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My free taxes Publication 51 - Main Content Table of Contents 1. My free taxes Taxpayer Identification NumbersWhen you receive your EIN. My free taxes Registering for SSNVS. My free taxes 2. My free taxes Who Are Employees?Crew Leaders Business Owned and Operated by Spouses 3. My free taxes Wages and Other Compensation 4. My free taxes Social Security and Medicare TaxesThe $150 Test or the $2,500 Test Social Security and Medicare Tax Withholding 5. My free taxes Federal Income Tax WithholdingImplementation of lock-in letter. My free taxes Seasonal employees and employees not currently performing services. My free taxes Termination and re-hire of employees. My free taxes How To Figure Federal Income Tax Withholding 6. My free taxes Required Notice to Employees About Earned Income Credit (EIC) 7. My free taxes Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties Employers of Both Farm and Nonfarm Workers 8. My free taxes Form 943 9. My free taxes Reporting Adjustments on Form 943Current Year Adjustments Prior Year Adjustments 10. My free taxes Federal Unemployment (FUTA) Tax 11. My free taxes Reconciling Wage Reporting Forms 13. My free taxes Federal Income Tax Withholding MethodsWage Bracket Method Percentage Method Alternative Methods of Federal Income Tax Withholding How To Get Tax Help 1. My free taxes Taxpayer Identification Numbers If you are required to withhold any federal income, social security, or Medicare taxes, you will need an employer identification number (EIN) for yourself. My free taxes Also, you will need the SSN of each employee and the name of each employee as shown on the employee's social security card. My free taxes Employer identification number (EIN). My free taxes   An employer identification number (EIN) is a nine-digit number that the IRS issues. My free taxes The digits are arranged as follows: 00-0000000. My free taxes It is used to identify the tax accounts of employers and certain others who have no employees. My free taxes Use your EIN on all of the items that you send to the IRS and SSA. My free taxes   If you do not have an EIN, you may apply for one online. My free taxes Visit IRS. My free taxes gov and click on the Apply for an EIN Online link under Tools. My free taxes You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. My free taxes Do not use a SSN in place of an EIN. My free taxes   If you do not have an EIN by the time a return is due, write “Applied For” and the date you applied for it in the space shown for the number. My free taxes If you took over another employer's business, do not use that employer's EIN. My free taxes   You should have only one EIN. My free taxes If you have more than one, and are not sure which one to use, call the toll-free Business and Specialty Tax Line at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). My free taxes Provide the EINs that you have, the name and address to which each number was assigned, and the address of your principal place of business. My free taxes The IRS will tell you which EIN to use. My free taxes   For more information, see Publication 1635 or Publication 583. My free taxes When you receive your EIN. My free taxes   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in the Electronic Federal Tax Payment System (EFTPS). My free taxes You will receive information in your Employer Identification Number (EIN) Package about Express Enrollment and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. My free taxes Call the toll-free number located in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your employment tax deposits. My free taxes If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. My free taxes Social security number (SSN). My free taxes   An employee's social security number (SSN) consists of nine digits arranged as follows: 000-00-0000. My free taxes You must obtain each employee's name and SSN as shown on the employee's social security card because you must enter them on Form W-2. My free taxes Do not accept a social security card that says “Not valid for employment. My free taxes ” A social security number issued with this legend does not permit employment. My free taxes You may, but are not required to, photocopy the social security card if the employee provides it. My free taxes If you do not show the employee's correct name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. My free taxes See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. My free taxes Applying for a social security card. My free taxes   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation to SSA. My free taxes You can get Form SS-5 at SSA offices, by calling 1-800-772-1213 or 1-800-325-0778 (TTY), or from the SSA website at www. My free taxes socialsecurity. My free taxes gov/online/ss-5. My free taxes html. My free taxes The employee must complete and sign Form SS-5; it cannot be filed by the employer. My free taxes You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. My free taxes Applying for a social security number. My free taxes   If you file Form W-2 on paper and your employee has applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. My free taxes If you are filing electronically, enter all zeros (000-00-0000) in the social security number field. My free taxes When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. My free taxes Furnish Copies B, C, and 2 of Form W-2c to the employee. My free taxes Up to 25 Forms W-2c per Form W-3c, Transmittal of Corrected Wage and Tax Statements, may be filed per session over the Internet, with no limit on the number of sessions. My free taxes For more information, visit SSA's Employer W-2 Filing Instructions & Information webpage at www. My free taxes socialsecurity. My free taxes gov/employer. My free taxes Advise your employee to correct the SSN on his or her original Form W-2. My free taxes Correctly record the employee's name and SSN. My free taxes   Record the name and number of each employee as they are shown on the employee's social security card. My free taxes If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. My free taxes Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. My free taxes   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2. My free taxes It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. My free taxes IRS individual taxpayer identification numbers (ITINs) for aliens. My free taxes   Do not accept an ITIN in place of an SSN for employee identification or for work. My free taxes An ITIN is issued for use by resident and nonresident aliens who need identification for tax purposes, but who are not eligible for U. My free taxes S. My free taxes employment. My free taxes The ITIN is a nine-digit number formatted like an SSN (for example, NNN-NN-NNNN). My free taxes However, it begins with the number “9” and has either a “7” or “8” as the fourth digit (for example, 9NN-7N-NNNN or 9NN-8N-NNNN). My free taxes    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. My free taxes If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier in this section. My free taxes Do not use an ITIN in place of an SSN on Form W-2. My free taxes Verification of social security numbers. My free taxes   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 employee names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive results the next business day. My free taxes Visit www. My free taxes socialsecurity. My free taxes gov/employer/ssnv. My free taxes htm for more information. My free taxes Registering for SSNVS. My free taxes   You must register online and receive authorization from your employer to use SSNVS. My free taxes To register, visit SSA's website at www. My free taxes socialsecurity. My free taxes gov/employer and click on the Business Services Online link. My free taxes Follow the registration instructions to obtain a user identification (ID) and password. My free taxes You will need to provide the following information about yourself and your company. My free taxes Name. My free taxes SSN. My free taxes Date of birth. My free taxes Type of employer. My free taxes EIN. My free taxes Company name, address, and telephone number. My free taxes Email address. My free taxes When you have completed the online registration process, SSA will mail a one-time activation code to your employer. My free taxes You must enter the activation code online to use SSNVS. My free taxes 2. My free taxes Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. My free taxes See Publication 15-A for details on statutory employees and nonemployees. My free taxes Employee status under common law. My free taxes   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. My free taxes This is so even when you give the employee freedom of action. My free taxes What matters is that you have the right to control the details of how the services are performed. My free taxes See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. My free taxes If an employer-employee relationship exists, it does not matter what it is called. My free taxes The employee may be called an agent or independent contractor. My free taxes It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. My free taxes You are responsible for withholding and paying employment taxes for your employees. My free taxes You are also required to file employment tax returns. My free taxes These requirements do not apply to amounts that you pay to independent contractors. My free taxes The rules discussed in this publication apply only to workers who are your employees. My free taxes In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. My free taxes For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. My free taxes Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. My free taxes The table in section 12, How Do Employment Taxes Apply to Farmwork , distinguishes between farm and nonfarm activities, and also addresses rules that apply in special situations. My free taxes Crew Leaders If you are a crew leader, you are an employer of farmworkers. My free taxes A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. My free taxes If there is no written agreement between you and the farm operator stating that you are his or her employee and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. My free taxes For FUTA tax rules, see section 10. My free taxes Business Owned and Operated by Spouses If you and your spouse jointly own and operate a farm or nonfarm business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. My free taxes See Publication 541, Partnerships, for more details. My free taxes The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. My free taxes Exception—Qualified joint venture. My free taxes   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. My free taxes A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). My free taxes   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. My free taxes Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. My free taxes   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. My free taxes If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. My free taxes Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. My free taxes However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. My free taxes    Note. My free taxes If your spouse is your employee, not your partner, you must pay social security and Medicare taxes for him or her. My free taxes   For more information on qualified joint ventures, visit IRS. My free taxes gov and enter “qualified joint venture” in the search box. My free taxes Exception—Community income. My free taxes   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. My free taxes S. My free taxes possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. My free taxes You may still make an election to be taxed as a qualified joint venture instead of a partnership. My free taxes See Exception—Qualified joint venture , earlier in this section. My free taxes 3. My free taxes Wages and Other Compensation Cash wages that you pay to employees for farmwork are generally subject to social security tax and Medicare tax. My free taxes You may also be required to withhold, deposit, and report Additional Medicare Tax. My free taxes See section 4 for more information. My free taxes If the wages are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. My free taxes You may also be liable for FUTA tax, which is not withheld by you or paid by the employee. My free taxes FUTA tax is discussed in section 10. My free taxes Cash wages include checks, money orders, etc. My free taxes Do not count as cash wages the value of food, lodging, and other noncash items. My free taxes For more information on what payments are considered taxable wages, see Publication 15 (Circular E). My free taxes Commodity wages. My free taxes   Commodity wages are not cash and are not subject to social security and Medicare taxes or federal income tax withholding. My free taxes However, noncash payments, including commodity wages, are treated as cash wages (see above) if the substance of the transaction is a cash payment. My free taxes These noncash payments are subject to social security and Medicare taxes and federal income tax withholding. My free taxes Other compensation. My free taxes   Publications 15-A and 15-B discuss other forms of compensation that may be taxable. My free taxes Family members. My free taxes   Generally, the wages that you pay to family members who are your employees are subject to social security and Medicare taxes, federal income tax withholding, and FUTA tax. My free taxes However, certain exemptions may apply for your child, spouse, or parent. My free taxes See the table, How Do Employment Taxes Apply to Farmwork , in section 12. My free taxes Household employees. My free taxes   The wages of an employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,900 in 2014. My free taxes   Social security and Medicare taxes do not apply to cash wages for housework in your private home if it was done by your spouse or your child under age 21. My free taxes Nor do the taxes apply to housework done by your parent unless: You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter, and You are a widow or widower, or divorced and not remarried, or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. My free taxes   For more information, see Publication 926, Household Employer's Tax Guide. My free taxes    Wages for household work may not be a deductible farm expense. My free taxes See Publication 225, Farmer's Tax Guide. My free taxes Share farmers. My free taxes   You do not have to withhold or pay social security and Medicare taxes on amounts paid to share farmers under share-farming arrangements. My free taxes Compensation paid to H-2A visa holders. My free taxes   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2 but do not report it as social security wages (box 3) or Medicare wages (box 5) on Form W-2 because compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes. My free taxes On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. My free taxes   An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. My free taxes In that case, the worker must give the employer a completed Form W-4. My free taxes Federal income tax withheld should be reported in box 2 of Form W-2. My free taxes These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. My free taxes For rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. My free taxes 4. My free taxes Social Security and Medicare Taxes Generally, you must withhold social security and Medicare taxes on all cash wage payments that you make to your employees. My free taxes You may also be required to withhold Additional Medicare Tax. My free taxes For more information, see Additional Medicare Tax withholding , later. My free taxes The $150 Test or the $2,500 Test All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met. My free taxes You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). My free taxes The $150 test applies separately to each farmworker that you employ. My free taxes If you employ a family of workers, each member is treated separately. My free taxes Do not count wages paid by other employers. My free taxes The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year. My free taxes Exceptions. My free taxes   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. My free taxes   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. My free taxes Social Security and Medicare Tax Withholding The social security tax rate is 6. My free taxes 2%, for both the employee and employer, on the first $117,000 paid to each employee. My free taxes You must withhold at this rate from each employee and pay a matching amount. My free taxes The Medicare tax rate is 1. My free taxes 45% each for the employee and employer on all wages. My free taxes You must withhold at this rate from each employee and pay a matching amount. My free taxes There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. My free taxes Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. My free taxes For details, see Publication 15-A. My free taxes Additional Medicare Tax withholding. My free taxes   In addition to withholding Medicare tax at 1. My free taxes 45%, you must withhold a 0. My free taxes 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. My free taxes You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. My free taxes Additional Medicare Tax is only imposed on the employee. My free taxes There is no employer share of Additional Medicare Tax. My free taxes All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. My free taxes   For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). My free taxes For more information on Additional Medicare Tax, visit IRS. My free taxes gov and enter “Additional Medicare Tax” in the search box. My free taxes Employee share paid by employer. My free taxes   If you would rather pay a household or agricultural employee's share of the social security and Medicare taxes without withholding them from his or her wages, you may do so. My free taxes If you do not withhold the taxes, however, you must still pay them. My free taxes Any employee social security and Medicare taxes that you pay is additional income to the employee. My free taxes Include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages and do not include it in boxes 3 and 5. My free taxes Also, do not count the additional income as wages for FUTA tax purposes. My free taxes Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. My free taxes See section 7 of Publication 15-A. My free taxes Withholding social security and Medicare taxes on nonresident alien employees. My free taxes   In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U. My free taxes S. My free taxes citizen or resident alien. My free taxes However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. My free taxes Also see Compensation paid to H-2A visa holders in section 3. My free taxes Religious exemption. My free taxes    An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to public insurance. My free taxes This exemption is available only if both the employee and the employer are members of the sect. My free taxes   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. My free taxes 5. My free taxes Federal Income Tax Withholding Farmers and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes. My free taxes The amount to withhold is figured on gross wages before taking out social security and Medicare taxes, union dues, insurance, etc. My free taxes You may use one of several methods to determine the amount of federal income tax withholding. My free taxes They are discussed in section 13. My free taxes Form W-4. My free taxes   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. My free taxes Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. My free taxes Advise your employees to use the IRS Withholding Calculator on the IRS website at www. My free taxes irs. My free taxes gov/individuals for help in determining how many withholding allowances to claim on their Form W-4. My free taxes   Ask each new employee to give you a signed Form W-4 when starting work. My free taxes Make the form effective with the first wage payment. My free taxes If a new employee does not give you a completed Form W-4, withhold tax as if he or she is single, with no withholding allowances. My free taxes Forms in Spanish. My free taxes   You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. My free taxes For more information, see Publicación 17(SP). My free taxes Effective date of Form W-4. My free taxes   A Form W-4 remains in effect until the employee gives you a new one. My free taxes When you receive a new Form W-4, do not adjust withholding for pay periods before the effective date of the new form. My free taxes Do not adjust withholding retroactively. My free taxes If an employee gives you a replacement Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. My free taxes For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. My free taxes A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. My free taxes Completing Form W-4. My free taxes   The amount of federal income tax withholding is based on marital status and withholding allowances. My free taxes Your employees may not base their withholding amounts on a fixed dollar amount or percentage. My free taxes However, the employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. My free taxes   Employees may claim fewer withholding allowances than they are entitled to claim. My free taxes They may do this to ensure that they have enough withholding or to offset other sources of taxable income that are not subject to withholding. My free taxes   See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. My free taxes Along with Form W-4, you may wish to order Publication 505 for use by your employees. My free taxes    Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. My free taxes If an employee wants additional withholding, he or she should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. My free taxes Exemption from federal income tax withholding. My free taxes   Generally, an employee may claim exemption from federal income tax withholding because he or she had no federal income tax liability last year and expects none this year. My free taxes See the Form W-4 instructions for more information. My free taxes However, the wages are still subject to social security and Medicare taxes. My free taxes   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. My free taxes To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. My free taxes If the employee does not give you a new Form W-4 by February 15, withhold tax based on the last valid Form W-4 you have for the employee that did not claim an exemption from withholding or, if one does not exist, withhold as if he or she is single with zero withholding allowances. My free taxes If the employee provides a new Form W-4 claiming an exemption from withholding on February 16 or later, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. My free taxes Withholding income taxes on the wages of nonresident alien employees. My free taxes   In general, you must withhold federal income taxes on the wages of nonresident alien employees. My free taxes However, see Publication 515 for exceptions to this general rule. My free taxes Also see Compensation paid to H-2A visa workers in section 3. My free taxes Withholding adjustment for nonresident alien employees. My free taxes   A special procedure applies for figuring the amount of income tax to withhold from wages of nonresident alien employees performing services within the United States for wages paid in 2014. My free taxes This procedure requires a special chart to be used with the withholding tables to determine the amount to withhold from the wages of the nonresident alien employee. My free taxes See Withholding adjustment for nonresident alien employees in section 9 of Publication 15 (Circular E). My free taxes Nonresident alien employee's Form W-4. My free taxes   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding; Request withholding as if they are single, regardless of their actual marital status; Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or Korea, he or she may claim more than one allowance); and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. My free taxes   If you maintain an electronic Form W-4 system, you should provide a field for nonresident alien employees to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. My free taxes    A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. My free taxes Form 8233. My free taxes   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. My free taxes See Publication 515 for details. My free taxes IRS review of requested Forms W-4. My free taxes   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. My free taxes You may also be directed to send certain Forms W-4 to the IRS. My free taxes You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. My free taxes Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. My free taxes The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin. My free taxes When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. My free taxes   After submitting a copy of the requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). My free taxes However, if the IRS later notifies you in writing that the employee is not entitled to claim a complete exemption from withholding or more than the maximum number of withholding allowances specified by the IRS in the written notice, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the notice (commonly referred to as a “lock-in letter”). My free taxes Initial lock-in letter. My free taxes   The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. My free taxes In some cases, where a serious under-withholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the maximum number of withholding allowances and marital status permitted for a specific employee. My free taxes You will also receive a copy for the employee that identifies the maximum number of withholding allowances permitted and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate number of withholding allowances. My free taxes If the employee is employed by you as of the date of the notice, you must furnish the employee copy to the employee within 10 business days of receipt. My free taxes You may follow any reasonable business practice to furnish the employee copy to the employee. My free taxes Implementation of lock-in letter. My free taxes   When you receive the notice specifying the maximum number of withholding allowances and marital status permitted, you may not withhold immediately on the basis of the notice. My free taxes You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. My free taxes The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee to contact the IRS. My free taxes Seasonal employees and employees not currently performing services. My free taxes   If you receive a notice for an employee who is not currently performing services for you, you are still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply. My free taxes You are paying wages for the employee's prior services and the wages are subject to income tax withholding on or after the date specified in the notice. My free taxes You reasonably expect the employee to resume services within 12 months of the date of the notice. My free taxes The employee is on a bona fide leave of absence that does not exceed 12 months or the employee has a right to reemployment after the leave of absence. My free taxes Termination and re-hire of employees. My free taxes   If you are required to furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. My free taxes You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship. My free taxes Modification notice. My free taxes   After issuing the notice specifying the maximum number of withholding allowances and marital status permitted, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. My free taxes The modification notice may change the marital status and/or the number of withholding allowances permitted. My free taxes You must withhold federal income tax based on the effective date specified in the modification notice. My free taxes New Form W-4 after IRS notice. My free taxes   After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or claims a marital status, a number of withholding allowances, and any additional withholding that results in less withholding than would result under the IRS notice or modification notice, you must disregard the new Form W-4. My free taxes You are required to withhold on the basis of the notice or modification notice unless the IRS subsequently notifies you to withhold based on the new Form W-4. My free taxes If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS. My free taxes   If, after you receive an IRS notice or modification notice, your employee provides you with a new Form W-4 that does not claim exemption from federal income tax withholding and claims a marital status, a number of withholding allowances, and any additional withholding that results in more withholding than would result under the notice or modification notice, you must withhold tax on the basis of that new Form W-4. My free taxes Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice. My free taxes Substitute Forms W-4. My free taxes   You are encouraged to have your employees use the official version of Form W-4 to claim withholding allowances or exemption from withholding. My free taxes Call the IRS at 1-800-TAX-FORM (1-800-829-3676) or visit IRS. My free taxes gov to obtain copies of Form W-4. My free taxes   You may use a substitute version of Form W-4 to meet your business needs. My free taxes However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. My free taxes At the time that you provide your substitute form to the employee, you must provide him or her with all tables, instructions, and worksheets from the current Form W-4. My free taxes   You cannot accept a substitute Form W-4 developed by an employee, and the employee submitting such form will be treated as failing to furnish a Form W-4. My free taxes However, continue to use any valid Forms W-4 developed by your employees that you accepted before October 11, 2007. My free taxes Invalid Forms W-4. My free taxes   Any unauthorized change or addition to Form W-4 makes it invalid. My free taxes This includes taking out any language by which the employee certifies that the form is correct. My free taxes A Form W-4 is also invalid if, by the date an employee gives it to you, he or she indicates in any way that it is false. My free taxes An employee who submits a false Form W-4 may be subject to a $500 penalty. My free taxes You may treat a Form W-4 as invalid if the employee wrote “exempt” on line 7 and also entered a number on line 5 or an amount on line 6. My free taxes   When you get an invalid Form W-4, do not use it to figure federal income tax withholding. My free taxes Tell the employee that it is invalid and ask for another one. My free taxes If the employee does not give you a valid one, withhold taxes as if the employee was single and claiming no withholding allowances. My free taxes However, if you have an earlier Form W-4 for this worker that is valid, withhold as you did before. My free taxes   For additional information about these rules, see Treasury Decision 9337, 2007-35 I. My free taxes R. My free taxes B. My free taxes 455, available at www. My free taxes irs. My free taxes gov/irb/2007-35_IRB/ar10. My free taxes html. My free taxes Amounts exempt from levy on wages, salary, and other income. My free taxes   If you receive a Notice of Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), or 668-W(ICS), you must withhold amounts as described in the instructions for these forms. My free taxes Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income—Forms 668-W(ACS), 668-W(c)(DO), and 668-W(ICS), shows the exempt amount. My free taxes If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Publication 1494 to compute the exempt amount. My free taxes How To Figure Federal Income Tax Withholding There are several ways to figure federal income tax withholding. My free taxes Wage bracket tables. My free taxes See section 13 for directions on how to use the tables. My free taxes Percentage method. My free taxes See section 13 for directions on how to use the percentage method. My free taxes Alternative formula tables for percentage method withholding. My free taxes See Publication 15-A. My free taxes Wage bracket percentage method withholding tables. My free taxes See Publication 15-A. My free taxes Other alternative methods. My free taxes See Publication 15-A. My free taxes Employers with automated payroll systems will find the two alternative formula tables and the two alternative wage bracket percentage method tables in Publication 15-A useful. My free taxes If an employee wants additional federal tax withheld, have the employee show the extra amount on Form W-4. My free taxes Supplemental wages. My free taxes   Supplemental wages are wage payments to an employee that are not regular wages. My free taxes They include, but are not limited to, bonuses, commissions, overtime pay, accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. My free taxes Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. My free taxes   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total was a single payment for a regular payroll period. My free taxes   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold federal income tax from your employee's regular wages. My free taxes If you withheld federal income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. My free taxes Withhold a flat 25% (no other percentage allowed). My free taxes If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. My free taxes If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. My free taxes Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. My free taxes Subtract the tax withheld from the regular wages. My free taxes Withhold the remaining tax from the supplemental wages. My free taxes If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and previous supplemental wage payments, and withhold the remaining tax from the current payment of supplemental wages. My free taxes If you did not withhold federal income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b above. My free taxes This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. My free taxes    Separate rules apply to any supplemental wages exceeding $1 million that you pay to an individual during the year. My free taxes See section 7 in Publication 15 (Circular E) for details. My free taxes   Regardless of the method that you use to withhold federal income tax on supplemental wages, they are generally subject to social security, Medicare, and FUTA taxes. My free taxes 6. My free taxes Required Notice to Employees About Earned Income Credit (EIC) You must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. My free taxes Although you do not have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2013 were less than $46,227 ($51,567 if married filing jointly) that they may be eligible to claim the credit for 2013. My free taxes This is because eligible employees may get a refund of the amount of EIC that is more than the tax that they owe. My free taxes You will meet the notification requirement if you issue to the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. My free taxes You may also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. My free taxes If a substitute Form W-2 is given to the employee on time but does not have the required statement, you must notify the employee within 1 week of the date that the substitute Form W-2 is given. My free taxes If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement by the date that Form W-2 is required to be given. My free taxes If Form W-2 is not required, you must notify the employee by February 7, 2014. My free taxes 7. My free taxes Depositing Taxes Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld. My free taxes You must use electronic funds transfer to make all federal tax deposits. My free taxes See How To Deposit , later in this section. My free taxes The credit against employment taxes for COBRA premium assistance payments is treated as a deposit of taxes on the first day of your return period. My free taxes For more information, see COBRA premium assistance credit under Introduction. My free taxes Payment with return. My free taxes   You may make payments with Forms 943 or 945 instead of depositing if one of the following applies. My free taxes You report less than a $2,500 tax liability for the year (Form 943, line 11; Form 945, line 3) and you pay in full with a return that is filed on time. My free taxes However, if you are unsure that you will report less than $2,500, deposit under the rules explained in this section so that you will not be subject to failure-to-deposit penalties. My free taxes You are a monthly schedule depositor and make a payment in accordance with the Accuracy of Deposits Rule discussed later in this section. My free taxes This payment may be $2,500 or more. My free taxes Only monthly schedule depositors, defined later, are allowed to make an Accuracy of Deposits Rule payment with the return. My free taxes Semiweekly schedule depositors must timely deposit the amount. My free taxes See Accuracy of Deposits Rule and How To Deposit, later in this section. My free taxes When To Deposit If you employ both farm and nonfarm workers, do not combine the taxes reportable on Forms 941 or 944 with Form 943 to decide whether to make a deposit. My free taxes See Employers of Both Farm and Nonfarm Workers, later in this section. My free taxes The rules for determining when to deposit Form 943 taxes are discussed below. My free taxes See section 10 for the separate rules that apply to FUTA tax. My free taxes Under these rules, you are classified as either a monthly schedule depositor or a semiweekly schedule depositor. My free taxes The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often your business pays its employees or how often you are required to make deposits. My free taxes The terms identify which set of rules you must follow when you incur a tax liability (for example, when you have a payday). My free taxes The deposit schedule that you must use for a calendar year is determined from the tax liability reported on your Form 943, line 9, for the lookback period, discussed next. My free taxes If you reported $50,000 or less of Form 943 taxes for the lookback period, you are a monthly schedule depositor. My free taxes If you reported more than $50,000 of Form 943 taxes for the lookback period, you are a semiweekly schedule depositor. My free taxes Lookback period. My free taxes   The lookback period is the second calendar year preceding the current calendar year. My free taxes For example, the lookback period for 2014 is 2012. My free taxes Example of deposit schedule based on lookback period. My free taxes Rose Co. My free taxes reported taxes on Form 943 as follows. My free taxes 2012 — $48,000 2013 — $60,000 Rose Co. My free taxes is a monthly schedule depositor for 2014 because its taxes for the lookback period ($48,000 for calendar year 2012) were not more than $50,000. My free taxes However, for 2015, Rose Co. My free taxes is a semiweekly schedule depositor because the total taxes before adjustment for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. My free taxes Adjustments to lookback period taxes. My free taxes   To determine your taxes for the lookback period, use only the tax that you reported on the original return (Form 943, line 9). My free taxes Do not include adjustments shown on Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. My free taxes Example of adjustments. My free taxes An employer originally reported total tax of $45,000 for the lookback period in 2012. My free taxes The employer discovered during March 2014 that the tax reported for the lookback period was understated by $10,000 and corrected this error by filing Form 943-X. My free taxes The total tax reported in the lookback period is still $45,000. My free taxes The $10,000 adjustment is also not treated as part of the 2014 taxes. My free taxes Deposit period. My free taxes   The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. My free taxes For monthly schedule depositors, the deposit period is a calendar month. My free taxes The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. My free taxes Monthly Deposit Schedule If the tax liability reported on Form 943, line 9, for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. My free taxes You must deposit Form 943 taxes on payments made during a calendar month by the 15th day of the following month. My free taxes Monthly schedule example. My free taxes   Red Co. My free taxes is a seasonal employer and a monthly schedule depositor. My free taxes It pays wages each Friday. My free taxes It paid wages during August 2014, but did not pay any wages during September. My free taxes Red Co. My free taxes must deposit the combined tax liabilities for the August paydays by September 15. My free taxes Red Co. My free taxes does not have a deposit requirement for September (that is, due by October 15, 2014) because no wages were paid in September; therefore, it did not have a tax liability for September. My free taxes New employers. My free taxes   For agricultural employers, your tax liability for any year in the lookback period before the date you started or acquired your business is considered to be zero. My free taxes Therefore, you are a monthly schedule depositor for the first and second calendar years of your agricultural business (but see the $100,000 Next-Day Deposit Rule , later in this section). My free taxes Semiweekly Deposit Schedule You are a semiweekly schedule depositor for a calendar year if the tax liability on Form 943, line 9, during your lookback period was more than $50,000. My free taxes Under the semiweekly deposit schedule, deposit Form 943 taxes for payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. My free taxes Deposit amounts accumulated for payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. My free taxes Semiweekly depositors are not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule (discussed later in this section) applies. My free taxes For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 by the following Wednesday. My free taxes If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. My free taxes Semiweekly schedule depositors must complete Form 943-A, Agricultural Employer's Record of Federal Tax Liability, and submit it with Form 943. My free taxes Semiweekly Deposit Schedule IF the payday falls on a. My free taxes . My free taxes . My free taxes THEN deposit taxes by the following. My free taxes . My free taxes . My free taxes Wednesday, Thursday, and/or Friday Wednesday Saturday, Sunday, Monday, and/or Tuesday Friday Semiweekly schedule example. My free taxes   Green, Inc. My free taxes , is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. My free taxes Green, Inc. My free taxes , will deposit only once a month, but the deposit will be made under the semiweekly deposit schedule as follows. My free taxes Green, Inc. My free taxes 's tax liability for the April 25, 2014 (Friday), wage payment must be deposited by April 30, 2014 (Wednesday). My free taxes Semiweekly deposit period spanning two quarters. My free taxes   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. My free taxes For example, if you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. My free taxes Both deposits will be due Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). My free taxes Deposits on Business Days Only If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. My free taxes A business day is any day other than a Saturday, Sunday, or legal holiday. My free taxes For example, if a deposit is required to be made on Friday and Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). My free taxes Semiweekly schedule depositors   will always have 3 business days to make a deposit. My free taxes That is, if any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the deposit. My free taxes For example, if a semiweekly schedule depositor accumulated taxes on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). My free taxes Legal holiday. My free taxes   The term “legal holiday” means any legal holiday in the District of Columbia. My free taxes Legal holidays for 2014 are listed below. My free taxes January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. My free taxes February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans' Day November 27— Thanksgiving Day December 25— Christmas Day $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more of Form 943 taxes (that is, taxes reported on Form 943, line 11) on any day during a deposit period, you must deposit the tax by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. My free taxes For purposes of the $100,000 rule, do not continue accumulating a tax liability after the end of a deposit period. My free taxes For example, if a semiweekly schedule depositor has accumulated a liability of $95,000 on a Tuesday (of a Saturday-through-Tuesday deposit period) and accumulated a $10,000 liability on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. My free taxes Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. My free taxes However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. My free taxes For example, Fir Co. My free taxes is a semiweekly schedule depositor. My free taxes On Monday, Fir Co. My free taxes accumulates taxes of $110,000 and must deposit this amount on Tuesday, the next business day. My free taxes On Tuesday, Fir Co. My free taxes accumulates additional taxes of $30,000. My free taxes Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. My free taxes does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). My free taxes If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year. My free taxes Example of the $100,000 next-day deposit rule. My free taxes   Elm, Inc. My free taxes , started its business on May 1, 2014. My free taxes Because Elm, Inc. My free taxes , is a new employer, the taxes for its lookback period are considered to be zero; therefore, Elm, Inc. My free taxes , is a monthly schedule depositor. My free taxes On May 8, Elm, Inc. My free taxes , paid wages for the first time and accumulated taxes of $50,000. My free taxes On May 9 (Friday), Elm, Inc. My free taxes , paid wages and accumulated taxes of $60,000, for a total of $110,000. My free taxes Because Elm, Inc. My free taxes , accumulated $110,000 on May 9, it must deposit $110,000 by May 12 (Monday), the next business day. My free taxes Elm, Inc. My free taxes , became a semiweekly schedule depositor on May 10. My free taxes It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. My free taxes Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. My free taxes However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. My free taxes Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. My free taxes The deposit shortfall is paid or deposited by the shortfall makeup date as described below. My free taxes Makeup Date for Deposit Shortfall:    Monthly Schedule Depositor—Deposit the shortfall or pay it with your return by the due date of your Form 943. My free taxes You may pay the shortfall with your Form 943 even if the amount is $2,500 or more. My free taxes Semiweekly Schedule Depositor—Deposit by the earlier of (a) the first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred, or (b) the due date for Form 943. My free taxes For example, if a semiweekly schedule depositor has a deposit shortfall during February 2014, the shortfall makeup date is March 19, 2014 (Wednesday). My free taxes How To Deposit You must deposit employment taxes by electronic funds transfer. My free taxes See Payment with return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. My free taxes Electronic deposit requirement. My free taxes   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). My free taxes Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). My free taxes If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. My free taxes   EFTPS is a free service provided by the Department of Treasury. My free taxes To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD). My free taxes You can also visit the EFTPS website at www. My free taxes eftps. My free taxes gov. My free taxes Additional information about EFTPS is also available in Publication 966. My free taxes New employers that have a federal tax obligation will be pre-enrolled in EFTPS. My free taxes Call the toll-free number located in your Employer Identification Number (EIN) Package to activate your enrollment and begin making your tax deposit payments. My free taxes See When you receive your EIN in section 1 for more information. My free taxes Deposit record. My free taxes   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. My free taxes The number can be used as a receipt or to trace the payment. My free taxes Depositing on time. My free taxes   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. My free taxes m. My free taxes Eastern time the day before the date a deposit is due. My free taxes If you use a third party to make a deposit on your behalf, they may have different cutoff times. My free taxes Same-day payment option. My free taxes   If you fail to initiate a deposit transaction on EFTPS by 8 p. My free taxes m. My free taxes Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). My free taxes To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. My free taxes Please check with your financial institution regarding availability, deadlines, and costs. My free taxes Your financial institution may charge you a fee for payments made this way. My free taxes To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, visit www. My free taxes eftps. My free taxes gov to download the Same-Day Payment Worksheet. My free taxes Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. My free taxes The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. My free taxes IRS may also waive deposit penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. My free taxes For amounts not properly deposited or not deposited on time, the penalty rates are shown next. My free taxes Penalty Charged for. My free taxes . My free taxes . My free taxes 2% Deposits made 1 to 5 days late. My free taxes 5% Deposits made 6 to 15 days late. My free taxes 10% Deposits made 16 or more days late. My free taxes Also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. My free taxes 10% Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return. My free taxes See Payment with return , earlier in this section, for exceptions. My free taxes 15% Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. My free taxes Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. My free taxes Order in which deposits are applied. My free taxes   Deposits generally are applied to the most recent tax liability within the year. My free taxes If you receive a failure-to-deposit penalty notice, you may designate how your deposits are to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. My free taxes Follow the instructions on the penalty notice that you received. My free taxes For examples on how the IRS will apply deposits and more information on designating deposits, see Revenue Procedure 2001-58. My free taxes You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. My free taxes irs. My free taxes gov/pub/irs-irbs/irb01-50. My free taxes pdf. My free taxes Example. My free taxes Cedar, Inc. My free taxes , is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. My free taxes It does not make the deposit on July 15. My free taxes On August 15, Cedar, Inc. My free taxes , deposits $2,000. My free taxes Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. My free taxes Accordingly, $500 of the July 15 liability remains undeposited. My free taxes The penalty on this underdeposit will apply as explained above. My free taxes Trust fund recovery penalty. My free taxes   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. My free taxes The penalty is the full amount of the unpaid trust fund tax. My free taxes This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. My free taxes   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. My free taxes   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. My free taxes A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. My free taxes    Willfully means voluntarily, consciously, and intentionally. My free taxes A responsible person acts willfully if the person knows that the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. My free taxes “Average” failure-to-deposit penalty. My free taxes   IRS may assess an “averaged” failure-to-deposit penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 943, line 17, when your tax liability shown on Form 943, line 11, was $2,500 or more. My free taxes IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 943, line 11, was $2,500 or more and you did any of the following. My free taxes Completed Form 943, line 17, instead of Form 943-A. My free taxes Failed to attach a properly completed Form 943-A. My free taxes Completed Form 943-A incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. My free taxes   IRS figures the penalty by allocating your tax liability on Form 943, line 11, equally throughout the tax period. My free taxes Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. My free taxes   You can avoid the penalty by reviewing your return before filing it. My free taxes Follow these steps before filing your Form 943. My free taxes If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 943, line 17. My free taxes If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Form 943-A in the lines that represent the dates you paid your employees. My free taxes Verify that your total liability shown on Form 943, line 17, or Form 943-A, line M, equals your tax liability shown on Form 943, line 11. My free taxes Do not show negative amounts on Form 943, line 17, or Form 943-A. My free taxes For prior period errors discovered after December 31, 2008, do not adjust your tax liabilities reported on Form 943, line 17, or on Form 943-A. My free taxes Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941 and 944 taxes). My free taxes Form 943 taxes and Form 941/944 taxes are not combined for purposes of applying any of the deposit schedule rules. My free taxes If a deposit is due, deposi
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Tax Relief for Victims of Hurricane Irene in New Jersey

E-file to Remain Open for Hurricane Irene Victims through Oct. 31

Updated 9/7/11 to add the following counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Salem, Sussex, Union and Warren.

NJ-2011-42, Sept. 1, 2011

MOUNTAINSIDE, N.J. — Victims of Hurricane Irene that began on Aug. 27, 2011 in parts of New Jersey may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 27, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 27, and on or before Sept. 12, as long as the deposits are made by Sept. 12, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 27 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 27 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 27 and on or before Sept. 12 provided the taxpayer makes these deposits by Sept. 12.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “New Jersey/Hurricane Irene” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 24-Mar-2014

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