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Hrblockfree 28. Hrblockfree 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. Hrblockfree The 2013 rate for business use of a vehicle is 56½ cents per mile. Hrblockfree Introduction This chapter explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040). Hrblockfree You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. Hrblockfree This chapter covers the following topics. Hrblockfree Deductions subject to the 2% limit. Hrblockfree Deductions not subject to the 2% limit. Hrblockfree Expenses you cannot deduct. Hrblockfree You must keep records to verify your deductions. Hrblockfree You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence. Hrblockfree For more information on recordkeeping, get Publication 552, Record- keeping for Individuals. Hrblockfree 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). Hrblockfree You can claim the amount of expenses that is more than 2% of your adjusted gross income. Hrblockfree You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Hrblockfree Your adjusted gross income is the amount on Form 1040, line 38. Hrblockfree Generally, you apply the 2% limit after you apply any other deduction limit. Hrblockfree 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. Hrblockfree Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040). Hrblockfree Unreimbursed employee expenses (line 21). Hrblockfree Tax preparation fees (line 22). Hrblockfree Other expenses (line 23). Hrblockfree 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. Hrblockfree An expense is ordinary if it is common and accepted in your trade, business, or profession. Hrblockfree An expense is necessary if it is appropriate and helpful to your business. Hrblockfree An expense does not have to be required to be considered necessary. Hrblockfree Examples of unreimbursed employee expenses are listed next. Hrblockfree The list is followed by discussions of additional unreimbursed employee expenses. Hrblockfree Business bad debt of an employee. Hrblockfree Education that is work related. Hrblockfree (See chapter 27. Hrblockfree ) Legal fees related to your job. Hrblockfree Licenses and regulatory fees. Hrblockfree Malpractice insurance premiums. Hrblockfree Medical examinations required by an employer. Hrblockfree Occupational taxes. Hrblockfree Passport for a business trip. Hrblockfree Subscriptions to professional journals and trade magazines related to your work. Hrblockfree Travel, transportation, entertainment, and gifts related to your work. Hrblockfree (See chapter 26. Hrblockfree ) Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Hrblockfree 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. Hrblockfree 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. Hrblockfree For more information about the rules and exceptions to the rules affecting the allowable deductions for a home computer, see Publication 529. Hrblockfree 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. Hrblockfree Similar organizations include: Boards of trade, Business leagues, Civic or public service organizations, Real estate boards, and Trade associations. Hrblockfree Lobbying and political activities. Hrblockfree You may not be able to deduct that part of your dues that is for certain lobbying and political activities. Hrblockfree See Dues used for lobbying under Nondeductible Expenses, later. Hrblockfree 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. Hrblockfree If you file Form 1040A, you can deduct these expenses on line 16. Hrblockfree If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Hrblockfree However, neither spouse can deduct more than $250 of his or her qualified expenses. Hrblockfree 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. Hrblockfree 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. Hrblockfree The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Hrblockfree See Publication 587 for more detailed information and a worksheet. Hrblockfree 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. Hrblockfree 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. Hrblockfree Employment and outplacement agency fees. Hrblockfree You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Hrblockfree Employer pays you back. Hrblockfree 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. Hrblockfree (See Recoveries in chapter 12. Hrblockfree ) Employer pays the employment agency. Hrblockfree 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. Hrblockfree Résumé. Hrblockfree 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. Hrblockfree Travel and transportation expenses. Hrblockfree 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. Hrblockfree You can deduct the travel expenses if the trip is primarily to look for a new job. Hrblockfree 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. Hrblockfree 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. Hrblockfree You can choose to use the standard mileage rate to figure your car expenses. Hrblockfree The 2013 rate for business use of a vehicle is 56½ cents per mile. Hrblockfree See chapter 26 for more information. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree However, you cannot deduct the cost of travel as a form of education. Hrblockfree 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. Hrblockfree You can depreciate the cost of tools that have a useful life substantially beyond the tax year. Hrblockfree For more information about depreciation, see Publication 946. Hrblockfree Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Hrblockfree You can also deduct assessments for benefit payments to unemployed union members. Hrblockfree However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Hrblockfree Also, you cannot deduct contributions to a pension fund, even if the union requires you to make the contributions. Hrblockfree You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. Hrblockfree See Lobbying Expenses under Nondeductible Expenses, later. Hrblockfree Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. Hrblockfree You must wear them as a condition of your employment. Hrblockfree The clothes are not suitable for everyday wear. Hrblockfree It is not enough that you wear distinctive clothing. Hrblockfree The clothing must be specifically required by your employer. Hrblockfree Nor is it enough that you do not, in fact, wear your work clothes away from work. Hrblockfree The clothing must not be suitable for taking the place of your regular clothing. Hrblockfree 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. Hrblockfree ). Hrblockfree Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. Hrblockfree 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. Hrblockfree Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Hrblockfree Protective clothing. Hrblockfree 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. Hrblockfree 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. Hrblockfree Military uniforms. Hrblockfree You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. Hrblockfree 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. Hrblockfree In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. Hrblockfree 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. Hrblockfree You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Hrblockfree Tax Preparation Fees (Line 22) You can usually deduct tax preparation fees in the year you pay them. Hrblockfree Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. Hrblockfree These fees include the cost of tax preparation software programs and tax publications. Hrblockfree They also include any fee you paid for electronic filing of your return. Hrblockfree Other Expenses (Line 23) You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2% limit. Hrblockfree 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. Hrblockfree 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. Hrblockfree Some of these other expenses are explained in the following discussions. Hrblockfree If the expenses you pay produce income that is only partially taxable, see Tax-Exempt Income Expenses , later, under Nondeductible Expenses. Hrblockfree Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Hrblockfree 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. Hrblockfree First report the loss in Section B of Form 4684, Casualties and Thefts. Hrblockfree You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. Hrblockfree 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. Hrblockfree For other casualty and theft losses, see chapter 25. Hrblockfree 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. Hrblockfree 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. Hrblockfree The fees are deductible in the year paid. Hrblockfree 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). Hrblockfree You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. Hrblockfree But if you work as an employee and also use the computer in that work, see Publication 946. Hrblockfree 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. Hrblockfree Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. Hrblockfree 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. Hrblockfree For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Hrblockfree 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. Hrblockfree But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. Hrblockfree You must add the fee to the cost of the property. Hrblockfree You cannot deduct the fee you pay to a broker to sell securities. Hrblockfree You can use the fee only to figure gain or loss from the sale. Hrblockfree See the Instructions for Form 8949 for information on how to report the fee. Hrblockfree Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. Hrblockfree A hobby is not a business because it is not carried on to make a profit. Hrblockfree See Activity not for profit in chapter 12 under Other Income. Hrblockfree Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Hrblockfree Deductions of pass-through entities are passed through to the partners or shareholders. Hrblockfree The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Hrblockfree Example. Hrblockfree You are a member of an investment club that is formed solely to invest in securities. Hrblockfree The club is treated as a partnership. Hrblockfree The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. Hrblockfree In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. Hrblockfree 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. Hrblockfree Publicly offered mutual funds. Hrblockfree Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. Hrblockfree 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. Hrblockfree 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). Hrblockfree This net figure is the amount you report on your return as income. Hrblockfree You cannot further deduct investment expenses related to publicly offered mutual funds because they are already included as part of the net income amount. Hrblockfree Information returns. Hrblockfree You should receive information returns from pass-through entities. Hrblockfree Partnerships and S corporations. Hrblockfree 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. Hrblockfree Nonpublicly offered mutual funds. Hrblockfree 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. Hrblockfree You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040). Hrblockfree See Tax Preparation Fees , earlier. Hrblockfree 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. Hrblockfree 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. Hrblockfree If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. Hrblockfree If it was more than $3,000, see Repayments Under Claim of Right under Deductions Not Subject to the 2% Limit, later. Hrblockfree 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. Hrblockfree 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. Hrblockfree You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Hrblockfree Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. Hrblockfree 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. Hrblockfree 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. Hrblockfree For more information about IRAs, see chapter 17. Hrblockfree Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. Hrblockfree They are not subject to the 2% limit. Hrblockfree Report these items on Schedule A (Form 1040), line 28. Hrblockfree List of Deductions Each of the following items is discussed in detail after the list (except where indicated). Hrblockfree Amortizable premium on taxable bonds. Hrblockfree Casualty and theft losses from income- producing property. Hrblockfree Federal estate tax on income in respect of a decedent. Hrblockfree Gambling losses up to the amount of gambling winnings. Hrblockfree Impairment-related work expenses of persons with disabilities. Hrblockfree Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Hrblockfree Losses from Ponzi-type investment schemes. Hrblockfree See Losses from Ponzi-type investment schemes under Theft in chapter 25. Hrblockfree Repayments of more than $3,000 under a claim of right. Hrblockfree Unrecovered investment in an annuity. Hrblockfree 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. Hrblockfree You can elect to amortize the premium on taxable bonds. Hrblockfree The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Hrblockfree Part of the premium on some bonds may be a miscellaneous deduction not subject to the 2% limit. Hrblockfree 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. Hrblockfree 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). Hrblockfree First, report the loss in Form 4684, Section B. Hrblockfree You may also have to include the loss on Form 4797, Sales of Business Property if you are otherwise required to file that form. Hrblockfree 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. Hrblockfree For more information on casualty and theft losses, see chapter 25. Hrblockfree 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. Hrblockfree 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. Hrblockfree See Publication 559 for more information. Hrblockfree 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. Hrblockfree You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. Hrblockfree You cannot deduct gambling losses that are more than your winnings. Hrblockfree You cannot reduce your gambling winnings by your gambling losses and report the difference. Hrblockfree 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. Hrblockfree Therefore, your records should show your winnings separately from your losses. Hrblockfree Diary of winnings and losses. Hrblockfree You must keep an accurate diary or similar record of your losses and winnings. Hrblockfree Your diary should contain at least the following information. Hrblockfree The date and type of your specific wager or wagering activity. Hrblockfree The name and address or location of the gambling establishment. Hrblockfree The names of other persons present with you at the gambling establishment. Hrblockfree The amount(s) you won or lost. Hrblockfree See Publication 529 for more information. Hrblockfree 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. Hrblockfree 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. Hrblockfree Self-employed. Hrblockfree 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. Hrblockfree 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. Hrblockfree It is not subject to the passive activity limitations. Hrblockfree 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. Hrblockfree See Repayments in chapter 12 for more information. Hrblockfree 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. Hrblockfree 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. Hrblockfree See chapter 10 for more information about the tax treatment of pensions and annuities. Hrblockfree Nondeductible Expenses Examples of nondeductible expenses are listed next. Hrblockfree The list is followed by discussions of additional nondeductible expenses. Hrblockfree List of Nondeductible Expenses Broker's commissions that you paid in connection with your IRA or other investment property. Hrblockfree Burial or funeral expenses, including the cost of a cemetery lot. Hrblockfree Capital expenses. Hrblockfree Fees and licenses, such as car licenses, marriage licenses, and dog tags. Hrblockfree Hobby losses, but see Hobby Expenses , earlier. Hrblockfree Home repairs, insurance, and rent. Hrblockfree Illegal bribes and kickbacks. Hrblockfree See Bribes and kickbacks in chapter 11 of Publication 535. Hrblockfree Losses from the sale of your home, furniture, personal car, etc. Hrblockfree Personal disability insurance premiums. Hrblockfree Personal, living, or family expenses. Hrblockfree The value of wages never received or lost vacation time. Hrblockfree Adoption Expenses You cannot deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. Hrblockfree See chapter 37. Hrblockfree Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. Hrblockfree These include qualification and registration fees for primary elections. Hrblockfree Legal fees. Hrblockfree You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Hrblockfree 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. Hrblockfree Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Hrblockfree This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. Hrblockfree 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. Hrblockfree Dues paid to airline, hotel, and luncheon clubs are not deductible. Hrblockfree Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). Hrblockfree 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. Hrblockfree Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. Hrblockfree This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Hrblockfree Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Hrblockfree 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. Hrblockfree Home Security System You cannot deduct the cost of a home security system as a miscellaneous deduction. Hrblockfree However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. Hrblockfree See Home Office under Unreimbursed Employee Expenses, earlier, and Security System under Deducting Expenses in Publication 587. Hrblockfree Investment-Related Seminars You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Hrblockfree Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. Hrblockfree You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. Hrblockfree See chapter 18 for information on alimony. Hrblockfree Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. Hrblockfree 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. Hrblockfree Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Hrblockfree Dues used for lobbying. Hrblockfree 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. Hrblockfree See Lobbying Expenses in Publication 529 for information on exceptions. Hrblockfree Lost or Mislaid Cash or Property You cannot deduct a loss based on the mere disappearance of money or property. Hrblockfree 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. Hrblockfree See chapter 25. Hrblockfree Example. Hrblockfree A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Hrblockfree The diamond falls from the ring and is never found. Hrblockfree The loss of the diamond is a casualty. Hrblockfree Lunches with Co-workers You cannot deduct the expenses of lunches with co-workers, except while traveling away from home on business. Hrblockfree See chapter 26 for information on deductible expenses while traveling away from home. Hrblockfree Meals While Working Late You cannot deduct the cost of meals while working late. Hrblockfree 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. Hrblockfree See chapter 26 for information on deductible entertainment expenses and expenses while traveling away from home. Hrblockfree Personal Legal Expenses You cannot deduct personal legal expenses such as those for the following. Hrblockfree Custody of children. Hrblockfree Breach of promise to marry suit. Hrblockfree Civil or criminal charges resulting from a personal relationship. Hrblockfree Damages for personal injury, except for certain unlawful discrimination and whistleblower claims. Hrblockfree Preparation of a title (or defense or perfection of a title). Hrblockfree Preparation of a will. Hrblockfree Property claims or property settlement in a divorce. Hrblockfree You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property. Hrblockfree Political Contributions You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Hrblockfree Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Hrblockfree Professional Accreditation Fees You cannot deduct professional accreditation fees such as the following. Hrblockfree Accounting certificate fees paid for the initial right to practice accounting. Hrblockfree Bar exam fees and incidental expenses in securing initial admission to the bar. Hrblockfree Medical and dental license fees paid to get initial licensing. Hrblockfree Professional Reputation You cannot deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation. Hrblockfree 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. Hrblockfree 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. Hrblockfree 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. Hrblockfree You cannot deduct these expenses even if you are attending the meeting to get information that would be useful in making further investments. Hrblockfree Tax-Exempt Income Expenses You cannot deduct expenses to produce tax-exempt income. Hrblockfree You cannot deduct interest on a debt incurred or continued to buy or carry tax-exempt securities. Hrblockfree 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. Hrblockfree Example. Hrblockfree During the year, you received taxable interest of $4,800 and tax-exempt interest of $1,200. Hrblockfree In earning this income, you had total expenses of $500 during the year. Hrblockfree You cannot identify the amount of each expense item that is for each income item. Hrblockfree 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. Hrblockfree You can deduct, subject to the 2% limit, expenses of $400 (80% of $500). Hrblockfree 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. Hrblockfree See chapter 26 for more information on deductible travel expenses. Hrblockfree Voluntary Unemployment Benefit Fund Contributions You cannot deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. Hrblockfree 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. Hrblockfree 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. Hrblockfree Prev Up Next Home More Online Publications
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Page Last Reviewed or Updated: 13-Mar-2014
Hrblockfree 3. Hrblockfree Credit for Withholding and Estimated Tax for 2013 Table of Contents Introduction Topics - This chapter discusses: WithholdingForm W-2 Form W-2G The 1099 Series Form Not Correct Form Received After Filing Separate Returns Fiscal Years (FY) Estimated TaxSeparate Returns Divorced Taxpayers Excess Social Security or Railroad Retirement Tax WithholdingJoint returns. Hrblockfree Worksheet for Nonrailroad Employees Worksheets for Railroad Employees Introduction When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Hrblockfree Also take credit for the estimated tax you paid for 2013. Hrblockfree These credits are subtracted from your total tax. Hrblockfree Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Hrblockfree If the total of your withholding and your estimated tax payments for any payment period is less than the amount you needed to pay by the due date for that period, you may be charged a penalty, even if the total of these credits is more than your tax for the year. Hrblockfree Topics - This chapter discusses: How to take credit for withholding, How to take credit for estimated taxes you paid, and How to take credit for excess social security, Medicare, or railroad retirement tax withholding. Hrblockfree Withholding If you had income tax withheld during 2013, you generally should be sent a statement by January 31, 2014, showing your income and the tax withheld. Hrblockfree Depending on the source of your income, you will receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. Hrblockfree Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Hrblockfree You should receive a separate Form W-2 from each employer you worked for. Hrblockfree If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. Hrblockfree However, your employer must provide or send it to you by January 31, 2014. Hrblockfree If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. Hrblockfree If you have not received your Form W-2 by January 31, contact your employer or payer to request a copy. Hrblockfree If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. Hrblockfree The phone number for the IRS is listed in chapter 5. Hrblockfree You will be asked for the following information. Hrblockfree Your name, address, city and state, zip code, and social security number. Hrblockfree Your employer's name, address, city, state, zip code, and the employer's identification number (if known). Hrblockfree An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. Hrblockfree The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible. Hrblockfree Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Hrblockfree Total the federal income tax withheld (shown in box 2 of all Forms W-2 received) and enter that amount on the appropriate line of your tax return. Hrblockfree In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Hrblockfree Your sick pay may be combined with other wages in one Form W-2 or you may receive a separate Form W-2 for sick pay. Hrblockfree If you file a paper tax return, attach Copy B of Form W-2 to your return. Hrblockfree Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Hrblockfree If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Hrblockfree Report the amounts you won on line 21 of Form 1040. Hrblockfree Take credit for the tax withheld on line 62 of Form 1040. Hrblockfree If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Hrblockfree Gambling losses can be deducted on Schedule A (Form 1040) as a miscellaneous itemized deduction. Hrblockfree However, you cannot deduct more than the gambling winnings you report on Form 1040. Hrblockfree File Form W-2G with your income tax return only if it shows any federal income tax withheld in box 2. Hrblockfree The 1099 Series Most forms in the 1099 series are not filed with your return. Hrblockfree In general, these forms should be furnished to you by January 31, 2014. Hrblockfree Unless instructed to file any of these forms with your return, keep them for your records. Hrblockfree There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-C, Cancellation of Debt; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third-Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received From Cooperatives; Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530); Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Hrblockfree ; Form SSA-1099, Social Security Benefit Statement; and Form RRB-1099, Payments by the Railroad Retirement Board. Hrblockfree If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. Hrblockfree See the instructions to these forms for details. Hrblockfree Reporting your withholding. Hrblockfree Report on your tax return all federal income tax withholding shown on your Form 1099, Form SSA-1099, and/or Form RRB-1099. Hrblockfree Include the amount withheld in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. Hrblockfree Form 1099-R. Hrblockfree Attach Form 1099-R to your paper return if federal income tax withholding is shown in box 4. Hrblockfree Do not attach any other Form 1099. Hrblockfree Form Not Correct If you receive a form with incorrect information, you should ask the payer for a corrected form. Hrblockfree Call the telephone number or write to the address given for the payer on the form. Hrblockfree The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. Hrblockfree A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Hrblockfree In certain situations, you will receive two forms in place of the original incorrect form. Hrblockfree This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). Hrblockfree One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. Hrblockfree This form will have an “X” in the “CORRECTED” box at the top of the form. Hrblockfree The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). Hrblockfree Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. Hrblockfree S. Hrblockfree Individual Income Tax Return. Hrblockfree Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Hrblockfree Do not include any amount withheld from your spouse's income. Hrblockfree However, different rules may apply if you live in a community property state. Hrblockfree Community property states. Hrblockfree The following are community property states. Hrblockfree Arizona. Hrblockfree California. Hrblockfree Idaho. Hrblockfree Louisiana. Hrblockfree Nevada. Hrblockfree New Mexico. Hrblockfree Texas. Hrblockfree Washington. Hrblockfree Wisconsin. Hrblockfree Generally, if you live in a community property state and file a separate return, you and your spouse each must report half of all community income in addition to your own separate income. Hrblockfree If you are required to report half of all community income, you are entitled to take credit for half of all taxes withheld on the community income. Hrblockfree If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce. Hrblockfree For more information on these rules, and some exceptions, see Publication 555, Community Property. Hrblockfree Fiscal Years (FY) If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules, described below, to determine your credit for federal income tax withholding. Hrblockfree Fiscal year withholding. Hrblockfree You can claim credit on your tax return only for the tax withheld during the calendar year (CY) ending within your fiscal year. Hrblockfree You cannot claim credit for any of the tax withheld during the calendar year beginning in your fiscal year. Hrblockfree You will be able to claim credit for that withholding on your return for your next fiscal year. Hrblockfree The Form W-2 or 1099 you receive for the calendar year that ends during your fiscal year will show the tax withheld and the income you received during that calendar year. Hrblockfree Although you take credit for all the withheld tax shown on the form, report only the part of the income shown on the form that you received during your fiscal year. Hrblockfree Add to that the income you received during the rest of your fiscal year. Hrblockfree Example. Hrblockfree Miles Hanson files his return for a fiscal year ending June 30, 2013. Hrblockfree In January 2013, he received a Form W-2 that showed that his wages for 2012 were $31,200 and that his income tax withheld was $3,380. Hrblockfree His records show that he had received $15,000 of the wages by June 30, 2012, and $16,200 from July 1 through December 31, 2012. Hrblockfree See Table 3-1 . Hrblockfree On his return for the fiscal year ending June 30, 2013, Miles will report the $16,200 he was paid in July through December of 2012, plus the $18,850 he was paid during the rest of the fiscal year, January 1, 2013, through June 30, 2013. Hrblockfree However, he takes credit for all $3,380 that was withheld during 2012. Hrblockfree On his return for the fiscal year ending June 30, 2012, he reported the $15,000 he was paid in January through June 2012, but took no credit for the tax withheld during that time. Hrblockfree On his return for the fiscal year ending June 30, 2014, he will take the credit for any tax withheld during 2013 but not for any tax withheld during 2014. Hrblockfree Table 3-1. Hrblockfree Example for Fiscal Year Ending June 30, 2013—Miles Hanson Date Form W-2 Miles' records Tax return for FY ending 6/30/20121 Tax return for FY ending 6/30/2013 Wages With- holding Wages With- holding Wages With- holding Wages With- holding CY 20122 $31,200 $3,380 1/1/2012 – 6/30/2012 $15,000 $1,600 $15,000 7/1/2012 – 12/31/2012 $16,200 $1,780 $16,200 $3,380 CY 2013 $37,700 $4,316 3 1/1/2013 – 6/30/2013 $18,850 $2,158 $18,850 7/1/2013 – 12/31/2013 $18,850 4 $2,158 1Miles' tax return for FY ending 6/30/2012 also included his wages for 7/1–12/31/2011 and the withholding shown on his 2011 Form W-2. Hrblockfree 2Calendar year (January 1 – December 31). Hrblockfree 3Withholding shown on 2013 Form W-2 ($4,316) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which calendar year 2013 ends. Hrblockfree 4Wages for 7/1–12/31/2013 ($18,850) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which the wages were received. Hrblockfree Backup withholding. Hrblockfree If income tax has been withheld under the backup withholding rule, take credit for it on your tax return for the fiscal year in which you received the income. Hrblockfree Example. Hrblockfree Emily Smith's records show that she received income in November 2013 and February 2014 from which there was backup withholding ($100 and $50, respectively). Hrblockfree Emily takes credit for the entire $150 of backup withholding on her tax return for the fiscal year ending September 30, 2014. Hrblockfree Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Hrblockfree Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Hrblockfree You must use Form 1040 or Form 1040A if you paid estimated tax. Hrblockfree You cannot file Form 1040EZ. Hrblockfree If you were a beneficiary of an estate or trust, you should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Hrblockfree , from the fiduciary. Hrblockfree If you have estimated taxes credited to you from the estate or trust (from Schedule K-1 (Form 1041)), you must report the estimated taxes on Schedule E (Form 1040). Hrblockfree On the dotted line next to the entry space for line 37 of Schedule E (Form 1040), enter “ES payment claimed” and the amount. Hrblockfree However, do not include this amount in the total on line 37. Hrblockfree Instead, enter the amount on Form 1040, line 63. Hrblockfree This estimated tax payment for 2013 is treated as being made by you on January 15, 2014. Hrblockfree Name changed. Hrblockfree If you changed your name, and you made estimated tax payments using your former name, attach a statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and The social security number under which you made the payments. Hrblockfree The statement should cover payments you made jointly with your spouse as well as any you made separately. Hrblockfree Be sure to report the change to your local Social Security Administration office before filing your 2014 tax return. Hrblockfree This prevents delays in processing your return and issuing refunds. Hrblockfree It also safeguards your future social security benefits. Hrblockfree For more information, call the Social Security Administration at 1-800-772-1213. Hrblockfree Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. Hrblockfree If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Hrblockfree One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. Hrblockfree If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. Hrblockfree Example. Hrblockfree James and Evelyn Brown made joint estimated tax payments for 2013 totaling $3,000. Hrblockfree They file separate 2013 Forms 1040. Hrblockfree James' tax is $4,000 and Evelyn's is $1,000. Hrblockfree If they do not agree on how to divide the $3,000, they must divide it proportionately between their returns. Hrblockfree Because James' tax ($4,000) is 80% of the total tax ($5,000), his share of the estimated tax is $2,400 (80% of $3,000). Hrblockfree The balance, $600 (20% of $3,000), is Evelyn's share. Hrblockfree Divorced Taxpayers If you made joint estimated tax payments for 2013 and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. Hrblockfree If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. Hrblockfree See Example earlier under Separate Returns. Hrblockfree If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided at the top of page 1 of Form 1040 or Form 1040A. Hrblockfree If you divorced and remarried in 2013, enter your present spouse's SSN in that space. Hrblockfree Enter your former spouse's SSN, followed by “DIV,” under Payments to the left of Form 1040, line 63, or in the blank space to the left of Form 1040A, line 37. Hrblockfree Excess Social Security or Railroad Retirement Tax Withholding Most employers must withhold social security tax from your wages. Hrblockfree In some cases, however, the federal government and state and local governments do not have to withhold social security tax from their employees' wages. Hrblockfree If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. Hrblockfree Two or more employers. Hrblockfree If you worked for two or more employers in 2013, too much social security tax or tier 1 RRTA tax may have been withheld from your pay. Hrblockfree You may be able to claim the excess as a credit against your income tax when you file your return. Hrblockfree Table 3-2 shows the maximum amount that should have been withheld for any of these taxes for 2013. Hrblockfree Figure the excess withholding on the appropriate worksheet. Hrblockfree Table 3-2. Hrblockfree Maximum Social Security and RRTA Withholding for 2013 Type of tax Maximum wages subject to tax Tax rate Maximum tax to be withheld Social security $113,700 6. Hrblockfree 2% $7,049. Hrblockfree 40 Tier 1 RRTA $113,700 6. Hrblockfree 2% $7,049. Hrblockfree 40 Tier 2 RRTA $84,300 4. Hrblockfree 4% $3,709. Hrblockfree 20 Joint returns. Hrblockfree If you are filing a joint return, you and your spouse must figure any excess social security or tier 1 RRTA separately. Hrblockfree Note. Hrblockfree All wages are subject to Medicare tax withholding. Hrblockfree Employer's error. Hrblockfree If you had only one employer and he or she withheld too much social security, Medicare, or tier 1 RRTA tax, ask the employer to refund the excess amount to you. Hrblockfree If the employer refuses to refund the overcollection, ask for a statement indicating the amount of the overcollection to support your claim. Hrblockfree File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Hrblockfree Worksheet for Nonrailroad Employees If you did not work for a railroad during 2013, figure the excess social security withholding on Worksheet 3-1. Hrblockfree Note. Hrblockfree If you worked for both a railroad employer and a nonrailroad employer, use Worksheet 3-2, to figure excess social security and tier 1 RRTA tax. Hrblockfree Where to claim credit for excess social security withholding. Hrblockfree If you file Form 1040, enter the excess on line 69. Hrblockfree If you file Form 1040A, include the excess in the total on line 41. Hrblockfree Write “Excess SST” and show the amount of the credit in the space to the left of the line. Hrblockfree You cannot claim excess social security tax withholding on Form 1040EZ. Hrblockfree Worksheets for Railroad Employees If you worked for a railroad during 2013, figure your excess withholding on Worksheet 3-2 and 3-3, as appropriate. Hrblockfree Where to claim credit for excess tier 1 RRTA withholding. Hrblockfree If you file Form 1040, enter the excess on line 69. Hrblockfree If you file Form 1040A, include the excess in the total on line 41. Hrblockfree Write “Excess SST” and show the amount of the credit in the space to the left of the line. Hrblockfree You cannot claim excess tier 1 RRTA withholding on Form 1040EZ. Hrblockfree How to claim refund of excess tier 2 RRTA. Hrblockfree To claim a refund of tier 2 tax, use Form 843. Hrblockfree Be sure to attach a copy of all of your Forms W-2. Hrblockfree See Worksheet 3-3 and the Instructions for Form 843, for more details. Hrblockfree Worksheet 3-1. Hrblockfree Excess Social Security—Nonrailroad Employees 1. Hrblockfree Add all social security tax withheld (but not more than $7,049. Hrblockfree 40 for each employer). Hrblockfree This tax should be shown in box 4 of your Forms W-2. Hrblockfree Enter the total here 1. Hrblockfree 2. Hrblockfree Enter any uncollected social security tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Hrblockfree 3. Hrblockfree Add lines 1 and 2. Hrblockfree If $7,049. Hrblockfree 40 or less, stop here. Hrblockfree You cannot claim the credit 3. Hrblockfree 4. Hrblockfree Social security limit 4. Hrblockfree $7,049. Hrblockfree 40 5. Hrblockfree Excess. Hrblockfree Subtract line 4 from line 3 5. Hrblockfree Worksheet 3-2. Hrblockfree Excess Social Security and Tier 1 RRTA—Railroad Employees 1. Hrblockfree Add all social security and tier 1 RRTA tax withheld (but not more than $7,049. Hrblockfree 40 for each employer). Hrblockfree Social security tax should be shown in box 4 and tier 1 RRTA should be shown in box 14 of your Forms W-2. Hrblockfree Enter the total here 1. Hrblockfree 2. Hrblockfree Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Hrblockfree 3. Hrblockfree Add lines 1 and 2. Hrblockfree If $7,049. Hrblockfree 40 or less, stop here. Hrblockfree You cannot claim the credit 3. Hrblockfree 4. Hrblockfree Social security and tier 1 RRTA tax limit 4. Hrblockfree $7,049. Hrblockfree 40 5. Hrblockfree Excess. Hrblockfree Subtract line 4 from line 3 5. Hrblockfree Worksheet 3-3. Hrblockfree Excess Tier 2 RRTA—Railroad Employees 1. Hrblockfree Add all tier 2 RRTA tax withheld (but not more than $3,709. Hrblockfree 20 for each employer). Hrblockfree Box 14 of your Forms W-2 should show tier 2 RRTA tax. Hrblockfree Enter the total here 1. Hrblockfree 2. Hrblockfree Enter any uncollected tier 2 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Hrblockfree 3. Hrblockfree Add lines 1 and 2. Hrblockfree If $3,709. Hrblockfree 20 or less, stop here. Hrblockfree You cannot claim the credit. Hrblockfree 3. Hrblockfree 4. Hrblockfree Tier 2 RRTA tax limit 4. Hrblockfree $3,709. Hrblockfree 20 5. Hrblockfree Excess. Hrblockfree Subtract line 4 from line 3. Hrblockfree 5. Hrblockfree Prev Up Next Home More Online Publications