Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Income Tax Return Preparation

Amended 1040x1040ez2011How Do I File My Taxes For Last YearFree File TaxesHow To File 2011 Taxes For Free1040x 2010Free Tax ReturnsTax Forms Federal And StateHr Block Tax Free1040ez FreeFree State Tax E FileHow To File Amended Tax Return 2012Amended State Tax ReturnIrs Forms 1040xFree Federal Tax Return2011 1040 EzH And R Block Free Tax ReturnFree Federal Tax ReturnAmended Tax Return Form1040x Form And InstructionsIncome Tax Extension DeadlineHr Block 1040xPrintable 1040ez Form1040ezTax Form EzHow To File Military TaxesTax Form For Students1040ez Irs GovTax Forms 1040ez2007 Tax2012 Income Tax FormsTurbo Tax Free State FilingTax 1040ezForms For Filing State Tax ReturnsDo Taxes Online 2010File 2007 Tax Return OnlineH 7 R Block Free FileOnline Tax Filing 2012Free State Turbo Tax 2012File 2011 Taxes Online Turbotax

Income Tax Return Preparation

Income tax return preparation 2. Income tax return preparation   Filing Requirements and Required Disclosures Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Annual Information ReturnsSupporting Organization Annual Information Return Unrelated Business Income Tax ReturnEstimated tax. Income tax return preparation Employment Tax ReturnsException. Income tax return preparation FUTA tax exception. Income tax return preparation FICA tax exemption election. Income tax return preparation Revoking the election. Income tax return preparation Definitions. Income tax return preparation Effect on employees. Income tax return preparation Political Organization Income Tax ReturnExempt function. Income tax return preparation Political organization taxable income. Income tax return preparation Separate fund. Income tax return preparation Failure to file. Income tax return preparation Failure to pay on time. Income tax return preparation Reporting Requirements for a Political OrganizationForm 8871 Form 8872 Donee Information ReturnCharitable deduction property. Income tax return preparation Publicly traded securities. Income tax return preparation Exceptions. Income tax return preparation Form 8283. Income tax return preparation Information Provided to DonorsDisclosure of Quid Pro Quo Contributions Acknowledgment of Charitable Contributions of $250 or More Acknowledgment of Vehicle Contribution Qualified Intellectual Property Report of Cash Received Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting FormsAnnual Information Return Public Inspection of Exemption Application Political Organization Reporting Forms Required DisclosuresSolicitation of Nondeductible Contributions Sales of Information or Services Available Free From Government Dues Used for Lobbying or Political Activities Prohibited Tax Shelter Transactions Miscellaneous RulesOrganizational Changes and Exempt Status Introduction Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. Income tax return preparation Topics - This chapter discusses: Annual information returns Unrelated business income tax return Employment tax returns Political organization income tax return Reporting requirements for a political organization Donee information return Information provided to donors Report of cash received Public inspection of exemption applications, annual returns, and political organizations reporting forms Required disclosures Miscellaneous rules 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 598 Tax on Unrelated Business Income of Exempt Organizations Form (and Instructions) 941 Employer's Quarterly Federal Tax Return 990 Return of Organization Exempt From Income Tax 990-EZ Short Form Return of Organization Exempt From Income Tax Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors Schedule C (Form 990 or 990-EZ) Political Campaign and Lobbying Activities Schedule D (Form 990) Supplemental Financial Statements Schedule E (Form 990 or 990-EZ) Schools Schedule F (Form 990) Statement of Activities Outside the United States Schedule G (Form 990 or 990-EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990) Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the United States Schedule J (Form 990) Compensation Information Schedule K (Form 990) Supplemental Information on Tax-Exempt Bonds Schedule L (Form 990 or 990-EZ) Transactions With Interested Persons Schedule M (Form 990) Noncash Contributions Schedule N (Form 990 or 990-EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Form 990 or 990-EZ) Supplemental Information to Form 990 Schedule R (Form 990) Related Organizations and Unrelated Partnerships 990-PF Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons 990-T Exempt Organization Business Income Tax Return 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations 1120-POL U. Income tax return preparation S. Income tax return preparation Income Tax Return for Certain Political Organizations 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation 6069 Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes 8282 Donee Information Return 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8453-X Political Organization Declaration for Electronic Filing of Notice of Section 527 Status 8822-B Change of Address-Business 8868 Application for Extension of Time to File an Exempt Organization Return 8870 Information Return for Transfers Associated with Certain Personal Benefits Contracts 8871 Political Organization Notice of Section 527 Status 8872 Political Organization Report of Contributions and Expenditures 8886-T Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction 8899 Notice of Income from Donated Intellectual Property 8940 Request for Miscellaneous Determination See chapter 6 for information about getting these publications and forms. Income tax return preparation Annual Information Returns Every organization exempt from federal income tax under section 501(a) must file an Annual Exempt Organization Return except: A church, an interchurch organization of local units of a church, a convention or association of churches, An integrated auxiliary of a church, A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs, A school below college level affiliated with a church or operated by a religious order, Church-affiliated mission societies if more than half of their activities are conducted in, or are directed at persons in, foreign countries, An exclusively religious activity of any religious order, A state institution, the income of which is excluded from gross income under section 115, A corporation described in section 501(c)(1) that is organized under an Act of Congress, an instrumentality of the United States, and is exempt from Federal income taxes, A stock bonus, pension, or profit-sharing trust that qualifies under section 401 (required to file Form 5500, Annual Return/Report of Employee Benefit Plan), A religious or apostolic organization described in section 501(d) (required to file Form 1065, U. Income tax return preparation S. Income tax return preparation Return of Partnership Income), A governmental unit or an affiliate of a governmental unit that meets the requirements of Revenue Procedure 95-48, 1995-2 C. Income tax return preparation B. Income tax return preparation 418, www. Income tax return preparation irs. Income tax return preparation gov/pub/irs-tege/rp1995-48. Income tax return preparation pdf, A private foundation described in section 501(c)(3) and exempt under section 501(a) (required to file Form 990-PF, Return of Private Foundation), A political organization that is a state or local committee of a political party, a political committee of a state or local candidate, a caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a political committee, An exempt organization (other than a private foundation) that normally has annual gross receipts of $50,000 or less, or A foreign organization, or an organization located in a U. Income tax return preparation S. Income tax return preparation possession, that normally has annual gross receipts from sources within the United States of $50,000 or less. Income tax return preparation Supporting Organization Annual Information Return For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file Form 990 or 990-EZ with the IRS regardless of the organization's gross receipts, unless it qualifies as one of the following: An integrated auxiliary of a church; The exclusively religious activities of a religious order; or An organization, the gross receipts of which are normally not more than $5,000, that supports a section 509(a)(3) religious order. Income tax return preparation If the organization is described in item (3) above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or 990-EZ. Income tax return preparation On its annual information return, at Part I, Schedule A (Form 990 or 990-EZ) a supporting organization must: List the section 509(a)(3) organizations to which it provides support, Indicate whether it is a Type I, Type II, or Type III supporting organization, and Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations). Income tax return preparation Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Small tax-exempt organizations with annual gross receipts normally $50,000 or less must submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, with the IRS each year, if they choose not to file a Form 990 or 990-EZ. Income tax return preparation Form 990-N requires the following information: The organization's legal name, and mailing address; Any name under which it operates and does business; Its Internet website address (if any); Its taxpayer identification number; The name and address of a principal officer; Organization's annual tax period; Verification that the organization's annual gross receipts are normally $50,000 or less; and Notification if the organization has terminated. Income tax return preparation Form 990-N is due by the 15th day of the fifth month after the close of the tax year. Income tax return preparation For tax years beginning after December 31, 2006, any organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. Income tax return preparation To regain its exempt status an organization will have to reapply for recognition as a tax-exempt organization. Income tax return preparation Exceptions. Income tax return preparation   This filing requirement does not apply to: Churches, their integrated auxiliaries, and conventions or associations of churches; Organizations that are included in a group return; Private foundations required to file Form 990-PF; and Section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. Income tax return preparation Forms 990 and 990-EZ Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted from filing or allowed to submit Form 990-N, described earlier. Income tax return preparation Generally, political organizations with gross receipts of $25,000 ($100,000 for a qualified state or local political organization (QSLPO)) or more for the tax year are required to file Form 990 or 990-EZ unless specifically excepted from filing the annual return. Income tax return preparation The following political organizations are not required to file Form 990 or Form 990-EZ. Income tax return preparation A state or local committee of a political party. Income tax return preparation A political committee of a state or local candidate. Income tax return preparation A caucus or association of state or local officials. Income tax return preparation A political organization that is required to report as a political committee under the Federal Election Campaign Act. Income tax return preparation A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or appointment of any individual for a federal, state, or local public office. Income tax return preparation Form 990-EZ. Income tax return preparation   This is a shortened version of Form 990. Income tax return preparation It is designed for use by small exempt organizations and nonexempt charitable trusts. Income tax return preparation   Beginning in tax year 2010, an organization can file either Form 990 or 990-EZ if it meets the following: Its gross receipts during the year are less than $200,000. Income tax return preparation Its total assets (line 25, column (B) of Form 990-EZ) at the end of the year are less than $500,000. Income tax return preparation If your organization does not meet either of these conditions, you cannot file Form 990-EZ. Income tax return preparation Instead you must file Form 990. Income tax return preparation Group return. Income tax return preparation   A group return on Form 990 may be filed by a central, parent, or like organization for two or more local organizations, none of which is a private foundation. Income tax return preparation This return is in addition to the central organization's separate annual return if it must file a return. Income tax return preparation It cannot be included in the group return. Income tax return preparation See the instructions for Form 990 for the conditions under which this procedure may be used. Income tax return preparation    In any year that an organization is properly included as a subordinate organization on a group return, it should not file its own Form 990. Income tax return preparation Schedule A (Form 990 or 990-EZ). Income tax return preparation   Organizations, other than private foundations, that are described in section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also complete Schedule A of that form. Income tax return preparation Schedule B (Form 990, Form 990-EZ, or 990-PF). Income tax return preparation   Organizations that file Form 990 or 990-EZ use this schedule to provide required information regarding their contributors. Income tax return preparation Schedule O (Form 990). Income tax return preparation   Organizations that file Form 990 must use this schedule to provide required additional information or if additional space is needed. Income tax return preparation   Other schedules may be required to be filed with Form 990 or 990-EZ. Income tax return preparation See the instructions for Form 990 or the instructions for Form 990-EZ for more information. Income tax return preparation Report significant new or changed program services and changes to organizational documents. Income tax return preparation    An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to EO Determinations. Income tax return preparation EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents. Income tax return preparation See Miscellaneous Rules, Organization Changes and Exempt Status, later. Income tax return preparation Form 990-PF All private foundations exempt under section 501(c)(3) must file Form 990-PF. Income tax return preparation These organizations are discussed in chapter 3. Income tax return preparation Electronic Filing You may be required to file Form 990, Form 990-EZ, or Form 990-PF, and related forms, schedules, and attachments electronically. Income tax return preparation If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. Income tax return preparation See Regulations section 301. Income tax return preparation 6033-4 for more information. Income tax return preparation The IRS may waive the requirement to file electronically in cases of undue hardship. Income tax return preparation For information on filing a waiver, see Notice 2010-13, 2010-4 I. Income tax return preparation R. Income tax return preparation B. Income tax return preparation 327, available at www. Income tax return preparation irs. Income tax return preparation gov/ir/2010-04_IRSB/ar14. Income tax return preparation html. Income tax return preparation Form 990. Income tax return preparation   An organization is required to file Form 990 electronically if it files at least 250 returns during the calendar year and has total assets of $10 million or more at the end of the tax year. Income tax return preparation Form 990-PF. Income tax return preparation   An organization is required to file Form 990-PF electronically if it files at least 250 returns during the calendar year. Income tax return preparation Due Date Forms 990, 990-EZ, or 990-PF must be filed by the 15th day of the fifth month after the end of your organization's accounting period. Income tax return preparation Thus, for a calendar year taxpayer, Forms 990, 990-EZ, or 990-PF is due May 15 of the following year. Income tax return preparation Extension of time to file. Income tax return preparation   Use Form 8868 to request an automatic 3-month extension of time to file Forms 990, 990-EZ, or 990-PF and also to apply for an additional (not automatic) 3-month extension if needed. Income tax return preparation   Do not apply for both the automatic 3-month extension and the additional 3-month extension at the same time. Income tax return preparation For more information, see Form 8868 and its instructions. Income tax return preparation   When filing Form 8868 for an automatic 3-month extension, neither a signature, nor an explanation is required. Income tax return preparation However, when filing Form 8868 for an additional 3-month extension, both a signature and an explanation are required. Income tax return preparation Application for exemption pending. Income tax return preparation   An organization that claims to be exempt under section 501(a) but has not established its exempt status by the due date for filing an information return must complete and file Form 990, 990-EZ, 990–N or 990-PF (if it considers itself a private foundation), unless the organization is exempt from Form 990-series filing requirements. Income tax return preparation If the organization's application is pending with the IRS, it must so indicate on Forms 990, 990-EZ, or 990-PF (whichever applies) by checking the application pending block at the top of page 1 of the return. Income tax return preparation For more information on the filing requirements, see the Instructions for Forms 990, 990-EZ, and 990-PF. Income tax return preparation State reporting requirements. Income tax return preparation   Copies of Forms 990, 990-EZ, or 990-PF may be used to satisfy state reporting requirements. Income tax return preparation See the instructions for those forms. Income tax return preparation Form 8870. Income tax return preparation   Organizations that filed a Form 990, 990-EZ, or 990-PF, and paid premiums or received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. Income tax return preparation For more information, see Form 8870 and the instructions for that form. Income tax return preparation Automatic Revocation If the organization fails to file a Form 990, 990-EZ, or 990-PF, or fails to submit a Form 990-N, as required, for 3 consecutive years, it will automatically lose its tax-exempt status by operation of law. Income tax return preparation The list of organizations whose tax-exempt status has been automatically revoked is available on IRS. Income tax return preparation gov. Income tax return preparation This list (Auto-Revocation List) may be viewed and searched on Exempt Organizations Select Check. Income tax return preparation The Auto-Revocation List includes each organization's name, Employer Identification Number (EIN) and last known address. Income tax return preparation It also includes the effective date of the automatic revocation and the date it was posted to the list. Income tax return preparation The IRS updates the list monthly to include additional organizations that lose their tax-exempt status. Income tax return preparation Tax Effect of Loss of Tax-Exempt Status If your organization’s tax-exempt status is automatically revoked, you may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U. Income tax return preparation S. Income tax return preparation Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or Form 1041, U. Income tax return preparation S. Income tax return preparation Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year. Income tax return preparation In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to received tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database). Income tax return preparation An organization whose exemption was automatically revoked must apply for tax exemption in order to regain its tax exemption (even if it was not originally required to apply). Income tax return preparation In some situations, an organization may be able to obtain exemption retroactive to its date of revocation. Income tax return preparation For more information about automatic revocation, go to IRS. Income tax return preparation gov and select Charities & Non-Profits and then select Revoked? Reinstated? Learn More. Income tax return preparation Penalties Penalties for failure to file. Income tax return preparation   Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each day the failure continues. Income tax return preparation The same penalty will apply if the organization does not give all the information required on the return or does not give the correct information. Income tax return preparation Maximum penalty. Income tax return preparation   The maximum penalty for any one return is the smaller of $10,000 or 5% of the organization's gross receipts for the year. Income tax return preparation Organization with gross receipts over $1 million. Income tax return preparation   For an organization that has gross receipts of over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. Income tax return preparation Managers. Income tax return preparation   If the organization is subject to this penalty, the IRS may specify a date by which the return or correct information must be supplied by the organization. Income tax return preparation Failure to comply with this demand will result in a penalty imposed upon the manager of the organization, or upon any other person responsible for filing a correct return. Income tax return preparation The penalty is $10 a day for each day that a return is not filed after the period given for filing. Income tax return preparation The maximum penalty imposed on all persons with respect to any one return is $5,000. Income tax return preparation Exception for reasonable cause. Income tax return preparation   No penalty will be imposed if reasonable cause for failure to file timely can be shown. Income tax return preparation Unrelated Business Income Tax Return Even though your organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. Income tax return preparation Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Income tax return preparation If your organization has $1,000 or more of unrelated business income, you must file Form 990-T in addition to your required annual information return. Income tax return preparation Estimated tax. Income tax return preparation   Quarterly estimated tax payments are due if your organization expects to owe $500 or more in tax including unrelated business income. Income tax return preparation Use Form 990-W to figure your organization's estimated tax payments. Income tax return preparation Travel tour programs. Income tax return preparation   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose to which tax exemption was granted to the organization. Income tax return preparation   Whether travel tour activities conducted by an organization are substantially related to the organization's tax exempt purpose is determined by looking at all the relevant facts and circumstances, including, but not limited to, how a travel tour is developed, promoted, and operated. Income tax return preparation Example. Income tax return preparation ABC, a university alumni association, is tax exempt as an educational organization under section 501(c)(3). Income tax return preparation As part of its activities, ABC operates a travel tour program. Income tax return preparation The program is open to all current members of ABC and their guests. Income tax return preparation ABC works with travel agents to schedule approximately ten tours annually to various destinations around the world. Income tax return preparation Members of ABC pay $1,000 to XYZ Travel Agency to participate in a tour. Income tax return preparation XYZ pays ABC a per person fee for each participant. Income tax return preparation Although the literature advertising the tours encourages ABC members to continue their lifelong learning by joining the tours, and a faculty member of ABC's related university frequently joins the tour as a guest of the alumni association, none of the tours include any scheduled instruction or curriculum related to the destinations being visited. Income tax return preparation The travel tours made available to ABC's members do not contribute importantly to the accomplishment of ABC's educational purpose. Income tax return preparation Rather, ABC's program is designed to generate revenues for ABC by regularly offering its members travel services. Income tax return preparation Therefore, ABC's tour program is an unrelated trade or business. Income tax return preparation For additional information on unrelated business income, see Publication 598 and the Instructions for Form 990-T. Income tax return preparation Employment Tax Returns Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA), unless that employer is specifically excepted by law from those requirements, or if the taxes clearly do not apply. Income tax return preparation For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941. Income tax return preparation Small Business Health Care Tax Credit. Income tax return preparation   If your small tax-exempt organization provides health care coverage for your workers you may qualify for the small business health care tax credit. Income tax return preparation Go to IRS. Income tax return preparation gov and select Affordable Care Act Tax Provisions for more details. Income tax return preparation See Small Business Health Care Tax Credit at www. Income tax return preparation irs. Income tax return preparation gov/newsroom/article/0,,id=223666,00. Income tax return preparation html. Income tax return preparation Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. Income tax return preparation   The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). Income tax return preparation The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer's share of social security tax. Income tax return preparation The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013. Income tax return preparation This tax credit was extended through December 31, 2013, under the American Taxpayer Relief Act, passed on January 1, 2013. Income tax return preparation   The credit can be as high as $6,240 for qualified tax-exempt organizations. Income tax return preparation The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. Income tax return preparation The amount of the credit for qualified tax-exempt organizations may not exceed the organization's employer social security tax for the period for which the credit is claimed. Income tax return preparation   All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. Income tax return preparation The process for certifying veterans for this credit is the same for all employers. Income tax return preparation For more information, see Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and the instructions to Form 8850. Income tax return preparation Notice 2012-13, 2012-9 I. Income tax return preparation R. Income tax return preparation B. Income tax return preparation 421, also provides additional guidance on submission Form 8850. Income tax return preparation   Organizations described in section 501(c) and exempt from taxation under section 501(a) may claim the credit for qualified veterans who begin work on or after Nov. Income tax return preparation 22, 2011, and before January 1, 2013. Income tax return preparation After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, Form 5884-C. Income tax return preparation File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. Income tax return preparation It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately. Income tax return preparation In addition to Form 5884-C and its instructions, tax-exempt employers should see Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit. Income tax return preparation Trust fund recovery penalty. Income tax return preparation   If any person required to collect, truthfully account for, and pay over any of these taxes willfully fails to satisfy any of these requirements or willfully tries in any way to evade or defeat any of them, that person will be subject to a penalty. Income tax return preparation The penalty is equal to the tax evaded, not collected, or not accounted for and paid over. Income tax return preparation The term person includes: An officer or employee of a corporation, or A member or employee of a partnership. Income tax return preparation Exception. Income tax return preparation   The penalty is not imposed on any unpaid volunteer director or member of a board of trustees of an exempt organization if the unpaid volunteer serves solely in an honorary capacity, does not participate in the day-to-day or financial operations of the organization, and does not have actual knowledge of the failure on which the penalty is imposed. Income tax return preparation   This exception does not apply if it results in no one being liable for the penalty. Income tax return preparation FICA and FUTA tax exceptions. Income tax return preparation   Payments for services performed by a minister of a church in the exercise of the ministry, or a member of a religious order performing duties required by the order, are generally not subject to FICA or FUTA taxes. Income tax return preparation FUTA tax exception. Income tax return preparation   Payments for services performed by an employee of a religious, charitable, educational, or other organization described in section 501(c)(3) that are generally subject to FICA taxes if the payments are $100 or more for the year, are not subject to FUTA taxes. Income tax return preparation FICA tax exemption election. Income tax return preparation   Churches and qualified church-controlled organizations can elect exemption from employer FICA taxes by filing Form 8274. Income tax return preparation   To elect the exemption, Form 8274 must be filed before the first date on which a quarterly employment tax return would otherwise be due from the electing organization. Income tax return preparation The organization can make the election only if it is opposed for religious reasons to the payment of FICA taxes. Income tax return preparation   The election applies to payments for services of current and future employees other than services performed in an unrelated trade or business. Income tax return preparation Revoking the election. Income tax return preparation   The election can be revoked by the IRS if the organization fails to file Form W-2, Wage and Tax Statement, for 2 years and fails to furnish certain information upon request by the IRS. Income tax return preparation Such revocation will apply retroactively to the beginning of the 2-year period. Income tax return preparation Definitions. Income tax return preparation   For purposes of this election, the term church means a church, a convention or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches. Income tax return preparation   The term qualified church-controlled organization means any church-controlled section 501(c)(3) tax-exempt organization, other than an organization that both: Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public at other than a nominal charge that is substantially less than the cost of providing such goods, services, or facilities, and Normally receives more than 25% of its support from the sum of governmental sources and receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or businesses. Income tax return preparation Effect on employees. Income tax return preparation   If a church or qualified church-controlled organization has made an election, payment for services performed for that church or organization, other than in an unrelated trade or business, will not be subject to FICA taxes. Income tax return preparation However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. Income tax return preparation The tax applies to income of $108. Income tax return preparation 28 or more for the tax year from that church or organization, and no deductions for trade or business expenses are allowed against this self-employment income. Income tax return preparation   Schedule SE (Form 1040), Self-Employment Tax, should be attached to the employee's income tax return. Income tax return preparation Political Organization Income Tax Return Generally, a political organization is treated as an organization exempt from tax. Income tax return preparation Certain political organizations, however, must file an annual income tax return, Form 1120-POL, U. Income tax return preparation S. Income tax return preparation Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100 specific deduction allowed under section 527. Income tax return preparation A political organization that has $25,000 ($100,000 for a qualified state or local political organization) or more in gross receipts for the tax year must file Form 990 or Form 990-EZ (and Schedule B of the form), unless excepted. Income tax return preparation See Forms 990 and 990-EZ , earlier. Income tax return preparation Political organization. Income tax return preparation   A political organization is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. Income tax return preparation Exempt function. Income tax return preparation   An exempt function means influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. Income tax return preparation It also includes certain office expenses of a holder of public office or an office in a political organization. Income tax return preparation Certain political organizations are required to notify the IRS that they are section 527 organizations. Income tax return preparation These organizations must use Form 8871. Income tax return preparation Some of these section 527 organizations must use Form 8872 to file periodic reports with the IRS disclosing their contributions and expenditures. Income tax return preparation For a discussion on these forms, see Reporting Requirements for a Political Organization, later. Income tax return preparation Political organization taxable income. Income tax return preparation   Political organization taxable income is the excess of: Gross income for the tax year (excluding exempt function income) minus Deductions directly connected with the earning of gross income. Income tax return preparation To figure taxable income, allow for a $100 specific deduction, but do not allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for corporations. Income tax return preparation Exempt organization not a political organization. Income tax return preparation   An organization exempt under section 501(c) that spends any amount for an exempt function must file Form 1120-POL for any year which it has political taxable income. Income tax return preparation These organizations must include in gross income the lesser of: The total amount of its exempt function expenditures, or The organization's net investment income. Income tax return preparation Separate fund. Income tax return preparation   A section 501(c) organization can set up a separate segregated fund that will be treated as an independent political organization. Income tax return preparation The earnings and expenditures made by the separate fund will not be attributed to the section 501(c) organization. Income tax return preparation Section 501(c)(3) organizations are precluded from, and may suffer loss of exemption for, engaging in any political campaign on behalf of, or in opposition to, any candidate for public office. Income tax return preparation Due date. Income tax return preparation   Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. Income tax return preparation Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. Income tax return preparation If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. Income tax return preparation    Form 1120-POL is not required of an exempt organization that makes expenditures for political purposes if its gross income does not exceed its directly connected deductions by more than $100 for the tax year. Income tax return preparation Extension of time to file. Income tax return preparation    Use Form 7004 to request an automatic 6-month extension of time to file Form 1120-POL. Income tax return preparation The extension will be granted if you complete Form 7004 properly, make a proper estimate of the tax (if applicable), file Form 1120-POL by the due date, and pay any tax due. Income tax return preparation Failure to file. Income tax return preparation   A political organization that fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month (or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable cause. Income tax return preparation For more information about filing Form 1120-POL, refer to the instructions accompanying the form. Income tax return preparation Failure to pay on time. Income tax return preparation   An organization that does not pay the tax when due generally may have to pay a penalty of 1/2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Income tax return preparation The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause. Income tax return preparation Reporting Requirements for a Political Organization Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. Income tax return preparation The organization is also required to periodically report certain contributions received and expenditures made by the organization. Income tax return preparation To notify the IRS of section 527 treatment, an organization must file Form 8871. Income tax return preparation To report contributions and expenditures, certain tax-exempt political organizations must file Form 8872. Income tax return preparation Form 8871 A political organization must electronically file Form 8871 to notify the IRS that it is to be treated as a section 527 organization. Income tax return preparation However, an organization is not required to file Form 8871 if: It reasonably expects its annual gross receipts to always be less than $25,000. Income tax return preparation It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA) (2 U. Income tax return preparation S. Income tax return preparation C. Income tax return preparation 431(4)). Income tax return preparation It is a state or local candidate committee. Income tax return preparation It is a state or local committee of a political party. Income tax return preparation It is a section 501(c) organization that has made an “exempt function expenditure. Income tax return preparation ” All other political organizations are required to file Form 8871. Income tax return preparation An organization must provide on Form 8871: Its name and address (including any business address, if different) and its electronic mailing address; Its purpose; The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its board of directors; The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4)); and Whether it intends to claim an exemption from filing Form 8872, Form 990, or Form 990-EZ. Income tax return preparation Employer identification number. Income tax return preparation   If your organization needs an EIN, you can apply for one: Online—Click on the Employer ID Numbers (EINs) link at www. Income tax return preparation IRS. Income tax return preparation gov/businesses/small. Income tax return preparation By telephone at 1-800-829-4933 from 7:00 a. Income tax return preparation m. Income tax return preparation to 10:00 p. Income tax return preparation m. Income tax return preparation in the organization's local time zone. Income tax return preparation By mailing or faxing Form SS-4. Income tax return preparation   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. Income tax return preparation Due dates. Income tax return preparation   The initial Form 8871 must be filed within 24 hours of the date on which the organization was established. Income tax return preparation If there is a material change, an amended Form 8871 must be filed within 30 days of the material change. Income tax return preparation When the organization terminates its existence, it must file a final Form 8871 within 30 days of termination. Income tax return preparation   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Income tax return preparation How to file. Income tax return preparation   An organization must file Form 8871 electronically via the IRS Internet website at www. Income tax return preparation IRS. Income tax return preparation gov/polorgs (Keyword: political orgs). Income tax return preparation Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. Income tax return preparation   After electronically submitting Form 8871, the political organization must print, sign, and mail Form 8453-X to the IRS. Income tax return preparation Upon receipt of the Form 8453-X, the IRS will send the organization a username and password that must be used to file an amended or final Form 8871 or to electronically file Form 8872. Income tax return preparation Penalties Failure to file. Income tax return preparation   An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a tax-exempt section 527 organization for any period before the date Form 8871 is filed. Income tax return preparation Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income. Income tax return preparation   Failure to file an amended Form 8871 will cause the organization not to be treated as a tax-exempt section 527 organization. Income tax return preparation If an organization is treated as not being a tax-exempt section 527 organization, the taxable income of the organization will be determined by considering any exempt function income and deductions during the period beginning on the date of the material change and ending on the date that the amended Form 8871 is filed. Income tax return preparation    The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate. Income tax return preparation Fraudulent returns. Income tax return preparation   Any individual or corporation that willfully delivers or discloses to the IRS any list, return, account, statement or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation) or imprisoned for not more than 1 year or both. Income tax return preparation Waiver of penalties. Income tax return preparation   The IRS may waive any additional tax assessed on an organization for failure to file Form 8871 if the failure was due to reasonable cause and not willful neglect. Income tax return preparation Additional information. Income tax return preparation   For more information on Form 8871, see the form and its instructions. Income tax return preparation For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms , later. Income tax return preparation Form 8872 Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except: A political organization that is not required to file Form 8871 (discussed earlier). Income tax return preparation A political organization that is subject to tax on its income because it did not file or amend Form 8871. Income tax return preparation A qualified state or local political organization (QSLPO), discussed below. Income tax return preparation All other tax-exempt section 527 organizations that accept contributions or make expenditures for an exempt function are required to file Form 8872. Income tax return preparation Qualified state or local political organization. Income tax return preparation   A state or local political organization may be a QSLPO if: All of its political activities relate solely to state or local public office (or office in a state or local political organization). Income tax return preparation It is subject to a state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS. Income tax return preparation The state agency and the organization make the reports publicly available. Income tax return preparation No federal candidate or office holder: Controls or materially participates in the direction of the organization, Solicits contributions for the organization, or Directs the disbursements of the organization. Income tax return preparation Information required on Form 8872. Income tax return preparation   If an organization pays an individual $500 or more for the calendar year, the organization is required to disclose the individual's name, address, occupation, employer, amount of the expense, the date the expense was paid, and the purpose of the expense on Form 8872. Income tax return preparation   If an organization receives contributions of $200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer, and the date the contributions were made. Income tax return preparation   For additional information that is required, see Form 8872. Income tax return preparation Due dates. Income tax return preparation   The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held, or any other calendar year (a nonelection year). Income tax return preparation   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Income tax return preparation Election year filing. Income tax return preparation    In election years, Form 8872 must be filed on either a quarterly or a monthly basis. Income tax return preparation Both a pre-election report and a post-election report are also required to be filed in an election year. Income tax return preparation An election year is any year in which a regularly scheduled general election for federal office is held (an even-numbered year). Income tax return preparation Nonelection year filing. Income tax return preparation    In nonelection years, the form must be filed on a semiannual or monthly basis. Income tax return preparation A complete listing of these filing periods are in the Form 8872 Instructions. Income tax return preparation A nonelection year is any odd-numbered year. Income tax return preparation How to file. Income tax return preparation   Form 8872 can be filed either electronically or by mail. Income tax return preparation However, organizations that have, or expect to have, contributions or expenditures of $50,000 or more for the year must file electronically. Income tax return preparation    To file by mail, send Form 8872 to the:   Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0027 Electronic filing. Income tax return preparation   File electronically via the IRS internet website at www. Income tax return preparation IRS. Income tax return preparation gov/polorgs. Income tax return preparation You will need a user ID and password to electronically file Form 8872. Income tax return preparation Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X will receive a username and password in the mail. Income tax return preparation   Organizations that have completed the electronic filing of Form 8871, but have not received their user ID and password can request one by writing to the following address: Internal Revenue Service Attn: Request for 8872 Password Mail Stop 6273 Ogden, UT 84201 Lost username and password. Income tax return preparation   If you have forgotten or misplaced the username and password issued to your organization after you filed your initial Form 8871, send a letter requesting a new username and password to the address under Electronic filing. Income tax return preparation You can also fax your request to (801) 620-3249. Income tax return preparation It may take 3-6 weeks for your new username and password to arrive, as they will be mailed to the organization. Income tax return preparation Penalty A penalty will be imposed if the organization is required to file Form 8872 and it: Fails to file the form by the due date, or Files the form but fails to report all of the information required or reports incorrect information. Income tax return preparation The penalty is 35% of the total amount of contributions and expenditures to which a failure relates. Income tax return preparation Fraudulent returns. Income tax return preparation   Any individual or corporation that willfully delivers or discloses any list, return, account, statement, or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned for not more than 1 year, or both. Income tax return preparation Waiver of penalties. Income tax return preparation   The IRS may waive any additional tax assessed on an organization for failure to file Form 8872 if the failure was due to reasonable cause and not willful neglect. Income tax return preparation Donee Information Return Dispositions of donated property. Income tax return preparation   If an organization receives charitable deduction property and within three years sells, exchanges, or otherwise disposes of the property, the organization must file Form 8282, Donee Information Return. Income tax return preparation However, an organization is not required to file Form 8282 if: The property is valued at $500 or less, or The property is consumed or distributed for charitable purposes. Income tax return preparation   Form 8282 must be filed with the IRS within 125 days after the disposition. Income tax return preparation Additionally, a copy of Form 8282 must be given to the donor. Income tax return preparation If the organization fails to file the required information return, penalties may apply. Income tax return preparation Charitable deduction property. Income tax return preparation   This is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions. Income tax return preparation Publicly traded securities. Income tax return preparation   These are securities for which market quotations are readily available on an established securities market as of the date of the contribution. Income tax return preparation Appraisal summary. Income tax return preparation   If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property, see the Exceptions. Income tax return preparation below. Income tax return preparation Exceptions. Income tax return preparation   A written appraisal is not needed if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is limited to the gross proceeds from its sale, Intellectual property, Certain securities considered to have market quotations readily available (see Regulations section 1. Income tax return preparation 170A-13(c)(7)(xi)(B)), Inventory and other property donated by a corporation that are qualified contributions for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A), or Any donation of stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. Income tax return preparation   The donee organization is not a qualified appraiser for the purpose of valuing the donated property. Income tax return preparation For more information, get Publication 561, Determining the Value of Donated Property. Income tax return preparation Form 8283. Income tax return preparation   For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. Income tax return preparation The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. Income tax return preparation The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. Income tax return preparation The signature does not represent concurrence in the appraised value of the contributed property. Income tax return preparation A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. Income tax return preparation The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. Income tax return preparation A copy of Form 8283 must be given to the donee. Income tax return preparation Information Provided to Donors In some situations, a donor must obtain certain information from a donee organization to obtain a deduction for a charitable contribution. Income tax return preparation In other situations, the donee organization is required to provide information to the donor. Income tax return preparation A charitable organization must give a donor a disclosure statement for a quid pro quo contribution over $75. Income tax return preparation (See Disclosure statement. Income tax return preparation later. Income tax return preparation ) This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. Income tax return preparation See Quid pro quo contribution below for an example. Income tax return preparation Failure to make the required disclosure may result in a penalty to the organization. Income tax return preparation A donor cannot deduct a charitable contribution of $250 or more unless the donor has a written acknowledgment from the charitable organization. Income tax return preparation In certain circumstances, an organization may be able to meet both of these requirements with the same written document. Income tax return preparation Disclosure of Quid Pro Quo Contributions A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution over $75. Income tax return preparation Quid pro quo contribution. Income tax return preparation   A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. Income tax return preparation Your charitable organization must provide the donor a written statement informing the donor of the fair market value of the items or services it provided in exchange for the contribution. Income tax return preparation Generally, a written statement is required for each payment, whenever the contribution portion is over $75. Income tax return preparation Example. Income tax return preparation If a donor gives your charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. Income tax return preparation In this example, the charitable part of the payment is $60. Income tax return preparation Even though the deductible part of the payment is not more than $75, a written statement must be filed because the total payment is more than $75. Income tax return preparation If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty. Income tax return preparation Disclosure statement. Income tax return preparation   The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. Income tax return preparation The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. Income tax return preparation If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution. Income tax return preparation   No disclosure statement is required if any of the following are true. Income tax return preparation The goods or services given to a donor have insubstantial value as described in Revenue Procedure 90-12, 1990-1 C. Income tax return preparation B. Income tax return preparation 471, Revenue Procedure 90-12, and Revenue Procedure 92-49, 1992-1 C. Income tax return preparation B. Income tax return preparation 507 (as adjusted for inflation), Revenue Procedure 92-49. Income tax return preparation There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop). Income tax return preparation There is only an intangible religious benefit provided to the donor. Income tax return preparation The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. Income tax return preparation For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. Income tax return preparation A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods. Income tax return preparation The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of: Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedure 90-12 (as adjusted for inflation), Revenue Procedure 90-12. Income tax return preparation Good faith estimate of fair market value (FMV). Income tax return preparation   An organization can use any reasonable method to estimate the FMV of goods or services it provided to a donor, as long as it applies the method in good faith. Income tax return preparation   The organization can estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. Income tax return preparation Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued. Income tax return preparation Example 1. Income tax return preparation A charity provides a 1-hour tennis lesson with a tennis professional for the first $500 payment it receives. Income tax return preparation The tennis professional provides 1-hour lessons on a commercial basis for $100. Income tax return preparation A good faith estimate of the lesson's FMV is $100. Income tax return preparation Example 2. Income tax return preparation For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. Income tax return preparation A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. Income tax return preparation If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500. Income tax return preparation Example 3. Income tax return preparation For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. Income tax return preparation The artist does not provide tours on a commercial basis. Income tax return preparation Tours of the museum normally are free to the public. Income tax return preparation A good faith estimate of the FMV of the evening museum tour is $0 even though it is conducted by the artist. Income tax return preparation Penalty for failure to disclose. Income tax return preparation   A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. Income tax return preparation The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. Income tax return preparation The charity can avoid the penalty if it can show that the failure was due to reasonable cause. Income tax return preparation Acknowledgment of Charitable Contributions of $250 or More A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgment from the charitable organization. Income tax return preparation The donor must get the acknowledgment by the earlier of: The date the donor files the original return for the year the contribution is made, or The due date, including extensions, for filing the return. Income tax return preparation The donor is responsible for requesting and obtaining the written acknowledgment from the donee. Income tax return preparation A charitable organization that receives a payment made as a contribution is treated as the donee organization for this purpose even if the organization (according to the donor's instructions or otherwise) distributes the amount received to one or more charities. Income tax return preparation Quid pro quo contribution. Income tax return preparation   If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a good faith estimate of the value of the goods or services. Income tax return preparation See Disclosure of Quid Pro Quo Contributions earlier. Income tax return preparation Form of acknowledgment. Income tax return preparation   Although there is no prescribed format for the written acknowledgment, it must provide enough information to substantiate the amount of the contribution. Income tax return preparation For more information, see IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. Income tax return preparation Cash contributions. Income tax return preparation   To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain a bank record or a written communication from the donee organization showing the donee's name, date, and amount of the contribution. Income tax return preparation In the case of a lump-sum contribution (rather than a contribution by payroll deduction) made through the Combined Federal Campaign or a similar program such as a United Way Campaign, the written communication must include the name of the donee organization that is the ultimate recipient of the charitable contribution. Income tax return preparation Contributions by payroll deduction. Income tax return preparation   An organization may substantiate an employee's contribution by deduction from its payroll by: A pay stub, Form W-2, or other document showing a contribution to a donee organization, together with A pledge card or other document from the donee organization that shows its name. Income tax return preparation   For contributions of $250 or more, the document must state that the donee organization provides no goods or services for any payroll contributions. Income tax return preparation The amount withheld from each payment of wages to a taxpayer is treated as a separate contribution. Income tax return preparation Acknowledgment of Vehicle Contribution If an exempt organization receives a contribution of a qualified vehicle with a claimed value of more than $500, the donee organization is required to provide a contemporaneous written acknowledgment to the donor. Income tax return preparation The donee organization can use a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. Income tax return preparation See section 3. Income tax return preparation 03 of Notice 2005-44 for guidance on the information that must be included in a contemporaneous written acknowledgment and the deadline for furnishing the acknowledgment to the donor. Income tax return preparation Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. Income tax return preparation The report is due by February 28 (March 31 if filing electronically) of the year following the year in which the donee organization provides the acknowledgment to the donor. Income tax return preparation The organization must file the report on Copy A of Form 1098-C. Income tax return preparation An organization that files Form 1098-C on paper should send it with Form 1096, Annual Summary and Transmittal of U. Income tax return preparation S. Income tax return preparation Information Returns. Income tax return preparation See the Instructions for Form 1096 for the correct filing location. Income tax return preparation An organization that is required to file 250 or more Forms 1098-C during the calendar year must file the forms electronically or magnetically. Income tax return preparation Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically at www. Income tax return preparation IRS. Income tax return preparation gov/pub/irs-pdf/p1220. Income tax return preparation pdf. Income tax return preparation Acknowledgment For a contribution of a qualified vehicle with a claimed value of $500 or less, do not file Form 1098-C. Income tax return preparation However, you can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. Income tax return preparation See the Instructions for Form 1098-C. Income tax return preparation Generally, the organization should complete Form 1098-C as the written acknowledgment to the donor and the IRS. Income tax return preparation The contents of the acknowledgment depend upon whether the organization: Sells a qualified vehicle without any significant intervening use or material improvement, Intends to make a significant intervening use of or material improvement to a qualified vehicle prior to sale, or Sells a qualified vehicle to a needy individual at a price significantly below fair market value, or a gratuitous transfer to a needy individual in direct furtherance of a charitable purpose of the organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. Income tax return preparation For more information on the acknowledgment, see Notice 2005-44, 2005-25 I. Income tax return preparation R. Income tax return preparation B. Income tax return preparation 1287, at www. Income tax return preparation irs. Income tax return preparation gov/irb/2005-25_IRB/2005-25_IRB/ar09. Income tax return preparation html. Income tax return preparation Material improvements or significant intervening use. Income tax return preparation   To constitute significant intervening use, the organization must actually use the vehicle to substantially further the organization's regularly conducted activities, and the use must be significant, not incidental. Income tax return preparation Factors in determining whether a use is a significant intervening use depend on the nature, extent, frequency, and duration. Income tax return preparation For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly related to training in vehicle repair. Income tax return preparation Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales. Income tax return preparation Examples of significant use include: Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Income tax return preparation Driving a vehicle for 10,000 miles over a 1-year period to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Income tax return preparation   Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. Income tax return preparation To be a material improvement, the improvement cannot be funded by an additional payment to the organization from the donor of the vehicle. Income tax return preparation Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. Income tax return preparation Penalties. Income tax return preparation   If your charitable organization receives contributions of used motor vehicles, boats, and airplanes valued over $500 it may be subject to a penalty if it knowingly: Fails to furnish an acknowledgement in a timely manner, showing the required information, or Furnishes a false or fraudulent acknowledgement of the contribution. Income tax return preparation    Other penalties may apply. Income tax return preparation See Part O in the 2012 General Instructions for Certain Information Returns. Income tax return preparation   An acknowledgment containing a certification will be presumed to be false or fraudulent if the qualified vehicle is sold to a buyer other than a needy individual without a significant intervening use or material improvement within 6 months of the date of the contribution. Income tax return preparation   If a charity sells a donated vehicle at auction, the IRS will not accept as substantiation an acknowledgment from the charity stating that the vehicle is to be transferred to a needy individual for significantly below fair market value. Income tax return preparation Vehicles sold at auction are not sold at prices significantly below fair market value, and the IRS will not treat vehicles sold at auction as qualifying for this exception. Income tax return preparation   The penalty for a false or fraudulent acknowledgment where the donee certifies that the vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use or the donee certifies that the vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000 or the claimed value of the vehicle multiplied by 39. Income tax return preparation 6%. Income tax return preparation   The penalty for an acknowledgment relating to a qualified vehicle being sold in an arm's length transaction to an unrelated party is the larger of the gross proceeds from the sale or the sales price stated in the acknowledgment multiplied by 39. Income tax return preparation 6%. Income tax return preparation Qualified Intellectual Property A taxpayer who contributes qualified intellectual property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. Income tax return preparation The additional deduction is based on a specified percentage of the qualified donee income with respect to the qualified intellectual property. Income tax return preparation To qualify for the additional charitable deduction, the donor must provide notice to the donee at the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of sections 170(m) and 6050L. Income tax return preparation Every donee organization described in section 170(c) (except a private foundation as defined in section 509(a) that is not described in section 170(b)(1)(F)) that receives or accrues net income from a charitable gift of qualified intellectual property must file Form 8899. Income tax return preparation Form 8899. Income tax return preparation   Form 8899, Notice of Income From Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to the IRS and is due by the last day of the first full month following the close of the donee’s tax year. Income tax return preparation This form must be filed for each tax year of the donee in which the donated property produces net income, but only if all or part of that tax year occurs during the 10-year period beginning on the date of the contribution and that tax year does not begin after the expiration of the legal life of the donated property. Income tax return preparation Qualified donee income. Income tax return preparation   Qualified donee income is any net income received by or accrued to the donee that is properly allocable to the qualified intellectual property for the tax year of the donee which ends within or with the tax year of the donor. Income tax return preparation Income is not treated as allocated to qualified intellectual property if it is received or accrued after the earlier of the expiration of the legal life of the qualified intellectual property, or the 10-year period beginning with the date of
Print - Click this link to Print this page

Understanding Your CP54Q Notice

Your tax return shows a different name and/or ID number from the information we have on file for you or from the information from the Social Security Administration (SSA).
We previously sent you a notice asking you to provide us some updated information. We still haven’t received a response from you.


What you need to do

  • Review your identifying information shown on this notice and compare it to your most recent social security card or taxpayer ID card.
  • Complete the CP54 response form to explain the discrepancies.
  • Include copies of documents to substantiate your name and identifying number.

You may want to

  • Contact the SSA to update your records if any of the following occurred:
    • you recently married and are using your spouse’s last name and have not already contacted SSA,
    • you legally changed your name without contacting SSA, or
    • your social security number (SSN) and/or name are different than on your social security card.

 


Answers to Common Questions

Q. I sent you my information. When will I get my refund?

A. Once we receive your response form and verify the information you provided, you should receive your refund in 4 to 6 weeks. If you don’t hear from us after 4 to 6 weeks, call our “Where’s My Refund?” toll free line at 1-800-829-1954 to check on the status of your refund.


Tips for next year

Make sure you file using your name and taxpayer ID number as they appear on your social security card or taxpayer ID card.

Page Last Reviewed or Updated: 23-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Income Tax Return Preparation

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