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Free 1040 Ez Filing

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Free 1040 Ez Filing

Free 1040 ez filing 3. Free 1040 ez filing   Gifts Table of Contents If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Free 1040 ez filing This chapter explains the limits and rules for deducting the costs of gifts. Free 1040 ez filing $25 limit. Free 1040 ez filing   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Free 1040 ez filing A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Free 1040 ez filing   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Free 1040 ez filing This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use. Free 1040 ez filing   If you and your spouse both give gifts, both of you are treated as one taxpayer. Free 1040 ez filing It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Free 1040 ez filing If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Free 1040 ez filing Example. Free 1040 ez filing Bob Jones sells products to Local Company. Free 1040 ez filing He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. Free 1040 ez filing They paid $80 for each gift basket, or $240 total. Free 1040 ez filing Three of Local Company's executives took the gift baskets home for their families' use. Free 1040 ez filing Bob and Jan have no independent business relationship with any of the executives' other family members. Free 1040 ez filing They can deduct a total of $75 ($25 limit × 3) for the gift baskets. Free 1040 ez filing Incidental costs. Free 1040 ez filing   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Free 1040 ez filing   A cost is incidental only if it does not add substantial value to the gift. Free 1040 ez filing For example, the cost of gift wrapping is an incidental cost. Free 1040 ez filing However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Free 1040 ez filing Exceptions. Free 1040 ez filing   The following items are not considered gifts for purposes of the $25 limit. Free 1040 ez filing An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Free 1040 ez filing Examples include pens, desk sets, and plastic bags and cases. Free 1040 ez filing Signs, display racks, or other promotional material to be used on the business premises of the recipient. Free 1040 ez filing    Figure B. Free 1040 ez filing When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Free 1040 ez filing (Do not use this chart if your home is your principal place of business. Free 1040 ez filing See Office in the home . Free 1040 ez filing ) Please click here for the text description of the image. Free 1040 ez filing Figure B. Free 1040 ez filing When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1. Free 1040 ez filing 162-1(a); RR 55–109; RR 94–47 Gift or entertainment. Free 1040 ez filing   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Free 1040 ez filing However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Free 1040 ez filing    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Free 1040 ez filing You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Free 1040 ez filing   You can change your treatment of the tickets at a later date by filing an amended return. Free 1040 ez filing Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Free 1040 ez filing    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Free 1040 ez filing You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Free 1040 ez filing Prev  Up  Next   Home   More Online Publications
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The Free 1040 Ez Filing

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