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Free File 2012 Taxes

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Free File 2012 Taxes

Free file 2012 taxes Index Symbols 28% rate gain, Collectibles (28% rate) gain. Free file 2012 taxes , Figuring 28% rate gain (line 11). Free file 2012 taxes A Adjustments to income, defined, Adjustment to income. Free file 2012 taxes Age 65 or older dependents, Both Earned and Unearned Income Aliens Individual taxpayer identification number (ITIN), Reminders Standard deduction, Standard Deduction of Zero Alternative minimum tax (AMT), Other Filing Requirements, Alternative minimum tax. Free file 2012 taxes , Alternative Minimum Tax Assistance (see Tax help) B Blind dependents, filing requirements, Both Earned and Unearned Income C Capital gain distributions, Capital gain distributions. Free file 2012 taxes Capital losses, Capital loss. Free file 2012 taxes Child's earnings, Child's earnings. Free file 2012 taxes Child's expenses, Child's expenses. Free file 2012 taxes Child's return Responsibility for, Should a Return Be Filed Even If Not Required?, Child's expenses. Free file 2012 taxes Child's unearned income Tax on, Renewing an exemption from withholding. Free file 2012 taxes Church, wages from, Other Filing Requirements Credits, reduced, Reduced deductions or credits. Free file 2012 taxes D Deductible investment interest, Deductible investment interest. Free file 2012 taxes Deductions, Deductions you cannot take. Free file 2012 taxes Deductions, reduced, Reduced deductions or credits. Free file 2012 taxes Dependents Exemption for, Standard Deduction of Zero Own exemption, Standard Deduction of Zero Social security numbers (SSNs) of, Reminders Divorced parents, reporting child's unearned income, Parents are divorced. Free file 2012 taxes E Earned income, Earned Income Only, Both Earned and Unearned Income Education credit, recaptured, Other Filing Requirements Election to include child's income on parent's return, Parent's Election To Report Child's Interest and Dividends, How to make the election. Free file 2012 taxes , Estimated tax, penalty, Penalty for underpayment of estimated tax. Free file 2012 taxes Exemption Own exemption — dependent, Dependent's Own Exemption Exemption from withholding, Claiming exemption from withholding. Free file 2012 taxes Extension of time to file, Extension of time to file. Free file 2012 taxes F Figures (see Tables and figures) Figuring child's income, Penalty for underpayment of estimated tax. Free file 2012 taxes Filing requirements, Part 1. Free file 2012 taxes Rules for All Dependents, Should a Return Be Filed Even If Not Required? Form 1040 Schedule A, Directly connected. Free file 2012 taxes Schedule J, Using Schedule J (Form 1040), for line 9 tax. Free file 2012 taxes , Using Schedule J for line 15 tax. Free file 2012 taxes Form 1040A Filled in example, Form 1099-DIV, Collectibles (28% rate) gain. Free file 2012 taxes Form 2555, Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Parent files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes Form 2555-EZ, Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Parent files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes , Child files Form 2555 or 2555-EZ. Free file 2012 taxes Form 2848, Designated as representative. Free file 2012 taxes , How to request. Free file 2012 taxes Form 6251, Alternative minimum tax. Free file 2012 taxes , Limit on exemption amount (AMT). Free file 2012 taxes Form 8615, Providing Parental Information (Form 8615, Lines A–C), Line 18 (Tax) Filled in example, Form 8814, How to make the election. Free file 2012 taxes , Figuring Child's Income, Figuring Additional Tax Form W-4, Claiming exemption from withholding. Free file 2012 taxes Free tax services, Free help with your tax return. Free file 2012 taxes G Gift, income from property received as, Income from property received as a gift. Free file 2012 taxes H Help (see Tax help) I Individual taxpayer identification numbers (ITINs), Reminders Investment interest, Deductible investment interest. Free file 2012 taxes IRS notice sent to child, IRS notice. Free file 2012 taxes Itemized deductions Directly connected, Directly connected. Free file 2012 taxes J Joint return of parents, Which Parent's Return To Use L Life insurance, Other Filing Requirements Limit on exemption amount (AMT) Alternative Minimum Tax — Limit on exemption amount, Limit on exemption amount (AMT). Free file 2012 taxes M Married parents filing separately, Parents are married. Free file 2012 taxes Medicare tax, Other Filing Requirements Missing children, photographs of, Reminders N Net capital gain, Net capital gain. Free file 2012 taxes Net unearned income, Line 5 (Net Unearned Income) P Parents Election (see Election to include child's income on parent's return) Which parent's return to use, Which Parent's Return To Use Penalty, estimated tax, Penalty for underpayment of estimated tax. Free file 2012 taxes Publications (see Tax help) Q Qualified dividends, Qualified dividends. Free file 2012 taxes , Qualified dividends. Free file 2012 taxes R Recapture taxes, Other Filing Requirements Remarried custodial parent, reporting child's unearned income, Custodial parent remarried. Free file 2012 taxes Remarried widowed parent, reporting child's unearned income, Widowed parent remarried. Free file 2012 taxes Returns Filing even if not required, Should a Return Be Filed Even If Not Required? Parent's election to include child's income (see Election to include child's income on parent's return) Responsibility for child's return, Responsibility for Child's Return, Child's expenses. Free file 2012 taxes Signing child's return, Signing the child's return. Free file 2012 taxes Who must file, Filing Requirements, Should a Return Be Filed Even If Not Required? S Schedule D Tax Worksheet, Using the Schedule D Tax Worksheet for line 9 tax. Free file 2012 taxes , Figuring 28% rate gain (line 11). Free file 2012 taxes , Using the Schedule D Tax Worksheet for line 15 tax. Free file 2012 taxes Section 1202 gain, Section 1202 gain. Free file 2012 taxes Self-employed, filing requirements, Other Filing Requirements Separated parents, reporting child's unearned income, Parents not living together. Free file 2012 taxes Signing child's return, Signing the child's return. Free file 2012 taxes Social security numbers (SSNs) of dependents, Reminders Social security tax, Other Filing Requirements Standard deduction, Standard Deduction, Standard Deduction of Zero Worksheet for dependents (Worksheet 1), Worksheet 1. Free file 2012 taxes Zero, Standard Deduction of Zero T Tables and figures Determining whether Form 8615 is required (Figure 2), Election to include child's income on parent's return (Figure 1), Filing requirements for dependents (Table 1), Table 1. Free file 2012 taxes 2013 Filing Requirements for Dependents Tax help, How to request. Free file 2012 taxes , How To Get Tax Help Tax on child's unearned income, Renewing an exemption from withholding. Free file 2012 taxes Age requirement, Certain January 1 birthdays. Free file 2012 taxes Figured on Form 8615, Tax for Certain Children Who Have Unearned Income Third party designee, Third party designee. Free file 2012 taxes Tips not reported to employer, Other Filing Requirements Trust income, Trust income. Free file 2012 taxes TTY/TDD information, How To Get Tax Help U Unearned income, Unearned Income Only, Both Earned and Unearned Income Defined, Unearned income defined. Free file 2012 taxes Election to include child's income on parent's return (see Election to include child's income on parent's return) Tax on, Part 2. Free file 2012 taxes Tax on Unearned Income of Certain Children Unrecaptured section 1250 gain, Unrecaptured section 1250 gain. Free file 2012 taxes , Figuring unrecaptured section 1250 gain (line 11). Free file 2012 taxes W Withholding, Withholding From Wages Worksheets Dependent's filing requirement, Both Earned and Unearned Income Form 8615 alternate worksheet, Line 1 (Unearned Income) Qualified dividends and capital gain tax, Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Schedule D Tax, Figuring 28% rate gain (line 11). Free file 2012 taxes Standard deduction worksheet for dependents (Worksheet 1), Worksheet 1. Free file 2012 taxes Unrecaptured section 1250 gain, Figuring unrecaptured section 1250 gain (line 11). Free file 2012 taxes Prev  Up     Home   More Online Publications
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Contact My Local Office in New Hampshire

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Manchester  1000 Elm St. 9th Floor
Manchester, NH 03101 

Monday-Friday - 8:30 a.m. - 4:30 p.m.

 

Services Provided

(603) 668-6763 
Nashua  410 Amherst St.
Nashua, NH 03063 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(603) 594-8370 
Portsmouth  80 Daniel St.
Portsmouth, NH 03801 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)
 

Services Provided

(603) 430-9598 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). 

For information on where to file your tax return please see Where to File Addresses

The Taxpayer Advocate Service: Call (603)433-0571 in Portsmouth or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
1000 Elm St., Suite 900
Manchester, NH  03101

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Free File 2012 Taxes

Free file 2012 taxes 2. Free file 2012 taxes   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. Free file 2012 taxes The pay may be in cash, property, or services. Free file 2012 taxes It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Free file 2012 taxes For information about deducting employment taxes, see chapter 5. Free file 2012 taxes You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Free file 2012 taxes Empowerment zone employment credit (Form 8844). Free file 2012 taxes Indian employment credit (Form 8845). Free file 2012 taxes Work opportunity credit (Form 5884). Free file 2012 taxes Credit for employer differential wage payments (Form 8932). Free file 2012 taxes Reduce your deduction for employee wages by the amount of employment credits you claim. Free file 2012 taxes For more information about these credits, see the form on which the credit is claimed. Free file 2012 taxes 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. Free file 2012 taxes 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. Free file 2012 taxes These and other requirements that apply to all business expenses are explained in chapter 1. Free file 2012 taxes In addition, the pay must meet both of the following tests. Free file 2012 taxes Test 1. Free file 2012 taxes It must be reasonable. Free file 2012 taxes Test 2. Free file 2012 taxes It must be for services performed. Free file 2012 taxes The form or method of figuring the pay does not affect its deductibility. Free file 2012 taxes For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Free file 2012 taxes Test 1—Reasonableness You must be able to prove that the pay is reasonable. Free file 2012 taxes 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. Free file 2012 taxes If the pay is excessive, the excess pay is disallowed as a deduction. Free file 2012 taxes Factors to consider. Free file 2012 taxes   Determine the reasonableness of pay by the facts and circumstances. Free file 2012 taxes Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Free file 2012 taxes   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Free file 2012 taxes The duties performed by the employee. Free file 2012 taxes The volume of business handled. Free file 2012 taxes The character and amount of responsibility. Free file 2012 taxes The complexities of your business. Free file 2012 taxes The amount of time required. Free file 2012 taxes The cost of living in the locality. Free file 2012 taxes The ability and achievements of the individual employee performing the service. Free file 2012 taxes 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. Free file 2012 taxes Your policy regarding pay for all your employees. Free file 2012 taxes The history of pay for each employee. Free file 2012 taxes Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Free file 2012 taxes Employee-shareholder salaries. Free file 2012 taxes   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. Free file 2012 taxes The excessive part of the salary would not be allowed as a salary deduction by the corporation. Free file 2012 taxes For more information on corporate distributions to shareholders, see Publication 542, Corporations. Free file 2012 taxes Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Free file 2012 taxes For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Free file 2012 taxes Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Free file 2012 taxes If you give property to an employee as an employee achievement award, your deduction may be limited. Free file 2012 taxes Achievement awards. Free file 2012 taxes   An achievement award is an item of tangible personal property that meets all the following requirements. Free file 2012 taxes It is given to an employee for length of service or safety achievement. Free file 2012 taxes It is awarded as part of a meaningful presentation. Free file 2012 taxes It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Free file 2012 taxes Length-of-service award. Free file 2012 taxes    An award will qualify as a length-of-service award only if either of the following applies. Free file 2012 taxes The employee receives the award after his or her first 5 years of employment. Free file 2012 taxes 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. Free file 2012 taxes Safety achievement award. Free file 2012 taxes    An award for safety achievement will qualify as an achievement award unless one of the following applies. Free file 2012 taxes It is given to a manager, administrator, clerical employee, or other professional employee. Free file 2012 taxes 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). Free file 2012 taxes Deduction limit. Free file 2012 taxes   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Free file 2012 taxes $400 for awards that are not qualified plan awards. Free file 2012 taxes $1,600 for all awards, whether or not qualified plan awards. Free file 2012 taxes   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. Free file 2012 taxes   A highly compensated employee is an employee who meets either of the following tests. Free file 2012 taxes The employee was a 5% owner at any time during the year or the preceding year. Free file 2012 taxes The employee received more than $115,000 in pay for the preceding year. Free file 2012 taxes 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. Free file 2012 taxes   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. Free file 2012 taxes To figure this average cost, ignore awards of nominal value. Free file 2012 taxes Deduct achievement awards as a nonwage business expense on your return or business schedule. Free file 2012 taxes You may not owe employment taxes on the value of some achievement awards you provide to an employee. Free file 2012 taxes See Publication 15-B. Free file 2012 taxes 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. Free file 2012 taxes However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Free file 2012 taxes If the bonus is paid in property, see Property , later. Free file 2012 taxes Gifts of nominal value. Free file 2012 taxes    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. Free file 2012 taxes Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Free file 2012 taxes For more information on this deduction limit, see Meals and lodging , later. Free file 2012 taxes 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. Free file 2012 taxes Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Free file 2012 taxes For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Free file 2012 taxes Fringe Benefits A fringe benefit is a form of pay for the performance of services. Free file 2012 taxes You can generally deduct the cost of fringe benefits. Free file 2012 taxes You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Free file 2012 taxes You also may not owe employment taxes on the value of the fringe benefits. Free file 2012 taxes See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Free file 2012 taxes 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. Free file 2012 taxes Certain fringe benefits are discussed next. Free file 2012 taxes See Publication 15-B for more details on these and other fringe benefits. Free file 2012 taxes Meals and lodging. Free file 2012 taxes   You can usually deduct the cost of furnishing meals and lodging to your employees. Free file 2012 taxes Deduct the cost in whatever category the expense falls. Free file 2012 taxes 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. Free file 2012 taxes 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. Free file 2012 taxes Deduction limit on meals. Free file 2012 taxes   You can generally deduct only 50% of the cost of furnishing meals to your employees. Free file 2012 taxes However, you can deduct the full cost of the following meals. Free file 2012 taxes Meals whose value you include in an employee's wages. Free file 2012 taxes Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Free file 2012 taxes 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. Free file 2012 taxes Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Free file 2012 taxes Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Free file 2012 taxes 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). Free file 2012 taxes This does not include meals you furnish on vessels primarily providing luxury water transportation. Free file 2012 taxes Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Free file 2012 taxes This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Free file 2012 taxes Employee benefit programs. Free file 2012 taxes   Employee benefit programs include the following. Free file 2012 taxes Accident and health plans. Free file 2012 taxes Adoption assistance. Free file 2012 taxes Cafeteria plans. Free file 2012 taxes Dependent care assistance. Free file 2012 taxes Education assistance. Free file 2012 taxes Life insurance coverage. Free file 2012 taxes Welfare benefit funds. Free file 2012 taxes   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Free file 2012 taxes 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. Free file 2012 taxes ). Free file 2012 taxes Life insurance coverage. Free file 2012 taxes   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. Free file 2012 taxes See Regulations section 1. Free file 2012 taxes 264-1 for more information. Free file 2012 taxes Welfare benefit funds. Free file 2012 taxes   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. Free file 2012 taxes Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Free file 2012 taxes   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Free file 2012 taxes If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Free file 2012 taxes   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Free file 2012 taxes The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Free file 2012 taxes The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Free file 2012 taxes These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Free file 2012 taxes   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Free file 2012 taxes 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. Free file 2012 taxes However, if the employee performs no services, treat the amount you advanced as a loan. Free file 2012 taxes If the employee does not repay the loan, treat it as income to the employee. Free file 2012 taxes Below-market interest rate loans. Free file 2012 taxes   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. Free file 2012 taxes See Below-Market Loans in chapter 4. Free file 2012 taxes Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Free file 2012 taxes 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. Free file 2012 taxes You can claim the deduction only for the tax year in which your employee includes the property's value in income. Free file 2012 taxes 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. Free file 2012 taxes 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. Free file 2012 taxes Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Free file 2012 taxes These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Free file 2012 taxes Restricted property. Free file 2012 taxes   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. Free file 2012 taxes However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Free file 2012 taxes    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Free file 2012 taxes This means that the recipient is not likely to have to give up his or her rights in the property in the future. Free file 2012 taxes Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Free file 2012 taxes However, your deduction may be limited. Free file 2012 taxes If you make the payment under an accountable plan, deduct it in the category of the expense paid. Free file 2012 taxes For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Free file 2012 taxes If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Free file 2012 taxes See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Free file 2012 taxes Sick and Vacation Pay Sick pay. Free file 2012 taxes   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Free file 2012 taxes However, your deduction is limited to amounts not compensated by insurance or other means. Free file 2012 taxes Vacation pay. Free file 2012 taxes   Vacation pay is an employee benefit. Free file 2012 taxes It includes amounts paid for unused vacation leave. Free file 2012 taxes You can deduct vacation pay only in the tax year in which the employee actually receives it. Free file 2012 taxes This rule applies regardless of whether you use the cash or accrual method of accounting. Free file 2012 taxes Prev  Up  Next   Home   More Online Publications