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Online tax software Part Five -   Standard Deduction and Itemized Deductions After you have figured your adjusted gross income, you are ready to subtract the deductions used to figure taxable income. Online tax software You can subtract either the standard deduction or itemized deductions. Online tax software Itemized deductions are deductions for certain expenses that are listed on Schedule A (Form 1040). Online tax software The ten chapters in this part discuss the standard deduction, each itemized deduction, and a limit on some of your itemized deductions if your adjusted gross income is more than certain amounts. Online tax software See chapter 20 for the factors to consider when deciding whether to subtract the standard deduction or itemized deductions. Online tax software Table of Contents 20. Online tax software   Standard DeductionWhat's New Introduction Standard Deduction Amount Standard Deduction for Dependents Who Should ItemizeWhen to itemize. Online tax software Married persons who filed separate returns. Online tax software 21. Online tax software   Medical and Dental ExpensesWhat's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Online tax software How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons 22. Online tax software   TaxesIntroductionIndian tribal government. Online tax software Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Online tax software Real Estate TaxesReal estate taxes for prior years. Online tax software Examples. Online tax software Form 1099-S. Online tax software Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct 23. Online tax software   Interest ExpenseIntroduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Online tax software Mortgage proceeds used for business or investment. Online tax software 24. Online tax software   ContributionsIntroduction Useful Items - You may want to see: Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions of PropertyException. Online tax software Household items. Online tax software Deduction more than $500. Online tax software Form 1098-C. Online tax software Filing deadline approaching and still no Form 1098-C. Online tax software Exception 1—vehicle used or improved by organization. Online tax software Exception 2—vehicle given or sold to needy individual. Online tax software Deduction $500 or less. Online tax software Right to use property. 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Online tax software   Miscellaneous DeductionsWhat's New Introduction Useful Items - You may want to see: Deductions Subject to the 2% LimitUnreimbursed Employee Expenses (Line 21) Tax Preparation Fees (Line 22) Other Expenses (Line 23) Deductions Not Subject to the 2% LimitList of Deductions Nondeductible ExpensesList of Nondeductible Expenses 29. Online tax software   Limit on Itemized DeductionsIntroduction Useful Items - You may want to see: Are You Subject to the Limit? Which Itemized Deductions Are Limited? Which Itemized Deductions Are Not Limited? How Do You Figure the Limit?Example. Online tax software Prev  Up  Next   Home   More Online Publications
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Employee Tool & Equipment Plans

This resource page provides information and guidance related to Employee Tool and Equipment Plans, sometimes called Service Technician’s Tool Reimbursement Plans (Tool Plans). Tool Plans are programs that are marketed in various industries including auto dealership and repair facilities and other trades that require employees to provide their own tools. The plans typically purport to receive tax-favored treatment as “accountable plans” under Internal Revenue Code § 62(c) and the accompanying regulations.

Available Guidance and other Information

View recent Department of Justice activity

Revenue Rule 2012-25
Revenue Rule 2012-25 clarifies that an arrangement that recharacterizes taxable wages as nontaxable reimbursements or allowances does not satisfy the business connection requirement of the accountable plan rules under § 62(c) and the applicable regulations.  The ruling includes three examples of programs that do not satisfy the business connection requirement of the accountable plan rules because they impermissibly recharacterize wages.  It also includes an example in which the reimbursement arrangement satisfies the business connection requirement of the accountable plan rules because the employer’s plan only reimburses employees when a deductible business expense has been incurred in connection with performing services for the employer and the reimbursement is not in lieu of wages that the employees would otherwise receive.

ILM 201120021
A reimbursement or other expense allowance arrangement that pays an amount regardless of whether an expense is paid or incurred or reasonably expected to be paid or incurred by the employee in performing services for the employer violates the business connection requirement of an accountable plan. Specifically, such an arrangement violates the business connection’s reimbursement requirement under Treas. Reg. § 1.62-2(d)(3)(i). Accordingly, payments made under the arrangement are treated as made under a nonaccountable plan. Amounts treated as paid under a nonaccountable plan must be included in the employee’s gross income for the taxable year, are subject to withholding and payment of employment taxes, and must be reported as wages or other compensation on the employee’s Form W-2.

Employee Tool & Equipment Plans Alert
The Internal Revenue Service has established a compliance team to address significant concerns with certain Employee Tool and Equipment Plans that purport to receive tax-favored treatment as accountable plans.

IRS Letter Ruling 200930029
An employer's expense reimbursement plan satisfies the business connection, substantiation, and return of excess requirements of an accountable plan.  Payments made under the Plan in accordance with the terms of the plan will be excluded from the Technician’s income and will not be wages subject to the withholding and payment of employment taxes.

Chief Counsel Advice -   ILM 200745018
A legal memorandum that concludes that an employer's tool reimbursement plan does not satisfy the requirements of an accountable plan. 

Revenue Ruling 2005-52
This ruling holds that tool allowances paid to employees are not paid under an accountable plan because the substantiation and return of excess requirements are not met. 

 

Page Last Reviewed or Updated: 13-Feb-2014

The Online Tax Software

Online tax software Publication 3402 - Introductory Material Table of Contents Reminder IntroductionOrdering forms and publications. Online tax software Tax questions. Online tax software Useful Items - You may want to see: Reminder Photographs of missing children. Online tax software  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Online tax software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Online tax software You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Online tax software Introduction This publication provides federal income, employment, and excise tax information for limited liability companies. Online tax software This publication does not address state law governing the formation, operation, or termination of limited liability companies. Online tax software This publication does not address any state taxes. Online tax software Comments and suggestions. Online tax software   We welcome your comments about this publication and your suggestions for future editions. Online tax software   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Online tax software NW, IR–6526 Washington, DC 20224   We respond to many letters by telephone. Online tax software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Online tax software   You can email us at *taxforms@irs. Online tax software gov. Online tax software (The asterisk must be included in the address. Online tax software ) Please put “Publications Comment” on the subject line. Online tax software Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products. Online tax software Ordering forms and publications. Online tax software   Visit www. Online tax software irs. Online tax software gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Online tax software Internal Revenue Service1201 N. Online tax software Mitsubishi MotorwayBloomington, IL 61705-6613 Tax questions. Online tax software   If you have a tax question, check the information available on www. Online tax software irs. Online tax software gov or call 1-800-829-1040. Online tax software We cannot answer tax questions sent to either of the above addresses. Online tax software Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 505 Tax Withholding and Estimated Tax 535 Business Expenses 541 Partnerships 542 Corporations 544 Sales and Other Dispositions of Assets 583 Starting a Business and Keeping Records 925 Passive Activity and At-Risk Rules Form (and Instructions) 1065 U. Online tax software S. Online tax software Return of Partnership Income 1120 U. Online tax software S. Online tax software Corporation Income Tax Return 1120S U. Online tax software S. Online tax software Income Tax Return for an S Corporation 2553 Election by a Small Business Corporation 8832 Entity Classification Election See How To Get More Information near the end of this publication for information about getting publications and forms. Online tax software Prev  Up  Next   Home   More Online Publications