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

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

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

3. E-File for FREE

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

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

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

Tax Amended

2013 Irs Form 1040 EzTaxes Due 2012Printable 1040ez PdfFile 2009 Taxes FreeH & R Block ComTurbo Tax Amended ReturnHow To File A Amended Tax ReturnStateincometaxformForm 1040 EzTax For StudentsBlank Printable 1040ez FormIrs E File 2012Military Tax Filing2011 1040 Tax FormState Income Tax By StateWhere To Send 1040xIrs 1040 Ez Form 2012Dfas MilTax AmendedWhere Can I File Back Taxes OnlineHow To Ammend Your TaxesHr Block Free File1040a 2011 Tax FormFree Taxes1040ez 20101040ez Irs FormHighest State TaxesFile Free Taxes For 2011 No Printing NeededTurbotax 2012 Amended ReturnFile State Return FreeFiling State Taxes FreeTax Act 2009Free Federal & State Tax FilingFiling A 1040 EzWww Aarp Org Taxaide1040x Online SoftwareFederal Tax Form 1040x1042nr EzTaxes Online FreeHow To File An Amended Tax Return 2011

Tax Amended

Tax amended Publication 15-A - Additional Material Prev  Up  Next   Home   More Online Publications
Español

Bureau of Alcohol, Tobacco, Firearms, and Explosives

The Bureau of Alcohol, Tobacco, Firearms, and Explosives enforces federal criminal laws regulating the firearms and explosives industries.

Contact the Agency or Department

Website: Bureau of Alcohol, Tobacco, Firearms, and Explosives

E-mail:

Address: 99 New York Avenue, NE, Room 5S 144
Washington, DC 20226

Phone Number: (202) 648-7777

Toll-free: (800) 800-3855

Text Message: Text ATF + your message to 274637

Forms: Bureau of Alcohol, Tobacco, Firearms, and Explosives Forms

The Tax Amended

Tax amended 8. Tax amended   Business Expenses Table of Contents Introduction Useful Items - You may want to see: Bad DebtsAccrual method. Tax amended Cash method. Tax amended Car and Truck ExpensesOffice in the home. Tax amended Methods for Deducting Car and Truck Expenses Reimbursing Your Employees for Expenses Depreciation Employees' PayFringe benefits. Tax amended InsuranceHow to figure the deduction. Tax amended Interest Legal and Professional FeesTax preparation fees. Tax amended Pension Plans Rent Expense Taxes Travel, Meals, and EntertainmentTransportation. Tax amended Taxi, commuter bus, and limousine. Tax amended Baggage and shipping. Tax amended Car or truck. Tax amended Meals and lodging. Tax amended Cleaning. Tax amended Telephone. Tax amended Tips. Tax amended More information. Tax amended Business Use of Your HomeExceptions to exclusive use. Tax amended Other Expenses You Can Deduct Expenses You Cannot Deduct Introduction You can deduct the costs of operating your business. Tax amended These costs are known as business expenses. Tax amended These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year. Tax amended To be deductible, a business expense must be both ordinary and necessary. Tax amended An ordinary expense is one that is common and accepted in your field of business. Tax amended A necessary expense is one that is helpful and appropriate for your business. Tax amended An expense does not have to be indispensable to be considered necessary. Tax amended For more information about the general rules for deducting business expenses, see chapter 1 in Publication 535, Business Expenses. Tax amended If you have an expense that is partly for business and partly personal, separate the personal part from the business part. Tax amended The personal part is not deductible. Tax amended Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 946 How To Depreciate Property See chapter 12 for information about getting publications and forms. Tax amended Bad Debts If someone owes you money you cannot collect, you have a bad debt. Tax amended There are two kinds of bad debts, business bad debts and nonbusiness bad debts. Tax amended A business bad debt is generally one that comes from operating your trade or business. Tax amended You may be able to deduct business bad debts as an expense on your business tax return. Tax amended Business bad debt. Tax amended   A business bad debt is a loss from the worthlessness of a debt that was either of the following. Tax amended Created or acquired in your business. Tax amended Closely related to your business when it became partly or totally worthless. Tax amended A debt is closely related to your business if your primary motive for incurring the debt is a business reason. Tax amended   Business bad debts are mainly the result of credit sales to customers. Tax amended They can also be the result of loans to suppliers, clients, employees, or distributors. Tax amended Goods and services customers have not paid for are shown in your books as either accounts receivable or notes receivable. Tax amended If you are unable to collect any part of these accounts or notes receivable, the uncollectible part is a business bad debt. Tax amended    You can take a bad debt deduction for these accounts and notes receivable only if the amount you were owed was included in your gross income either for the year the deduction is claimed or for a prior year. Tax amended Accrual method. Tax amended   If you use an accrual method of accounting, you normally report income as you earn it. Tax amended You can take a bad debt deduction for an uncollectible receivable if you have included the uncollectible amount in income. Tax amended Cash method. Tax amended   If you use the cash method of accounting, you normally report income when you receive payment. Tax amended You cannot take a bad debt deduction for amounts owed to you that you have not received and cannot collect if you never included those amounts in income. Tax amended More information. Tax amended   For more information about business bad debts, see chapter 10 in Publication 535. Tax amended Nonbusiness bad debts. Tax amended   All other bad debts are nonbusiness bad debts and are deductible as short-term capital losses on Form 8949 and Schedule D (Form 1040). Tax amended For more information on nonbusiness bad debts, see Publication 550, Investment Income and Expenses. Tax amended Car and Truck Expenses If you use your car or truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle. Tax amended You also may be able to deduct other costs of local transportation and traveling away from home overnight on business. Tax amended You may qualify for a tax credit for qualified plug-in electric vehicles, qualified plug-in electric drive motor vehicles, and alternative motor vehicles you place in service during the year. Tax amended See Form 8936 and Form 8910 for more information. Tax amended Local transportation expenses. Tax amended   Local transportation expenses include the ordinary and necessary costs of all the following. Tax amended Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Tax amended Tax home is defined later. Tax amended Visiting clients or customers. Tax amended Going to a business meeting away from your regular workplace. Tax amended Getting from your home to a temporary workplace when you have one or more regular places of work. Tax amended These temporary workplaces can be either within the area of your tax home or outside that area. Tax amended Local business transportation does not include expenses you have while traveling away from home overnight. Tax amended Those expenses are deductible as travel expenses and are discussed later under Travel, Meals, and Entertainment. Tax amended However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Tax amended   Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Tax amended It includes the entire city or general area in which your business or work is located. Tax amended Example. Tax amended You operate a printing business out of rented office space. Tax amended You use your van to deliver completed jobs to your customers. Tax amended You can deduct the cost of round-trip transportation between your customers and your print shop. Tax amended    You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. Tax amended These costs are personal commuting expenses. Tax amended Office in the home. Tax amended   Your workplace can be your home if you have an office in your home that qualifies as your principal place of business. Tax amended For more information, see Business Use of Your Home, later. Tax amended Example. Tax amended You are a graphics designer. Tax amended You operate your business out of your home. Tax amended Your home qualifies as your principal place of business. Tax amended You occasionally have to drive to your clients to deliver your completed work. Tax amended You can deduct the cost of the round-trip transportation between your home and your clients. Tax amended Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. Tax amended Standard mileage rate. Tax amended Actual expenses. Tax amended Standard mileage rate. Tax amended   You may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Tax amended For 2013, the standard mileage rate is 56. Tax amended 5 cents per mile. Tax amended    If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls. Tax amended Choosing the standard mileage rate. Tax amended   If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. Tax amended In later years, you can choose to use either the standard mileage rate or actual expenses. Tax amended   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Tax amended Standard mileage rate not allowed. Tax amended   You cannot use the standard mileage rate if you: Operate five or more cars at the same time, Claimed a depreciation deduction using any method other than straight line, for example, ACRS or MACRS, Claimed a section 179 deduction on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Tax amended Parking fees and tolls. Tax amended   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Tax amended (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Tax amended ) Actual expenses. Tax amended   If you do not choose to use the standard mileage rate, you may be able to deduct your actual car or truck expenses. Tax amended    If you qualify to use both methods, figure your deduction both ways to see which gives you a larger deduction. Tax amended   Actual car expenses include the costs of the following items. Tax amended Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Tax amended You can divide your expenses based on the miles driven for each purpose. Tax amended Example. Tax amended You are the sole proprietor of a flower shop. Tax amended You drove your van 20,000 miles during the year. Tax amended 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use (including commuting miles). Tax amended You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Tax amended More information. Tax amended   For more information about the rules for claiming car and truck expenses, see Publication 463. Tax amended Reimbursing Your Employees for Expenses You generally can deduct the amount you reimburse your employees for car and truck expenses. Tax amended The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Tax amended For details, see chapter 11 in Publication 535. Tax amended That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Tax amended Depreciation If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Tax amended You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. Tax amended This method of deducting the cost of business property is called depreciation. Tax amended The discussion here is brief. Tax amended You will find more information about depreciation in Publication 946. Tax amended What property can be depreciated?   You can depreciate property if it meets all the following requirements. Tax amended It must be property you own. Tax amended It must be used in business or held to produce income. Tax amended You never can depreciate inventory (explained in chapter 2) because it is not held for use in your business. Tax amended It must have a useful life that extends substantially beyond the year it is placed in service. Tax amended It must have a determinable useful life, which means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Tax amended You never can depreciate the cost of land because land does not wear out, become obsolete, or get used up. Tax amended It must not be excepted property. Tax amended This includes property placed in service and disposed of in the same year. Tax amended Repairs. Tax amended    You cannot depreciate repairs and replacements that do not increase the value of your property, make it more useful, or lengthen its useful life. Tax amended You can deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. Tax amended Depreciation method. Tax amended   The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). Tax amended MACRS is discussed in detail in Publication 946. Tax amended Section 179 deduction. Tax amended   You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Tax amended This deduction is known as the “section 179 deduction. Tax amended ” The maximum amount you can elect to deduct during 2013 is generally $500,000 (higher limits apply to certain property). Tax amended See IRC 179(e). Tax amended   This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Tax amended The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2013 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2013). Tax amended Special rules apply to trucks and vans. Tax amended For more information, see Publication 946. Tax amended It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction. Tax amended    Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. Tax amended For more information, see the Instructions for Form 4562 or Publication 946. Tax amended Listed property. Tax amended   You must follow special rules and recordkeeping requirements when depreciating listed property. Tax amended Listed property is any of the following. Tax amended Most passenger automobiles. Tax amended Most other property used for transportation. Tax amended Any property of a type generally used for entertainment, recreation, or amusement. Tax amended Certain computers and related peripheral equipment. Tax amended   For more information about listed property, see Publication 946. Tax amended Form 4562. Tax amended   Use Form 4562, Depreciation and Amortization, if you are claiming any of the following. Tax amended Depreciation on property placed in service during the current tax year. Tax amended A section 179 deduction. Tax amended Depreciation on any listed property (regardless of when it was placed in service). Tax amended    If you have to use Form 4562, you must file Schedule C. Tax amended You cannot use Schedule C-EZ. Tax amended   Employees' Pay You can generally deduct on Schedule C the pay you give your employees for the services they perform for your business. Tax amended The pay may be in cash, property, or services. Tax amended To be deductible, your employees' pay must be an ordinary and necessary expense and you must pay or incur it in the tax year. Tax amended In addition, the pay must meet both the following tests. Tax amended The pay must be reasonable. Tax amended The pay must be for services performed. Tax amended Chapter 2 in Publication 535 explains and defines these requirements. Tax amended You cannot deduct your own salary or any personal withdrawals you make from your business. Tax amended As a sole proprietor, you are not an employee of the business. Tax amended If you had employees during the year, you must use Schedule C. Tax amended You cannot use Schedule C-EZ. Tax amended Kinds of pay. Tax amended   Some of the ways you may provide pay to your employees are listed below. Tax amended For an explanation of each of these items, see chapter 2 in Publication 535. Tax amended Awards. Tax amended Bonuses. Tax amended Education expenses. Tax amended Fringe benefits (discussed later). Tax amended Loans or advances you do not expect the employee to repay if they are for personal services actually performed. Tax amended Property you transfer to an employee as payment for services. Tax amended Reimbursements for employee business expenses. Tax amended Sick pay. Tax amended Vacation pay. Tax amended Fringe benefits. Tax amended   A fringe benefit is a form of pay for the performance of services. Tax amended The following are examples of fringe benefits. Tax amended Benefits under qualified employee benefit programs. Tax amended Meals and lodging. Tax amended The use of a car. Tax amended Flights on airplanes. Tax amended Discounts on property or services. Tax amended Memberships in country clubs or other social clubs. Tax amended Tickets to entertainment or sporting events. Tax amended   Employee benefit programs include the following. Tax amended Accident and health plans. Tax amended Adoption assistance. Tax amended Cafeteria plans. Tax amended Dependent care assistance. Tax amended Educational assistance. Tax amended Group-term life insurance coverage. Tax amended Welfare benefit funds. Tax amended   You can generally deduct the cost of fringe benefits you provide on your Schedule C in whatever category the cost falls. Tax amended For example, if you allow an employee to use a car or other property you lease, deduct the cost of the lease as a rent or lease expense. Tax amended If you own the property, include your deduction for its cost or other basis as a section 179 deduction or a depreciation deduction. Tax amended    You may be able to exclude all or part of the fringe benefits you provide from your employees' wages. Tax amended For more information about fringe benefits and the exclusion of benefits, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Tax amended Insurance You can generally deduct premiums you pay for the following kinds of insurance related to your business. Tax amended Fire, theft, flood, or similar insurance. Tax amended Credit insurance that covers losses from business bad debts. Tax amended Group hospitalization and medical insurance for employees, including long-term care insurance. Tax amended Liability insurance. Tax amended Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Tax amended Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Tax amended Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Tax amended Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Tax amended Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Tax amended If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Tax amended If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Tax amended Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract. Tax amended Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Tax amended Nondeductible premiums. Tax amended   You cannot deduct premiums on the following kinds of insurance. Tax amended Self-insurance reserve funds. Tax amended You cannot deduct amounts credited to a reserve set up for self-insurance. Tax amended This applies even if you cannot get business insurance coverage for certain business risks. Tax amended However, your actual losses may be deductible. Tax amended For more information, see Publication 547, Casualties, Disasters, and Thefts. Tax amended Loss of earnings. Tax amended You cannot deduct premiums for a policy that pays for your lost earnings due to sickness or disability. Tax amended However, see item (8) in the previous list. Tax amended Certain life insurance and annuities. Tax amended For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Tax amended You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Tax amended A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Tax amended For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Tax amended The disallowance applies without regard to whom the policy covers. Tax amended Insurance to secure a loan. Tax amended If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Tax amended Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Tax amended In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. Tax amended Self-employed health insurance deduction. Tax amended   You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family. Tax amended How to figure the deduction. Tax amended   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Tax amended However, if any of the following apply, you must use the worksheet in chapter 6 of Publication 535. Tax amended You have more than one source of income subject to self-employment tax. Tax amended You file Form 2555 or Form 2555-EZ (relating to foreign earned income). Tax amended You are using amounts paid for qualified long-term care insurance to figure the deduction. Tax amended Prepayment. Tax amended   You cannot deduct expenses in advance, even if you pay them in advance. Tax amended This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Tax amended Example. Tax amended In 2013, you signed a 3-year insurance contract. Tax amended Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Tax amended You can deduct in 2014 and 2015 the premium allocable to those years. Tax amended More information. Tax amended   For more information about deducting insurance, see chapter 6 in Publication 535. Tax amended Interest You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your business. Tax amended Interest relates to your business if you use the proceeds of the loan for a business expense. Tax amended It does not matter what type of property secures the loan. Tax amended You can deduct interest on a debt only if you meet all of the following requirements. Tax amended You are legally liable for that debt. Tax amended Both you and the lender intend that the debt be repaid. Tax amended You and the lender have a true debtor-creditor relationship. Tax amended You cannot deduct on Schedule C or C-EZ the interest you paid on personal loans. Tax amended If a loan is part business and part personal, you must divide the interest between the personal part and the business part. Tax amended Example. Tax amended In 2013, you paid $600 interest on a car loan. Tax amended During 2013, you used the car 60% for business and 40% for personal purposes. Tax amended You are claiming actual expenses on the car. Tax amended You can only deduct $360 (60% × $600) for 2013 on Schedule C or C-EZ. Tax amended The remaining interest of $240 is a nondeductible personal expense. Tax amended More information. Tax amended   For more information about deducting interest, see chapter 4 in Publication 535. Tax amended That chapter explains the following items. Tax amended Interest you can deduct. Tax amended Interest you cannot deduct. Tax amended How to allocate interest between personal and business use. Tax amended When to deduct interest. Tax amended The rules for a below-market interest rate loan. Tax amended (This is generally a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Tax amended ) Legal and Professional Fees Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible on Schedule C or C-EZ. Tax amended However, you usually cannot deduct legal fees you pay to acquire business assets. Tax amended Add them to the basis of the property. Tax amended If the fees include payments for work of a personal nature (such as making a will), you can take a business deduction only for the part of the fee related to your business. Tax amended The personal part of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. Tax amended For more information, see Publication 529, Miscellaneous Deductions. Tax amended Tax preparation fees. Tax amended   You can deduct on Schedule C or C-EZ the cost of preparing that part of your tax return relating to your business as a sole proprietor or statutory employee. Tax amended You can deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. Tax amended   You can also deduct on Schedule C or C-EZ the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor or statutory employee. Tax amended Pension Plans You can set up and maintain the following small business retirement plans for yourself and your employees. Tax amended SEP (Simplified Employee Pension) plans. Tax amended SIMPLE (Savings Incentive Match Plan for Employees) plans. Tax amended Qualified plans (including Keogh or H. Tax amended R. Tax amended 10 plans). Tax amended SEP, SIMPLE, and qualified plans offer you and your employees a tax favored way to save for retirement. Tax amended You can deduct contributions you make to the plan for your employees on line 19 of Schedule C. Tax amended If you are a sole proprietor, you can deduct contributions you make to the plan for yourself on line 28 of Form 1040. Tax amended You can also deduct trustees' fees if contributions to the plan do not cover them. Tax amended Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. Tax amended You may also be able to claim a tax credit of 50% of the first $1,000 of qualified startup costs if you begin a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. Tax amended Under certain plans, employees can have you contribute limited amounts of their before-tax pay to a plan. Tax amended These amounts (and earnings on them) are generally tax free until your employees receive distributions from the plan. Tax amended For more information on retirement plans for small business, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Tax amended Publication 590, Individual Retirement Arrangements (IRAs), discusses other tax favored ways to save for retirement. Tax amended Rent Expense Rent is any amount you pay for the use of property you do not own. Tax amended In general, you can deduct rent as a business expense only if the rent is for property you use in your business. Tax amended If you have or will receive equity in or title to the property, you cannot deduct the rent. Tax amended Unreasonable rent. Tax amended   You cannot take a rental deduction for unreasonable rents. Tax amended Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Tax amended Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Tax amended Rent is not unreasonable just because it is figured as a percentage of gross receipts. Tax amended   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Tax amended For a list of the other related persons, see section 267 of the Internal Revenue Code. Tax amended Rent on your home. Tax amended   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Tax amended You must meet the requirements for business use of your home. Tax amended For more information, see Business Use of Your Home , later. Tax amended Rent paid in advance. Tax amended   Generally, rent paid in your business is deductible in the year paid or accrued. Tax amended If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Tax amended You can deduct the rest of your payment only over the period to which it applies. Tax amended More information. Tax amended   For more information about rent, see chapter 3 in Publication 535. Tax amended Taxes You can deduct on Schedule C or C-EZ various federal, state, local, and foreign taxes directly attributable to your business. Tax amended Income taxes. Tax amended   You can deduct on Schedule C or C-EZ a state tax on gross income (as distinguished from net income) directly attributable to your business. Tax amended You can deduct other state and local income taxes on Schedule A (Form 1040) if you itemize your deductions. Tax amended Do not deduct federal income tax. Tax amended Employment taxes. Tax amended   You can deduct the social security, Medicare, and federal unemployment (FUTA) taxes you paid out of your own funds as an employer. Tax amended Employment taxes are discussed briefly in chapter 1. Tax amended You can also deduct payments you made as an employer to a state unemployment compensation fund or to a state disability benefit fund. Tax amended Deduct these payments as taxes. Tax amended Self-employment tax. Tax amended   You can deduct one-half of your self-employment tax on line 27 of Form 1040. Tax amended Self-employment tax is discussed in chapters 1 and 10. Tax amended Personal property tax. Tax amended   You can deduct on Schedule C or C-EZ any tax imposed by a state or local government on personal property used in your business. Tax amended   You can also deduct registration fees for the right to use property within a state or local area. Tax amended Example. Tax amended May and Julius Winter drove their car 7,000 business miles out of a total of 10,000 miles. Tax amended They had to pay $25 for their annual state license tags and $20 for their city registration sticker. Tax amended They also paid $235 in city personal property tax on the car, for a total of $280. Tax amended They are claiming their actual car expenses. Tax amended Because they used the car 70% for business, they can deduct 70% of the $280, or $196, as a business expense. Tax amended Real estate taxes. Tax amended   You can deduct on Schedule C or C-EZ the real estate taxes you pay on your business property. Tax amended Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. Tax amended The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Tax amended   For more information about real estate taxes, see chapter 5 in Publication 535. Tax amended That chapter explains special rules for deducting the following items. Tax amended Taxes for local benefits, such as those for sidewalks, streets, water mains, and sewer lines. Tax amended Real estate taxes when you buy or sell property during the year. Tax amended Real estate taxes if you use an accrual method of accounting and choose to accrue real estate tax related to a definite period ratably over that period. Tax amended Sales tax. Tax amended   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. Tax amended If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. Tax amended If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. Tax amended If the property is depreciable, add the sales tax to the basis for depreciation. Tax amended For information on the basis of property, see Publication 551, Basis of Assets. Tax amended    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Tax amended Do not include these taxes in gross receipts or sales. Tax amended Excise taxes. Tax amended   You can deduct on Schedule C or C-EZ all excise taxes that are ordinary and necessary expenses of carrying on your business. Tax amended Excise taxes are discussed briefly in chapter 1. Tax amended Fuel taxes. Tax amended   Taxes on gasoline, diesel fuel, and other motor fuels you use in your business are usually included as part of the cost of the fuel. Tax amended Do not deduct these taxes as a separate item. Tax amended   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. Tax amended For more information, see Publication 510, Excise Taxes. Tax amended Travel, Meals, and Entertainment This section briefly explains the kinds of travel and entertainment expenses you can deduct on Schedule C or C-EZ. Tax amended Table 8-1. Tax amended When Are Entertainment Expenses Deductible? (Note. Tax amended The following is a summary of the rules for deducting entertainment expenses. Tax amended For more details about these rules, see Publication 463. Tax amended ) General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Tax amended Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Tax amended An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Tax amended A necessary expense is one that is helpful and appropriate, although not necessarily required, for your business. Tax amended Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Tax amended   Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion. Tax amended Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Tax amended You cannot deduct expenses that are lavish or extravagant under the circumstances. Tax amended You generally can deduct only 50% of your unreimbursed entertainment expenses. Tax amended Travel expenses. Tax amended   These are the ordinary and necessary expenses of traveling away from home for your business. Tax amended You are traveling away from home if both the following conditions are met. Tax amended Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work. Tax amended You need to get sleep or rest to meet the demands of your work while away from home. Tax amended Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Tax amended It includes the entire city or general area in which your business is located. Tax amended See Publication 463 for more information. Tax amended   The following is a brief discussion of the expenses you can deduct. Tax amended Transportation. Tax amended   You can deduct the cost of travel by airplane, train, bus, or car between your home and your business destination. Tax amended Taxi, commuter bus, and limousine. Tax amended   You can deduct fares for these and other types of transportation between the airport or station and your hotel, or between the hotel and your work location away from home. Tax amended Baggage and shipping. Tax amended   You can deduct the cost of sending baggage and sample or display material between your regular and temporary work locations. Tax amended Car or truck. Tax amended   You can deduct the costs of operating and maintaining your vehicle when traveling away from home on business. Tax amended You can deduct actual expenses or the standard mileage rate (discussed earlier under Car and Truck Expenses), as well as business-related tolls and parking. Tax amended If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Tax amended Meals and lodging. Tax amended   You can deduct the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Tax amended In most cases, you can deduct only 50% of your meal expenses. Tax amended Cleaning. Tax amended   You can deduct the costs of dry cleaning and laundry while on your business trip. Tax amended Telephone. Tax amended   You can deduct the cost of business calls while on your business trip, including business communication by fax machine or other communication devices. Tax amended Tips. Tax amended   You can deduct the tips you pay for any expense in this list. Tax amended More information. Tax amended   For more information about travel expenses, see Publication 463. Tax amended Entertainment expenses. Tax amended   You may be able to deduct business-related entertainment expenses for entertaining a client, customer, or employee. Tax amended In most cases, you can deduct only 50% of these expenses. Tax amended   The following are examples of entertainment expenses. Tax amended Entertaining guests at nightclubs, athletic clubs, theaters, or sporting events. Tax amended Providing meals, a hotel suite, or a car to business customers or their families. Tax amended To be deductible, the expenses must meet the rules listed in Table 8-1. Tax amended For details about these rules, see Publication 463. Tax amended Reimbursing your employees for expenses. Tax amended   You generally can deduct the amount you reimburse your employees for travel and entertainment expenses. Tax amended The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Tax amended For details, see chapter 11 in Publication 535. Tax amended That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Tax amended Business Use of Your Home To deduct expenses related to the part of your home used for business, you must meet specific requirements. Tax amended Even then, your deduction may be limited. Tax amended To qualify to claim expenses for business use of your home, you must meet the following tests. Tax amended Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use , later), Regular, For your business, and The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your business, or A separate structure (not attached to your home) you use in connection with your business. Tax amended Exclusive use. Tax amended   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Tax amended The area used for business can be a room or other separately identifiable space. Tax amended The space does not need to be marked off by a permanent partition. Tax amended   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Tax amended Example. Tax amended You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Tax amended Your family also uses the den for recreation. Tax amended The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. Tax amended Exceptions to exclusive use. Tax amended   You do not have to meet the exclusive use test if you use part of your home in either of the following ways. Tax amended For the storage of inventory or product samples. Tax amended As a daycare facility. Tax amended For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Tax amended Regular use. Tax amended   To qualify under the regular use test, you must use a specific area of your home for business on a continuing basis. Tax amended You do not meet the test if your business use of the area is only occasional or incidental, even if you do not use that area for any other purpose. Tax amended Principal place of business. Tax amended   You can have more than one business location, including your home, for a single trade or business. Tax amended To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that business. Tax amended To determine your principal place of business, you must consider all the facts and circumstances. Tax amended   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Tax amended You use it exclusively and regularly for administrative or management activities of your business. Tax amended You have no other fixed location where you conduct substantial administrative or management activities of your business. Tax amended   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Tax amended The relative importance of the activities performed at each location. Tax amended If the relative importance factor does not determine your principal place of business, you can also consider the time spent at each location. Tax amended   If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Tax amended However, for other ways to qualify to deduct home office expenses, see Publication 587. Tax amended Deduction limit. Tax amended   If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. Tax amended If your gross income from the business use is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. Tax amended   Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation (with depreciation taken last), allocable to the business is limited to the gross income from the business use of your home minus the sum of the following. Tax amended The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). Tax amended The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. Tax amended Do not include in (2) above your deduction for one-half of your self-employment tax. Tax amended   Use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Tax amended New simplified method. Tax amended    The IRS now provides a simplified method to determine your expenses for business use of your home. Tax amended The simplified method is an alternative to calculating and substantiating actual expenses. Tax amended In most cases, you will figure your deduction by multiplying $5 by the area of your home used for a qualified business use. Tax amended The area you use to figure your deduction is limited to 300 square feet. Tax amended For more information, see the Instructions for Schedule C. Tax amended More information. Tax amended   For more information on deducting expenses for the business use of your home, see Publication 587. Tax amended Other Expenses You Can Deduct You may also be able to deduct the following expenses. Tax amended See Publication 535 to find out whether you can deduct them. Tax amended Advertising. Tax amended Bank fees. Tax amended Donations to business organizations. Tax amended Education expenses. Tax amended Energy efficient commercial buildings deduction expenses. Tax amended Impairment-related expenses. Tax amended Interview expense allowances. Tax amended Licenses and regulatory fees. Tax amended Moving machinery. Tax amended Outplacement services. Tax amended Penalties and fines you pay for late performance or nonperformance of a contract. Tax amended Repairs that keep your property in a normal efficient operating condition. Tax amended Repayments of income. Tax amended Subscriptions to trade or professional publications. Tax amended Supplies and materials. Tax amended Utilities. Tax amended Expenses You Cannot Deduct You usually cannot deduct the following as business expenses. Tax amended For more information, see Publication 535. Tax amended Bribes and kickbacks. Tax amended Charitable contributions. Tax amended Demolition expenses or losses. Tax amended Dues to business, social, athletic, luncheon, sporting, airline, and hotel clubs. Tax amended Lobbying expenses. Tax amended Penalties and fines you pay to a governmental agency or instrumentality because you broke the law. Tax amended Personal, living, and family expenses. Tax amended Political contributions. Tax amended Repairs that add to the value of your property or significantly increase its life. Tax amended Prev  Up  Next   Home   More Online Publications