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Form 1040a

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Form 1040a

Form 1040a 2. Form 1040a   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Form 1040a The pay may be in cash, property, or services. Form 1040a It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Form 1040a For information about deducting employment taxes, see chapter 5. Form 1040a You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Form 1040a Empowerment zone employment credit (Form 8844). Form 1040a Indian employment credit (Form 8845). Form 1040a Work opportunity credit (Form 5884). Form 1040a Credit for employer differential wage payments (Form 8932). Form 1040a Reduce your deduction for employee wages by the amount of employment credits you claim. Form 1040a For more information about these credits, see the form on which the credit is claimed. Form 1040a Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Form 1040a Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Form 1040a These and other requirements that apply to all business expenses are explained in chapter 1. Form 1040a In addition, the pay must meet both of the following tests. Form 1040a Test 1. Form 1040a It must be reasonable. Form 1040a Test 2. Form 1040a It must be for services performed. Form 1040a The form or method of figuring the pay does not affect its deductibility. Form 1040a For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Form 1040a Test 1—Reasonableness You must be able to prove that the pay is reasonable. Form 1040a Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Form 1040a If the pay is excessive, the excess pay is disallowed as a deduction. Form 1040a Factors to consider. Form 1040a   Determine the reasonableness of pay by the facts and circumstances. Form 1040a Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Form 1040a   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Form 1040a The duties performed by the employee. Form 1040a The volume of business handled. Form 1040a The character and amount of responsibility. Form 1040a The complexities of your business. Form 1040a The amount of time required. Form 1040a The cost of living in the locality. Form 1040a The ability and achievements of the individual employee performing the service. Form 1040a The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Form 1040a Your policy regarding pay for all your employees. Form 1040a The history of pay for each employee. Form 1040a Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Form 1040a Employee-shareholder salaries. Form 1040a   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Form 1040a The excessive part of the salary would not be allowed as a salary deduction by the corporation. Form 1040a For more information on corporate distributions to shareholders, see Publication 542, Corporations. Form 1040a Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Form 1040a For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Form 1040a Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Form 1040a If you give property to an employee as an employee achievement award, your deduction may be limited. Form 1040a Achievement awards. Form 1040a   An achievement award is an item of tangible personal property that meets all the following requirements. Form 1040a It is given to an employee for length of service or safety achievement. Form 1040a It is awarded as part of a meaningful presentation. Form 1040a It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Form 1040a Length-of-service award. Form 1040a    An award will qualify as a length-of-service award only if either of the following applies. Form 1040a The employee receives the award after his or her first 5 years of employment. Form 1040a The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Form 1040a Safety achievement award. Form 1040a    An award for safety achievement will qualify as an achievement award unless one of the following applies. Form 1040a It is given to a manager, administrator, clerical employee, or other professional employee. Form 1040a During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Form 1040a Deduction limit. Form 1040a   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Form 1040a $400 for awards that are not qualified plan awards. Form 1040a $1,600 for all awards, whether or not qualified plan awards. Form 1040a   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Form 1040a   A highly compensated employee is an employee who meets either of the following tests. Form 1040a The employee was a 5% owner at any time during the year or the preceding year. Form 1040a The employee received more than $115,000 in pay for the preceding year. Form 1040a You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Form 1040a   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Form 1040a To figure this average cost, ignore awards of nominal value. Form 1040a Deduct achievement awards as a nonwage business expense on your return or business schedule. Form 1040a You may not owe employment taxes on the value of some achievement awards you provide to an employee. Form 1040a See Publication 15-B. Form 1040a Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Form 1040a However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Form 1040a If the bonus is paid in property, see Property , later. Form 1040a Gifts of nominal value. Form 1040a    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Form 1040a Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Form 1040a For more information on this deduction limit, see Meals and lodging , later. Form 1040a Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Form 1040a Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Form 1040a For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Form 1040a Fringe Benefits A fringe benefit is a form of pay for the performance of services. Form 1040a You can generally deduct the cost of fringe benefits. Form 1040a You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Form 1040a You also may not owe employment taxes on the value of the fringe benefits. Form 1040a See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Form 1040a Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Form 1040a Certain fringe benefits are discussed next. Form 1040a See Publication 15-B for more details on these and other fringe benefits. Form 1040a Meals and lodging. Form 1040a   You can usually deduct the cost of furnishing meals and lodging to your employees. Form 1040a Deduct the cost in whatever category the expense falls. Form 1040a For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Form 1040a If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Form 1040a Deduction limit on meals. Form 1040a   You can generally deduct only 50% of the cost of furnishing meals to your employees. Form 1040a However, you can deduct the full cost of the following meals. Form 1040a Meals whose value you include in an employee's wages. Form 1040a Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Form 1040a This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Form 1040a Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Form 1040a Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Form 1040a Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Form 1040a This does not include meals you furnish on vessels primarily providing luxury water transportation. Form 1040a Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Form 1040a This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Form 1040a Employee benefit programs. Form 1040a   Employee benefit programs include the following. Form 1040a Accident and health plans. Form 1040a Adoption assistance. Form 1040a Cafeteria plans. Form 1040a Dependent care assistance. Form 1040a Education assistance. Form 1040a Life insurance coverage. Form 1040a Welfare benefit funds. Form 1040a   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Form 1040a For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Form 1040a ). Form 1040a Life insurance coverage. Form 1040a   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Form 1040a See Regulations section 1. Form 1040a 264-1 for more information. Form 1040a Welfare benefit funds. Form 1040a   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Form 1040a Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Form 1040a   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Form 1040a If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Form 1040a   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Form 1040a The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Form 1040a The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Form 1040a These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Form 1040a   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Form 1040a Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Form 1040a However, if the employee performs no services, treat the amount you advanced as a loan. Form 1040a If the employee does not repay the loan, treat it as income to the employee. Form 1040a Below-market interest rate loans. Form 1040a   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Form 1040a See Below-Market Loans in chapter 4. Form 1040a Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Form 1040a The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Form 1040a You can claim the deduction only for the tax year in which your employee includes the property's value in income. Form 1040a Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Form 1040a You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Form 1040a Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Form 1040a These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Form 1040a Restricted property. Form 1040a   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Form 1040a However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Form 1040a    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Form 1040a This means that the recipient is not likely to have to give up his or her rights in the property in the future. Form 1040a Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Form 1040a However, your deduction may be limited. Form 1040a If you make the payment under an accountable plan, deduct it in the category of the expense paid. Form 1040a For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Form 1040a If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Form 1040a See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Form 1040a Sick and Vacation Pay Sick pay. Form 1040a   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Form 1040a However, your deduction is limited to amounts not compensated by insurance or other means. Form 1040a Vacation pay. Form 1040a   Vacation pay is an employee benefit. Form 1040a It includes amounts paid for unused vacation leave. Form 1040a You can deduct vacation pay only in the tax year in which the employee actually receives it. Form 1040a This rule applies regardless of whether you use the cash or accrual method of accounting. Form 1040a Prev  Up  Next   Home   More Online Publications
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The Form 1040a

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