taxes 2014 Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. Filing taxes 2014 Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. Filing taxes 2014 Researching, preparing, planning, or coordinating any of the preceding activities. Filing taxes 2014   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. Filing taxes 2014 For information on making this allocation, see section 1. Filing taxes 2014 162-28 of the regulations. Filing taxes 2014   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. Filing taxes 2014 The organization conducts lobbying activities on matters of direct financial interest to your business. Filing taxes 2014 A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. Filing taxes 2014   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. Filing taxes 2014 Covered executive branch official. Filing taxes 2014   For purposes of this discussion, a covered executive branch official is any of the following. Filing taxes 2014 The President. Filing taxes 2014 The Vice President. Filing taxes 2014 Any officer or employee of the White House Office of the Executive Office of the President and the two most senior level officers of each of the other agencies in the Executive Office. Filing taxes 2014 Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). Filing taxes 2014 Exceptions to denial of deduction. Filing taxes 2014   The general denial of the deduction does not apply to the following. Filing taxes 2014 Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. Filing taxes 2014 An Indian tribal government is treated as a local council or similar governing body. Filing taxes 2014 Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). Filing taxes 2014 Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). Filing taxes 2014 Moving machinery. Filing taxes 2014   Generally, the cost of moving machinery from one city to another is a deductible expense. Filing taxes 2014 So is the cost of moving machinery from one plant to another, or from one part of your plant to another. Filing taxes 2014 You can deduct the cost of installing the machinery in the new location. Filing taxes 2014 However, you must capitalize the costs of installing or moving newly purchased machinery. Filing taxes 2014 Outplacement services. Filing taxes 2014   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. Filing taxes 2014 are deductible. Filing taxes 2014   The costs of outplacement services may cover more than one deduction category. Filing taxes 2014 For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. Filing taxes 2014   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. Filing taxes 2014 Penalties and fines. Filing taxes 2014   Penalties paid for late performance or nonperformance of a contract are generally deductible. Filing taxes 2014 For instance, you own and operate a construction company. Filing taxes 2014 Under a contract, you are to finish construction of a building by a certain date. Filing taxes 2014 Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. Filing taxes 2014 You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. Filing taxes 2014 These additional costs are deductible business expenses. Filing taxes 2014   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. Filing taxes 2014 These fines or penalties include the following amounts. Filing taxes 2014 Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. Filing taxes 2014 Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. Filing taxes 2014 Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. Filing taxes 2014 Forfeited as collateral posted for a proceeding that could result in a fine or penalty. Filing taxes 2014   Examples of nondeductible penalties and fines include the following. Filing taxes 2014 Fines for violating city housing codes. Filing taxes 2014 Fines paid by truckers for violating state maximum highway weight laws. Filing taxes 2014 Fines for violating air quality laws. Filing taxes 2014 Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. Filing taxes 2014   A fine or penalty does not include any of the following. Filing taxes 2014 Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. Filing taxes 2014 Court costs or stenographic and printing charges. Filing taxes 2014 Compensatory damages paid to a government. Filing taxes 2014 Political contributions. Filing taxes 2014   Contributions or gifts paid to political parties or candidates are not deductible. Filing taxes 2014 In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. Filing taxes 2014 Indirect political contributions. Filing taxes 2014   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. Filing taxes 2014 Examples of nondeductible expenses include the following. Filing taxes 2014 Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. Filing taxes 2014 Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. Filing taxes 2014 Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. Filing taxes 2014 Repairs. Filing taxes 2014   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. Filing taxes 2014 Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. Filing taxes 2014 Otherwise, the cost must be capitalized and depreciated. Filing taxes 2014 See Form 4562 and its instructions for how to compute and claim the depreciation deduction. Filing taxes 2014   The cost of repairs includes the costs of labor, supplies, and certain other items. Filing taxes 2014 The value of your own labor is not deductible. Filing taxes 2014 Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). Filing taxes 2014 Repayments. Filing taxes 2014   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. Filing taxes 2014 Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Filing taxes 2014 Type of deduction. Filing taxes 2014   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Filing taxes 2014 For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. Filing taxes 2014 If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Filing taxes 2014   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. Filing taxes 2014 However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. Filing taxes 2014 Repayment—$3,000 or less. Filing taxes 2014   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Filing taxes 2014 Repayment—over $3,000. Filing taxes 2014   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. Filing taxes 2014 However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. Filing taxes 2014 ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. Filing taxes 2014 If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. Filing taxes 2014 Method 1. Filing taxes 2014   Figure your tax for 2013 claiming a deduction for the repaid amount. Filing taxes 2014 Method 2. Filing taxes 2014   Figure your tax for 2013 claiming a credit for the repaid amount. Filing taxes 2014 Follow these steps. Filing taxes 2014 Figure your tax for 2013 without deducting the repaid amount. Filing taxes 2014 Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Filing taxes 2014 Subtract the tax in (2) from the tax shown on your return for the earlier year. Filing taxes 2014 This is the amount of your credit. Filing taxes 2014 Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). Filing taxes 2014   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. Filing taxes 2014   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. Filing taxes 2014 R. Filing taxes 2014 C. Filing taxes 2014 1341” next to line 71. Filing taxes 2014 Example. Filing taxes 2014 For 2012, you filed a return and reported your income on the cash method. Filing taxes 2014 In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. Filing taxes 2014 Your filing status in 2013 and 2012 is single. Filing taxes 2014 Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. Filing taxes 2014 Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. Filing taxes 2014 Repayment does not apply. Filing taxes 2014   This discussion does not apply to the following. Filing taxes 2014 Deductions for bad debts. Filing taxes 2014 Deductions from sales to customers, such as returns and allowances, and similar items. Filing taxes 2014 Deductions for legal and other expenses of contesting the repayment. Filing taxes 2014 Year of deduction (or credit). Filing taxes 2014   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. Filing taxes 2014 If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. Filing taxes 2014 For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. Filing taxes 2014 Subscriptions. Filing taxes 2014   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. Filing taxes 2014 Supplies and materials. Filing taxes 2014   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. Filing taxes 2014   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. Filing taxes 2014 You do not keep a record of when they are used. Filing taxes 2014 You do not take an inventory of the amount on hand at the beginning and end of the tax year. Filing taxes 2014 This method does not distort your income. Filing taxes 2014   You can also deduct the cost of books, professional instruments, equipment, etc. Filing taxes 2014 , if you normally use them within a year. Filing taxes 2014 However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. Filing taxes 2014 For more information regarding depreciation see Publication 946, How To Depreciate Property. Filing taxes 2014 Utilities. Filing taxes 2014   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. Filing taxes 2014 However, any part due to personal use is not deductible. Filing taxes 2014 Telephone. Filing taxes 2014   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Filing taxes 2014 However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Filing taxes 2014 Prev  Up  Next   Home   More Online Publications
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HCTC: Information for Health Plan Administrators (HPAs)

Important Update: The legislation that authorizes the Health Coverage Tax Credit (HCTC) has expired. The tax credit will no longer be available for tax years after 2013. 

Health Plan Administrators (HPAs) are vital to the success of the HCTC program. Your role as an HPA can vary, depending on your level of involvement in helping eligible individuals receive the tax credit.  Below you will find information about how you can help individuals receive this important tax credit.

Complete Ongoing Responsibilities
When individuals claim the Yearly HCTC on their federal tax return, they must submit supporting documents (such as a health insurance bill, COBRA Election Letter, or substitute letter that has the same information that a health insurance bill contains) to show they have the insurance they are claiming.  As an HPA, you can help these individuals if they request information or documentation from you concerning their health coverage.

Returning Funds to the HCTC Program
An HPA can return funds to the HCTC Program for many reasons, including: a member's coverage ended or was cancelled, their premium amount changed, the member changed HPA or Third Party Administrator (TPA), the member is no longer eligible for the HCTC, the member is receiving Medicare benefits, or because an incorrect HPA or TPA was paid.

Prior to returning funds to the HCTC Program, you should:
1.    Contact your HCTC HPA Analyst to inform them of the pending return.
2.    Fill out the Return of Funds Form in its entirety.
3.    Fax copies of the completed Return of Funds Form to your HCTC HPA Analyst with the returned funds. 
4.    Reference the Return of Funds Form to determine the correct mailing address for the type of funds you are returning. Include a copy of the Returned Funds Form with the check, and send to the appropriate address.
 

Please note: An updated Return of Funds Form with new contact information and instructions will be provided in early 2014 for use beginning in April 2014.

Return to the HCTC Program home page
Go to the HCTC Quick References page to view a glossary of terms, frequently asked questions (FAQs) and additional resources.

Page Last Reviewed or Updated: 01-Jan-2014

The Filing Taxes 2014

Filing taxes 2014 Publication 17 - Introductory Material Table of Contents What's New Reminders IntroductionIcons. Filing taxes 2014 Ordering forms and publications. Filing taxes 2014 Tax questions. Filing taxes 2014 All material in this publication may be reprinted freely. Filing taxes 2014 A citation to Your Federal Income Tax (2013) would be appropriate. Filing taxes 2014 The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of: Tax laws enacted by Congress, Treasury regulations, and Court decisions. Filing taxes 2014 However, the information given does not cover every situation and is not intended to replace the law or change its meaning. Filing taxes 2014 This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Filing taxes 2014 Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS. Filing taxes 2014 All taxpayers have important rights when working with the IRS. Filing taxes 2014 These rights are described in Your Rights as a Taxpayer in the back of this publication. Filing taxes 2014 What's New This section summarizes important tax changes that took effect in 2013. Filing taxes 2014 Most of these changes are discussed in more detail throughout this publication. Filing taxes 2014 Future developments. Filing taxes 2014  For the latest information about the tax law topics covered in this publication, including information about any tax legislation, go to www. Filing taxes 2014 irs. Filing taxes 2014 gov/pub17. Filing taxes 2014 Additional Medicare Tax. Filing taxes 2014  Beginning in 2013, a 0. Filing taxes 2014 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Filing taxes 2014 See Form 8959 and its instructions. Filing taxes 2014 Net Investment Income Tax. Filing taxes 2014  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Filing taxes 2014 The NIIT is 3. Filing taxes 2014 8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over: $125,000 if married filing separately, $250,000 if married filing jointly or qualifying widow(er), or $200,000 if any other filing status. Filing taxes 2014 See Form 8960 and its instructions. Filing taxes 2014 Change in tax rates. Filing taxes 2014  The highest tax rate is 39. Filing taxes 2014 6%. Filing taxes 2014 For more information, see the 2013 Tax Computation Worksheet or the 2013 Tax Rate Schedules near the end of this publication. Filing taxes 2014 Tax rate on net capital gain and qualified dividends. Filing taxes 2014  The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers. Filing taxes 2014 See chapter 16. Filing taxes 2014 Medical and dental expenses. Filing taxes 2014  You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7. Filing taxes 2014 5% if either you or your spouse is age 65 or older). Filing taxes 2014 See chapter 21. Filing taxes 2014 Personal exemption amount increased for certain taxpayers. Filing taxes 2014  Your personal exemption is increased to $3,900. Filing taxes 2014 But the amount is reduced if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Filing taxes 2014 See chapter 3. Filing taxes 2014 Limit on itemized deductions. Filing taxes 2014  You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Filing taxes 2014 See chapter 29. Filing taxes 2014 Same-sex marriages. Filing taxes 2014  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Filing taxes 2014 See chapter 2. Filing taxes 2014 If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. Filing taxes 2014 For details on filing amended returns, see chapter 1. Filing taxes 2014 Health flexible spending arrangements (FSAs). Filing taxes 2014  You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012. Filing taxes 2014 See chapter 5. Filing taxes 2014 Expiring credits. Filing taxes 2014  The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. Filing taxes 2014 You cannot claim either one on your 2013 return. Filing taxes 2014 See chapter 37. Filing taxes 2014 Ponzi-type investment schemes. Filing taxes 2014  There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme. Filing taxes 2014 See chapter 25. Filing taxes 2014 Home office deduction simplified method. Filing taxes 2014  If you can take a home office deduction, you may be able to use a simplified method to figure it. Filing taxes 2014 See Publication 587. Filing taxes 2014 Standard mileage rates. Filing taxes 2014  The 2013 rate for business use of your car is increased to 56½ cents a mile. Filing taxes 2014 See chapter 26. Filing taxes 2014 The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. Filing taxes 2014 See chapter 21. Filing taxes 2014 The 2013 rate for use of your car to move is increased to 24 cents a mile. Filing taxes 2014 See Publication 521, Moving Expenses. Filing taxes 2014 Reminders Listed below are important reminders and other items that may help you file your 2013 tax return. Filing taxes 2014 Many of these items are explained in more detail later in this publication. Filing taxes 2014 Enter your social security number (SSN). Filing taxes 2014  Enter your SSN in the space provided on your tax form. Filing taxes 2014 If you filed a joint return for 2012 and are filing a joint return for 2013 with the same spouse, enter your names and SSNs in the same order as on your 2012 return. Filing taxes 2014 See chapter 1. Filing taxes 2014 Secure your tax records from identity theft. Filing taxes 2014  Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. Filing taxes 2014 An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. Filing taxes 2014 For more information about identity theft and how to reduce your risk from it, see chapter 1. Filing taxes 2014 Taxpayer identification numbers. Filing taxes 2014  You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. Filing taxes 2014 This applies even if the person was born in 2013. Filing taxes 2014 Generally, this number is the person's social security number (SSN). Filing taxes 2014 See chapter 1. Filing taxes 2014 Foreign source income. Filing taxes 2014  If you are a U. Filing taxes 2014 S. Filing taxes 2014 citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by U. Filing taxes 2014 S. Filing taxes 2014 law. Filing taxes 2014 This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. Filing taxes 2014 This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties). Filing taxes 2014 If you live outside the United States, you may be able to exclude part or all of your foreign source earned income. Filing taxes 2014 For details, see Publication 54, Tax Guide for U. Filing taxes 2014 S. Filing taxes 2014 Citizens and Resident Aliens Abroad. Filing taxes 2014 Foreign financial assets. Filing taxes 2014  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. Filing taxes 2014 Check www. Filing taxes 2014 IRS. Filing taxes 2014 gov/form8938 for details. Filing taxes 2014 Automatic 6-month extension to file tax return. Filing taxes 2014  You can use Form 4868, Application for Automatic Extension of Time To File U. Filing taxes 2014 S. Filing taxes 2014 Individual Income Tax Return, to obtain an automatic 6-month extension of time to file your tax return. Filing taxes 2014 See chapter 1. Filing taxes 2014 Include your phone number on your return. Filing taxes 2014  To promptly resolve any questions we have in processing your tax return, we would like to be able to call you. Filing taxes 2014 Please enter your daytime telephone number on your tax form next to your signature and occupation. Filing taxes 2014 If you are filing a joint return, you can enter either your or your spouse's daytime phone number. Filing taxes 2014 Payment of taxes. Filing taxes 2014   You can pay your taxes online, by phone, or by check or money order. Filing taxes 2014 You can make a direct transfer from your bank account or use a credit or debit card. Filing taxes 2014 If you e-file, you can schedule an electronic payment. Filing taxes 2014 See chapter 1. Filing taxes 2014 Faster ways to file your return. Filing taxes 2014  The IRS offers fast, accurate ways to file your tax return information without filing a paper tax return. Filing taxes 2014 You can use IRS e-file (electronic filing). Filing taxes 2014 See chapter 1. Filing taxes 2014 Free electronic filing. Filing taxes 2014  You may be able to file your 2013 taxes online for free. Filing taxes 2014 See chapter 1. Filing taxes 2014 Change of address. Filing taxes 2014  If you change your address, you should notify the IRS. Filing taxes 2014 See Change of Address in chapter 1. Filing taxes 2014 Refund on a late filed return. Filing taxes 2014  If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund. Filing taxes 2014 See chapter 1. Filing taxes 2014 Frivolous tax returns. Filing taxes 2014  The IRS has published a list of positions that are identified as frivolous. Filing taxes 2014 The penalty for filing a frivolous tax return is $5,000. Filing taxes 2014 See chapter 1. Filing taxes 2014 Filing erroneous claim for refund or credit. Filing taxes 2014  You may have to pay a penalty if you file an erroneous claim for refund or credit. Filing taxes 2014 See chapter 1. Filing taxes 2014 Privacy Act and paperwork reduction information. Filing taxes 2014   The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduction Act of 1980 require that when we ask you for information we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. Filing taxes 2014 A complete statement on this subject can be found in your tax form instructions. Filing taxes 2014 Customer service for taxpayers. Filing taxes 2014  You can set up a personal appointment at the most convenient Taxpayer Assistance Center, on the most convenient business day. Filing taxes 2014 See How To Get Tax Help in the back of this publication. Filing taxes 2014 Preparer e-file mandate. Filing taxes 2014  Most paid preparers must e-file returns they prepare and file. Filing taxes 2014 Your preparer may make you aware of this requirement and the options available to you. Filing taxes 2014 Treasury Inspector General for Tax Administration. Filing taxes 2014   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (call 1-800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). Filing taxes 2014 You can remain anonymous. Filing taxes 2014 Photographs of missing children. Filing taxes 2014  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Filing taxes 2014 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Filing taxes 2014 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Filing taxes 2014 Introduction This publication covers the general rules for filing a federal income tax return. Filing taxes 2014 It supplements the information contained in your tax form instructions. Filing taxes 2014 It explains the tax law to make sure you pay only the tax you owe and no more. Filing taxes 2014 How this publication is arranged. Filing taxes 2014   This publication closely follows Form 1040, U. Filing taxes 2014 S. Filing taxes 2014 Individual Income Tax Return. Filing taxes 2014 It is divided into six parts which cover different sections of Form 1040. Filing taxes 2014 Each part is further divided into chapters which generally discuss one line of the form. Filing taxes 2014 Do not worry if you file Form 1040A or Form 1040EZ. Filing taxes 2014 Anything included on a line of either of these forms is also included on Form 1040. Filing taxes 2014   The table of contents inside the front cover and the index in the back of the publication are useful tools to help you find the information you need. Filing taxes 2014 What is in this publication. Filing taxes 2014   The publication begins with the rules for filing a tax return. Filing taxes 2014 It explains: Who must file a return, Which tax form to use, When the return is due, How to e-file your return, and Other general information. Filing taxes 2014 It will help you identify which filing status you qualify for, whether you can claim any dependents, and whether the income you receive is taxable. Filing taxes 2014 The publication goes on to explain the standard deduction, the kinds of expenses you may be able to deduct, and the various kinds of credits you may be able to take to reduce your tax. Filing taxes 2014   Throughout the publication are examples showing how the tax law applies in typical situations. Filing taxes 2014 Also throughout the publication are flowcharts and tables that present tax information in an easy-to-understand manner. Filing taxes 2014   Many of the subjects discussed in this publication are discussed in greater detail in other IRS publications. Filing taxes 2014 References to those other publications are provided for your information. Filing taxes 2014 Icons. Filing taxes 2014   Small graphic symbols, or icons, are used to draw your attention to special information. Filing taxes 2014 See Table 1 later for an explanation of each icon used in this publication. Filing taxes 2014 What is not covered in this publication. Filing taxes 2014   Some material that you may find helpful is not included in this publication but can be found in your tax form instruction booklet. Filing taxes 2014 This includes lists of: Where to report certain items shown on information documents, and Recorded tax information topics (TeleTax). Filing taxes 2014   If you operate your own business or have other self-employment income, such as from babysitting or selling crafts, see the following publications for more information. Filing taxes 2014 Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). Filing taxes 2014 Publication 535, Business Expenses. Filing taxes 2014 Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Filing taxes 2014 Help from the IRS. Filing taxes 2014   There are many ways you can get help from the IRS. Filing taxes 2014 These are explained under How To Get Tax Help in the back of this publication. Filing taxes 2014 Comments and suggestions. Filing taxes 2014   We welcome your comments about this publication and your suggestions for future editions. Filing taxes 2014   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Filing taxes 2014 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Filing taxes 2014 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Filing taxes 2014   You can send your comments from www. Filing taxes 2014 irs. Filing taxes 2014 gov/formspubs/. Filing taxes 2014 Click on “More Information” and then on “Comment on Tax Forms and Publications”. Filing taxes 2014   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Filing taxes 2014 Ordering forms and publications. Filing taxes 2014   Visit www. Filing taxes 2014 irs. Filing taxes 2014 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Filing taxes 2014 Internal Revenue Service 1201 N. Filing taxes 2014 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Filing taxes 2014   If you have a tax question, check the information available on IRS. Filing taxes 2014 gov or call 1-800-829-1040. Filing taxes 2014 We cannot answer tax questions sent to either of the above addresses. Filing taxes 2014 IRS mission. Filing taxes 2014   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Filing taxes 2014 Table 1. Filing taxes 2014 Legend of Icons Icon Explanation Items that may cause you particular problems, or an alert about pending legislation that may be enacted after this publication goes to print. Filing taxes 2014 An Internet site or an email address. Filing taxes 2014 An address you may need. Filing taxes 2014 Items you should keep in your personal records. Filing taxes 2014 Items you may need to figure or a worksheet you may need to complete and keep for your records. Filing taxes 2014 An important phone number. Filing taxes 2014 Helpful information you may need. Filing taxes 2014 Prev  Up  Next   Home   More Online Publications