// $ - defines a major category (ie a page on the tax deduction finder place) (max of 10)
// ~ - defines a category of expense (max of 10)
// = - defines the rules for eligibility (1,2)(3) indicates that ?'s #1 & 2 must be checked OR ? #3
// % - questions for eligibility (max of 10)
// @ - IRS form for this tax ded
// ! - limits of this tax ded
// # - IRS reference for this tax ded
// * - txn,txcpy ie 34,2 refers to txn=34 and txcpy=2
// ? - additional help
// ^ End of Table - ends the table
^ Start of Table
$Itemized deductions: Medical, taxes, and charity
~Doctors, Hospitals, and other Medical Services
%I had expenses for medical services, such as doctor and dentist fees, eyeglasses, lab fees, or stop-smoking programs.
%The medical services were for myself, my spouse, or my dependents.
%The medical services were for my child, for whom the child's other parent claimed the tax exemption.
%The medical services were for a person for whom I met the tests for multiple support.
%The medical services were for diagnosis, cure, mitigation, treatment or prevention of disease, or any treatment that affects a part or function of the body.
%Treatment was primarily to alleviate or prevent a physical or mental defect or illness, and not solely for cosmetic reasons or merely beneficial to general health.
=(1,2,5,6)(1,3,5,6)(1,4,5,6)
@Deduct as Medical and Dental Expense on Schedule A.
!Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502, Medical and Dental Expenses
?If your medical expenses may have exceeded 7.5% of your adjusted gross income last year, check this box.
*484,1
~Donations - Cash
%I made cash donations to charitable, religious, scientific, educational, or other nonprofit organizations.
%The donations weren't made directly to individuals or to foreign charities (except certain Canadian or Mexican charities).
%I didn't receive any benefit as a result of my donation, or I reduced the amount of the donation by the value of any goods and services received.
%I have a statement from the organization for any single donation of $250 or more.
=(1,2,3,4)
@Deduct on Schedule A as Gifts to Charity (by cash or check).
!Your deduction for cash charitable contributions to most organizations is limited to 50% of your adjusted gross income (AGI). Your deduction for cash contributions to certain organizations, such as veterans' organization and fraternal societies, is limited to 30% of your AGI. You can carry any excess contributions over to future years. Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17 and Publication 526, Charitable Contributions.
?You may be able to take a tax deduction for your cash contributions to qualified charities.
*280,1
~Donations - Noncash
%I made noncash donations to charitable, religious, scientific, educational, or other nonprofit organizations.
%The donations weren't made directly to individuals or to foreign charities (except certain Canadian or Mexican charities).
%I didn't receive any benefit as a result of my contribution, or I reduced the amount of the contribution by the value of any goods and services received.
%I have a receipt for any donation of $250 or more.
=(1,2,3,4)
@For long-term capital gain property, such as stocks or personal property, deduct the fair-market value of the contributed property on Schedule A as Gifts to Charity (other than by cash or check). For ordinary income property, such as inventory, or short-term capital gain property, deduct the lower of your basis or fair market value. If the total claimed value of your donations exceeds $500, you must also complete Form 8283. You may need an appraisal for property deductions exceeding $5,000.
!The total of all charitable contributions can't exceed 50% of adjusted gross income (AGI), but you can carry over the excess to future years. In addition, the deductions for certain kinds of gifts are limited to 30% or 20% of your AGI. See IRS Publication 526, Charitable Contributions. Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married filing separately).
#See IRS Publication 526, Charitable Contributions, and Publication 17
?If you made noncash charitable contributions, you may qualify for a tax deduction.
*485,1
~Health Insurance
%I paid premiums for health insurance.
%The policy provides payment for medical expenses such as hospitalization, doctor visits, dental work and prescription drugs.
%The coverage was for myself, my spouse, or my dependent.
%The insurance covered my child for whom the child's other parent claimed the tax exemption.
%The premiums were paid for a person for whom I met the tests for multiple support.
=(1,2,3,5)(1,2,4,5)
@Deduct as Medical and Dental Expenses on Schedule A. If you are self-employed, you can deduct 60% (in 2001) of your premiums as an adjustment on Form 1040, whether or not you itemize deductions. This percentage rises to 70% in 2002, and to 100% for 2003 and thereafter. You can deduct the balance of your self-employed health insurance premiums on Schedule A.
!Your total medical expenses on Schedule A are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502
?If you paid significant medical expenses, you may qualify to deduct not only those expenses but any premiums you paid for health insurance.
*484,1
~Lifetime Care Advance Payments
%I paid lifetime retirement-home care fee for myself, my spouse, or an impaired dependent.
%The agreement requires a specific fee payment as a condition of the homeÆs promise to provide lifetime care that includes medical care.
%I have properly allocated the portion of the care fee that the retirement home specifies as for medical care.
=(1,2,3)
@Deduct as Medical and Dental Expenses on Schedule A.
!Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married filing separately).
#See IRS Publication 502
?Payments for lifetime care made to retirement homes or to facilities for the mentally or physically impaired may be deductible.
*484,1
~Long-Term Care
%I paid premiums for insurance intended solely for long-term care of the chronically ill.
%The policy was for myself, my spouse or a dependent.
%The insurance is guaranteed renewable.
%The insurance doesn't provide for cash surrender value or money that can be assigned, pledged or borrowed.
%The policy doesn't reimburse expenses covered by Medicare, unless Medicare is the secondary payer, or payments are made per diem.
=(1,2,3,4,5)
@Deduct as Medical and Dental Expense on Schedule A.
!A portion of premiums can be deducted based on your age at the end of the year. Amounts for 2001 are: age 40 or younger, $220; ages 41 to 50, $410; ages 51 to 60, $820; ages 61 to 70, $2,200; and over age 70, $2,750. Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502.
?A portion of the premiums you pay for long-term care insurance may be deductible as medical expenses.
*484,1
~Medical Savings Account
%I put money into a qualified medical savings account.
%I am self-employed or employed by a "small employer."
%My employer or I also paid for health insurance with a deductible of $1,550 to $2,350, or $3,100 to $4,650 for a family (2001) .
%Payment to my MSA wasn't made by my employer as a non-taxable benefit.
=(1,2,3,4)
@Report your contribution on Form 8853 and deduct as an adjustment on Form 1040.
!Your contribution is limited to 65% of your health plan's deductible (75% for family coverage). The deduction can't be more than income received from the "small employer" or from your self-employment.
?A medical savings account (MSA) allows you to save for large medical expenses and deduct your contributions to the account.
*607,1
~Medical Transportation
%I paid expenses getting to and from medical care, such as ambulance, car, train, bus, plane, taxi, and parking fees.
%The travel wasn't taken for nonmedical reasons nor for a change in environment, morale or general health improvement (even on the advice of a doctor).
%Expenses were paid for myself, my spouse, or my dependent.
%Expenses were paid for my child for whom the childÆs other parent claimed the tax exemption.
%Expenses were paid for a person for whom I met the tests for multiple support.
=(1,2,5)(1,3,5)(1,4,5)
@Deduct as Medical and dental expenses on Schedule A. For personal vehicle expenses, deduct actual gas and oil expenses or the standard medical mileage rate of 12 cents a mile (as of 2001).
!Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502
?Your expenses incurred traveling to and from a hospital, doctor's office, or other medical provider can be added to your total medical deductions.
*484,1
~Medicines and Drugs
%I paid for prescribed medication.
%The medicine requires a prescription or is insulin.
%Expenses were paid for myself, my spouse, or my dependent.
%Expenses were paid for my child, for whom the childÆs other parent claimed the tax exemption.
%Expenses were paid for a person for whom I met the tests for multiple support.
=(1,2,3)(1,2,4)(1,2,5)
@Deduct as Medical and Dental Expenses on Schedule A
!Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502
?Your unreimbursed expenses for medicine and other prescription drugs can be added to your total medical expenses.
*484,1
~Nursing Home
%I paid for medical care in a nursing or retirement home for myself, my spouse, or my dependent.
%The main reason for being in the home is for medical care.
%The main reason for being in the home is personal, and I am deducting only the cost of medical or nursing care (not lodging or meals).
=(1,2)(1,3)
@Deduct as Medical and dental expenses on Schedule A.
!Your total medical expenses are reduced by 7.5% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 502
?If you paid for medical care in a nursing home for yourself or a dependent, a portion of the expenses may be deductible.
*484,1
~Student Support
%I housed an elementary or high school exchange student through a charitable organization's educational program.
%The program was not a mutual exchange through which my child will live with a family in a foreign country.
%The student is not my relative or dependent.
%I was not reimbursed for the student's maintenance.
=(1,2,3,4)
@Deduct on Schedule A as Gifts to Charity (by cash or check).
!You may deduct up to $50 for each month the student stays in your home, counting 15 days or more of a calendar month as a full month. Your total charitable contribution deduction is limited to 50% of your adjusted gross income (AGI), but you can carry over the excess to future years. Itemized deductions are limited if AGI exceeds $132,950 ($66,475 if married and filing separately
#See IRS Publication 17 and Publication 526
?If you hosted an exchange student in your home who was sponsored by a qualified organization, you may be able to deduct up to $50 for each month the student lived with you.
*280,1
~Taxes - Estate
%I received taxable income that was included in the estate of someone who died.
%The estate paid estate taxes on this income.
=(1,2)
@Deduct on Schedule A as Other Miscellaneous Deductions (not subject to the 2% floor).
!The deduction must be claimed in the same year that you include the related income in your gross income. Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17, and Publication 529.
?If you inherit taxable income from an estate, you may deduct estate taxes paid on that income as part of the settlement.
*523,1
~Taxes - Foreign
%I paid income taxes to a foreign country or U.S. possession on non-U.S. income.
%I chose not to take the foreign tax credit for this year's taxes.
%The taxes weren't paid to a country designated by the government as engaging in terrorist activities.
%The tax wasn't paid on income exempt from U.S. tax under the foreign earned-income exclusion or the foreign housing exclusion.
=(1,2,3,4)
@Deduct on Schedule A as Other Taxes or take the foreign tax credit. In most cases, you will receive more tax benefit by taking the credit.
!Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17,, and Publication 514 - Foreign Tax Credit for Individuals
?You can generally either deduct foreign taxes that you pay as a U.S. citizen as an itemized deduction or claim the taxes as a credit against your U.S. tax.
*277,1
~Taxes - Personal Property
%I paid state or local personal property taxes, such as automobile excise tax.
%The tax is imposed annually on personal property, based on the value of the property, and levied for the general public welfare.
=(1,2)
@Deduct as Other Taxes on Schedule A.
!Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?Personal property taxes that are based on the value of the property and are assessed yearly may be deductible.
*277,1
~Taxes - Real Estate
%I paid state or local taxes on real estate I owned.
%The taxes were based on the value of the property and levied for the general public welfare.
%If I bought or sold real estate during the year, the buyer and seller each paid real estate taxes for the number of days that year that each owned the property.
%If my monthly mortgage payment includes an escrow payment for real estate taxes, I'm deducting the amount the lender actually paid on my behalf.
=(1,2,3,4)
@Deduct as Real Estate Taxes on Schedule A.
!Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?Taxes paid on your home or other real property may be deductible.
*276,1
~Taxes - State and Local Income
%I paid state or local income taxes, including amounts withheld from my pay, paid quarterly, or paid with a tax return.
%The taxes weren't paid on income exempt from federal tax, other than interest income.
=(1,2)
@Deduct as State and local income taxes on Schedule A.
!Itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?You may be able to deduct state and local income taxes. Include income withheld from your pay, quarterly estimated payments, amounts paid with a tax return, and amounts paid in response to communication from the taxing authorities.
*275,1
~Volunteer Expenses
%I paid expenses as a volunteer for a charitable organization.
%It was a qualified charitable organization such as a religious organization, school, hospital, or society for the prevention of cruelty to children or animals.
%I wasn't reimbursed for the expenses.
%The expenses were directly connected with the services I gave and were not personal, living or family expenses.
%Any expenses for travel away from home involved no significant element of personal pleasure, recreation or vacation.
%I received a statement from the organization for any unreimbursed expense of $250 or more.
=(1,2,3,4,5,6)
@Deduct as Cash Contributions on Schedule A. If you used your car, you may deduct actual direct expenses such as gas and oil, or a standard rate of 14 cents a mile.
!Expenses must be reasonable. Your total charitable contribution deduction is limited to 50% of your adjusted gross income (AGI), but you can carry over any excess to future years. Itemized deductions are limited if your AGI exceeds $132,950 ($62,500 if married and filing separately).
#See IRS Publication 17
?Did you incur any unreimbursed expenses as a volunteer to a qualified charitable organization? Those expenses may be deductible.
*280,1
$Individual deductions: Other
~Alimony
%I made cash payments to my ex-spouse that are required by a divorce or separation decree or written agreement.
%I am not obligated to make payments if my ex-spouse dies.
%The payments are not child support.
%If my spouse and I are separated under a decree of divorce or separate maintenance, we are not members of the same household.
=(1,2,3,4)
@Deduct as an Adjustment on Form 1040. You must report the recipient's Social Security number. The recipient must include the payments in income.
!Alimony paid in the first and second years may be adjusted in the third year if payments drop by more than $15,000.
#See IRS Publication 17
?Alimony payments ordered as part of a legally binding separation or a divorce settlement may be deductible.
*264,1
~Casualty - Nonbusiness
%My nonbusiness property was damaged or destroyed due to an identifiable event.
%The event was sudden, unexpected or unusual, such as a hurricane, fire, theft, or car accident.
%The property wasn't insured.
%I filed a timely insurance claim and have reduced the amount of my loss by any reimbursement or expected reimbursement.
%I can prove and support the amount I claim for the loss.
=(1,2,3,5)(1,2,4,5)
@Report on Form 4684 - Casualties and Thefts (use Section A - Personal Use Property). If insurance or other reimbursement was more than the cost of the damaged property and you didn't replace it, you may have a gain.
!Each casualty event loss is reduced by $100, plus your total personal casualty and theft losses for the year are reduced by 10% of your adjusted gross income (AGI).
?A portion of significant losses caused by a catastrophic event, such as a hurricane or earthquake, may be deductible.
*413,1
~Gambling Losses
%I had gambling losses during the year.
%I also had gambling winnings.
%I kept an accurate diary or similar record of losses and winnings.
=(1,2,3)
@Deduct on Schedule A as Other Miscellaneous Deductions.
!You can't deduct losses that are more than your winnings. You must report the full amount of winnings as income and claim your losses, up to the amount of winnings, as an itemized deduction, not subject to the 2% floor. Total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 529
?Gambling losses may be deductible up to the amount of income that you report from winnings.
*272,1
~Interest Home Mortgage
%I paid interest on a debt secured by my home.
%The mortgage was on my main home or second home (including a house, condo, boat, or similar property with sleeping, cooking, and toilet facilities.)
%I was legally obligated to make the mortgage payments.
=(1,2,3)
@Deduct on Schedule A as Home mortgage interest. If the interest wasn't reported to you on Form 1098 and you paid it to the seller of the property, you must include information about the person to whom you paid the interest.
!Generally, interest on home mortgage debt taken out on or before October 13, 1987, is fully deductible, but there are limits on debt taken out after October 13, 1987. You can generally deduct interest on debt up to $1 million ($500,000 if married filing separately) taken out to buy, build or improve a first or second home. You can deduct interest on home equity debt used for any other purpose of up to $100,000 ($50,000 if married filing separately). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17 and Publication 936
?The single biggest tax deduction for most people is home mortgage interest expense.
*283,1
~IRA - Spousal
%I contributed to a traditional Individual Retirement Account (IRA).
%My spouse or I received taxable compensation such as wages, tips, or self-employment income.
%My spouse or I received taxable alimony or separate maintenance payments.
%I was under age 70-1/2 at the end of the year.
%I contributed to my IRA during the tax year or before April 15 of the following year.
%I will file a joint return with my spouse.
=(1,2,4,5,6)(1,3,4,5,6)(1,2,3,4,5,6)
@Deduct as an Adjustment on Form 1040 or 1040A. Calculate and report the amount of any non-deductible contributions on Form 8606.
!The most you can contribute for any year is the smaller of $2,000 or the sum of your and your spouse's taxable compensation, reduced by your spouse's IRA contribution. The amount is limited if you or your spouse are covered for any part of the year by an employer (or self-employed) retirement plan and have adjusted gross income (AGI) above certain levels.
#See IRS Publication 17 and Publication 590.
?If you're filing jointly with your spouse, you may be able to make a second contribution of up to $2,000 to an IRA - which may be deductible - in your spouse's IRA account.
*481,1
~Moving - Retiree or Survivor Abroad
%I paid for a move to my new home in the United States.
%I retired, and both my former home and main job location were outside the U.S. My retirement was meant to be permanent.
%My spouse or dependent died within 6 months before the move. My spouse or dependent's main job location (and our home) at the time of death was outside the U.S.
=(1,2)(1,3)
@Complete Form 3903. The allowable expense is deducted as an Adjustment on Form 1040
!Amounts must be reasonable for the circumstances of your move. For example, the cost of traveling to your new home should be by the shortest, most direct route by conventional transportation.
#See IRS Publication 521
?If you lived abroad and move to the United States to retire or following the death of your spouse, you may qualify to deduct your moving and travel expenses.
*407,1
~Points - Fully Deductible
%I paid points or loan placement fees to obtain a mortgage secured by my main home.
%Paying points is an established business practice in my area, and the amount was not more than the points generally charged in my area.
%I use the cash method of accounting, and the points were not paid in place of items that ordinarily are separately stated on the settlement sheet.
%I took out the loan to improve my main home.
%I took out the loan to buy or build my main home.
%The points were computed as a percentage of the principal amount of the mortgage and clearly shown on the settlement statement as points charged for the mortgage.
%The funds I provided (not borrowed from the lender or mortgage broker) plus any points the seller paid, were at least as much as the points charged.
%The amount paid is clearly shown as points on the settlement statement.
=(1,2,3,4)(1,2,3,4,5,6,7,8,9)
@Deduct points that are fully deductible in the year you paid them on Schedule A as Home mortgage interest and points reported to you on Form 1098 or as Points not reported to you on Form 1098, as applicable.
!Your total itemized deductions for 2001, including points, are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 936
*284,1
~Points - Refinance
%I paid 'points' or loan placement fees to get or refinance a mortgage secured by my home.
=(1)
@If you don't meet the qualifications to fully deduct the points in the year you paid them, you may amortize them - that is, write them off over the life of the loan. Divide the total points paid by the number of months of the loan, then multiply by the number of monthly payments you made for the year. Deduct the result on Schedule A as Points not reported to you on Form 1098. When the loan is repaid in full or you sell the property, you can deduct any remaining points.
!Your total itemized deductions, including points, are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 936
*284,1
~Points - Seller Paid
%I bought a home and the seller paid points or loan placement fees for my financing.
%The financing was secured by my home.
=(1,2)
@Points paid by the seller are treated as though you had paid them because they are negotiated into the price you pay for the home. You may deduct them in full, if you otherwise qualify, or amortize them over the period of the loan. See requirements for Points - Fully Deductible and Points - Refinance.
!Your total itemized deductions are limited if adjusted gross income (AGI) exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 936
?You may be able to deduct the points paid on the purchase of your home even if the seller paid the points.
*284,1
~Repaid Income
%I had to give back money that I included in taxable income in a previous year.
%I included the amount on my tax return because I thought I had an unrestricted right to it.
=(1,2)
@If you receive income in one year, such as unemployment compensation or Social Security benefits, and you are required to repay the income in a later year, you can deduct the repayment on Schedule A as a Miscellaneous Itemized Deduction. If the repayment is more than $3,000, you may choose to take a credit against tax instead of a deduction. See Publication 17 to learn how to compute the amount of the credit.
!If the repayment is $3,000 or less, it's subject to the reduction by 2% of adjusted gross income (AGI). If the amount is $3,000, enter it on the line that's reduced by 2% of AGI. Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married filing separately.
#See IRS Publication 17.
?If you had to return income that was paid to you in advance from a previous year, you can deduct the repayment.
*257,1
~Tax Preparation Fees
%I paid for tax preparation services, advice, or software, or for E-filing of my return.
=(1)
@Deduct expenses of preparing tax schedules related 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. Deduct expenses of preparing the remainder of the return on Schedule A, Miscellaneous Itemized Deductions
!Your total miscellaneous itemized deductions are reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 529.
?If you paid for tax advice, software or preparation services, you can deduct your expenses with your other miscellaneous deductions subject to the 2% floor.
*281,1
~Theft
%Someone stole personal property from me.
%The theft was illegal under state law and done with criminal intent.
%The property wasn't covered by insurance.
%I filed a timely insurance claim and have reduced the amount of my loss by any reimbursement or expected reimbursement.
%I can prove and support the amount I claim for the loss.
=(1,2,3,5)(1,2,4,5)
@Report on Form 4684 - Casualties and Thefts (use Section A - Personal Use Property). If insurance or other reimbursement was more than the cost of the stolen property and you didn't replace it, you may have a gain.
!Each theft loss is reduced by $100, and then your total personal casualty and theft losses for the year are reduced by 10% of your adjusted gross income (AGI).
#See IRS Publication 17
?If someone stole property or money from you, you may be able to deduct a portion of the loss that wasn't covered by an insurance claim settlement.
*413,1
$Individual tax credits
~Adoption
%I paid expenses directly related to my legal adoption of a child.
%The child was under age 18 at the time or physically or mentally incapable of self care.
%Expenses were not paid illegally, and they were not for the adoption of my spouse's child or for a surrogate parenting arrangement.
%The expenses were not paid by my employer as a non-taxable benefit or by government grant.
%My filing status isn't Married Filing Separately, and I was not separated from my spouse for the last six months of the year.
=(1,2,3,4,5)
@Claim the credit on Form 8839, Qualified Adoption Expenses.
!The credit is limited to the lower of $5,000 ($6,000 for a "special needs" child) or your income tax liability. The maximum credit is reduced if your modified adjusted gross income (AGI) is over $75,000 and disallowed if your AGI is more than $115,000. If your credit exceeds your tax liability, you can carry forward the excess credit to future years.
?If you adopted a child during the year, you may be able to take a tax credit for your related expenses.
*618,1
~Child & Dependent Care Credit
%I paid someone to care for my qualifying dependent who is under age 13, or for my spouse or dependent who is incapable of self care, so I could work or look for work.
%I (and my spouse, if married) keep up a home that I live in with the qualifying individuals.
%I (and my spouse, if married) have earned income during the year.
%My spouse is a full-time student or incapacitated.
%The payments are not made to my (or my spouse's) dependent or child under age 19.
%I will identify the care provider on my tax return.
=(1,2,3,5,6)
@Claim the credit on Form 2441, Child and Dependent Care Expenses.
!Your credit is based on maximum expenses of $2,400 for one qualifying child or dependent, or $4,800 for two. The expenses are reduced by nontaxable employer dependent care benefits and are generally limited to your earned income or your spouse's earned income
#See Publication 17 and Publication 503 - Child and Dependent Care Expenses
?If you incurred child- or dependent-care expenses in order to work, you may qualify for a tax credit.
*401,1
~Elderly or Disabled Credit
%At the end of the tax year I was age 65 or older, or retired with disability income from my employer.
%I wasn't a nonresident alien at any time during the year, unless I was married to a citizen or resident and I filed a joint return.
%I didn't receive more than $5,000 of nontaxable disability income, SSN or RRSP benefits ($7,500 for joint return; $3,750 living apart from spouse).
%My adjusted gross income was under $17,500 ($25,500 if I file a joint return and my spouse and I both qualify or $20,000 if one of us qualifies; or $12,500 if I am living apart from spouse).
=(1,2,3,4)
@Complete Schedule R if you file Form 1040, or Schedule 3 if you file Form 1040A, and enter the amount in the Credits section of the tax return. You can have the IRS figure the credit for you if you fill out the front of the schedule and attach it to your tax return and write "CFE" next to the line for the credit on Form 1040 or' 1040A.
!The amount of the credit is reduced by your nontaxable pension and Social Security income. It is also reduced by the amount your adjusted gross income (AGI) exceeds certain base levels.
#Publication 524 - Credit for the Elderly or the Disabled.
?The credit for the elderly or the disabled provides a tax credit for low-income seniors and disabled persons.
*258,1
~Excess Social Security Tax Withheld Credit
%I worked for two or more employers during the year and had Social Security tax withheld.
%Neither employer withheld more than the limit, but my combined wages were above the maximum subject to tax.
=(1,2)
@Claim the credit on the Excess Social Security and RRTA tax withheld line in the Payments section of Form 1040.
!You can receive a credit if two or more employers withheld a total of more than the maximum Social Security or RRTA tax for the year. There is no maximum Medicare tax per year.
#See IRS Publication 17.
?If you worked for two or more employers last year and your income exceeded $76,200 for 2000 or $80,400 for 2001, you can get a refund of your overpaid Social Security tax.
*462,1
~Foreign Tax Credit
%I paid income taxes to a foreign country or U.S. possession on foreign income, such as dividends from a mutual fund that invests internationally.
%I chose not to take the itemized deduction for this year's taxes (see Individual Deductions).
%The taxes weren't paid to a country designated by the government as engaging in terrorist activities
%The tax wasn't paid on income exempt from U.S. tax under the foreign earned income exclusion or the foreign housing exclusion.
=(1,2,3,4)
@Claim the credit on Form 1116, Foreign Tax Credit (Individual, Estate, Trust, or Nonresident Alien Individual), which you attach to Form 1040. You cannot file Form 1040A.
!Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by the ratio of your taxable income from foreign countries divided by your total taxable income from all sources.
#See IRS Publication 514 - Foreign Tax Credit for Individuals.
?You may be able to take a dollar-for-dollar credit on your U.S. tax return for the amount of taxes you paid to a foreign government.
*277,1
$Employee business expenses
~Business Entertainment
%I spent money entertaining clients or customers.
%The expense was both ordinary and necessary to my trade or business as an employee.
%The entertainment was directly related to the active conduct of my business.
%The entertainment directly preceded or followed a substantial business discussion.
%The expense was not lavish or extravagant under the circumstances.
%I kept adequate records of my expenses.
=(1,2,3,5)(1,2,4,5)
@Deduct as Meals and Entertainment Expenses on Form 2106.
!You can deduct 50% of the unreimbursed expense. Your employee business expenses, along with other miscellaneous itemized deductions on Schedule A, are reduced by 2% of your adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 463
?If you paid for meals or entertained people in the past year for business-related reasons, check this box.
*386,1
~Business Gifts
%I gave gifts to customers and clients in the course of my business as an employee.
%The expense was both ordinary and necessary to my trade or business as an employee.
=(1,2)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A.
!Business gifts are limited to $25 per recipient, except for items such as advertising or promotional items. Include employee business expenses with other miscellaneous itemized deductions on Schedule A that are reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 463
?Check this box if you made direct or indirect gifts to individuals in the past year as an employee for business-related reasons.
*385,1
~Business Meals
%I paid money for meals and wasn't reimbursed.
%The expense was both ordinary and necessary to my trade or business as an employee.
%Meals were eaten while I was traveling away from home overnight.
%Meals were directly related to the active conduct of my business as an employee, or directly preceded or followed a substantial business discussion.
%The meals were not lavish or extravagant under the circumstances.
%I kept adequate records of my expenses.
=(1,2,3,5,6)(1,2,4,5,6)
@Deduct as Meals and Entertainment Expenses on Form 2106.
!You can deduct 50% of the unreimbursed expense. Your employee business expenses, along with other miscellaneous itemized deductions on Schedule A, are reduced by 2% of your adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 463, Publication 17
?Tax laws allow you to deduct half of your meals and entertainment expenses if theyÆre business-related. If you paid for any business-related meals and have records, check this box.
*386,1
~Car Expense Leased
%I leased a car for use in my trade or business as an employee.
%I used the car for business travel away from home overnight.
%I used the car to get from one workplace to another in the course of my business (not commuting from home).
%I used the car to visit clients or customers for my employer.
%I used the car to go to business meetings or a temporary workplace away from my regular workplace.
%I kept a log or diary or similar record of business use of the car.
%I will reduce my deduction by any reimbursement from my employer, unless the reimbursement has been included in my wages.
=(1,2,6,7)(1,3,6,7)(1,4,6,7)(1,5,6,7)
@Compute the deductible portion of vehicle expense on Form 2106, Employee Business Expenses.
!If you also use the car for personal driving, you may only deduct the portion of your expenses allocated to business travel. Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17 and Publication 463
?You may deduct the portion of your car lease payments that are directly related to conducting your business. You must prorate the costs, since commuting and personal use expenses are not deductible.
*382,1
~Car Expense Owned
%I owned a car which I used in my trade or business as an employee.
%I used the car for business travel away from home overnight.
%I used the car to get from one workplace to another in the course of my business (not commuting from home).
%I used the car to visit clients or customers for my employer.
%I used the car to go to business meetings or a temporary workplace, away from my regular workplace.
%I kept a log or diary or similar record of business use of the car.
%I will reduce my deduction by any reimbursement from my employer, unless the reimbursement has been included in my wages.
=(1,2,6,7)(1,3,6,7)(1,4,6,7)(1,5,6,7)
@Compute the deductible portion of vehicle expense on Form 2106, Employee Business Expenses.
!If you also use the car for personal driving, you must divide your expenses between business and personal use. Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17 and Publication 463
?If you use your car in your work, you may deduct the percentage of expenses you incurred that are business-related.
*382,1
~Cellular Phone
%I used my cellular phone in my trade or business as an employee.
%Use of the cellular phone was for the convenience of my employer.
%Its use was required as a condition of my employment.
=(1,2,3)
@Use Form 4562 to claim a depreciation deduction. Deduct the expense on Form 2106 as Other Business Expense or on Schedule A as Unreimbursed Employee Expense.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17 and Publication 529
?If you purchased a cellular phone as an employee for business reasons, you can deduct the costs that were directly related to conducting your business.
*385,1
~Computer
%I used my computer as an employee.
%Use of the computer was for the convenience of my employer.
%Its use was required as a condition of my employment.
=(1,2,3)
@Use Form 4562 to claim a depreciation deduction for the portion of your computer used for business. Deduct the expense on Form 2106 as Other Business Expense or on Schedule A as Unreimbursed Employee Expense.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?You can deduct depreciation expense for your personal computer only if you used it for your employer's convenience and you were required to have the computer as a condition of employment. Be careful - personal computer-related deductions can be a red flag for audit purposes.
*486,1
~Home Business Use
%I regularly used part of my home for my trade or business as an employee.
%The business part of my home was used only for business, or to store inventory or product samples.
%I used the business part of my home as my principal place of business, such as to perform administrative or management activities, and I had no other place where I conducted substantive administrative or management activities.
%I used the business part of my home to meet or deal with patients, clients or customers.
%The business part was a separate structure, not attached to my home
%I worked at home for the convenience of my employer, and I didn't rent the business part of my home to my employer.
=(1,2,3,6)(1,2,4,6)(1,2,5,6)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A. See IRS Publication 587 for a worksheet to compute the deduction.
!If your gross income from your business use of the home is less than your total business expenses, your deduction is limited. See IRS Publication 587.
?If you work at home for the convenience of your employer, you may be able to deduct home office expenses, including a portion of your mortgage payment or rent, utilities, and property taxes.
*385,1
~Labor Union Dues
%I paid dues and initiation fees for union membership.
%The payments were not assessments for sickness, accident or health benefits or contributions to a pension fund.
=(1,2)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?If you're a member of a labor union, you can deduct your union dues with miscellaneous deductions, subject to the 2% floor.
*385,1
~Liability or Malpractice Insurance
%I paid premiums for liability or malpractice insurance related to my employment.
%The expense was both ordinary and necessary to my trade or business as an employee.
=(1,2)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A. Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if AGI exceeds $132,950 ($66,475 if married and filing separately).
?If you purchased business-related liability or malpractice insurance as an employee, you can deduct your premiums with miscellaneous deductions, subject to the 2% floor.
*385,1
~Professional Dues & Subscriptions
%I had expenses for job-related dues or professional or trade publications.
%The expense was both ordinary and necessary to my trade or business as an employee.
%Dues were not paid to a club organized for business, pleasure, recreation or other social purpose or for entertainment.
=(1,2,3)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?You can deduct dues you paid to professional organizations and business-related publications with other miscellaneous deductions, subject to the 2% floor.
*385,1
~Tools
%I furnished my own small tools for use in my work.
%The expense was both ordinary and necessary to my employment.
=(1,2)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?You can deduct the cost of tools you purchased as an employee for business purposes with other miscellaneous deductions, subject to the 2% floor.
*385,1
~Travel
%As an employee, I spent money traveling away from home for my job or profession.
%My duties required me to be away from the general area of my regular workplace for substantially longer than an ordinary day's work.
%My assignment was temporary.
%I needed sleep and rest to meet the demands of my work while away from home.
%The expense was ordinary and necessary for my work, rather than extravagant.
%I kept adequate records of my expenses.
=(1,2,3,4,5,6)
@Deduct as Travel Expenses on Form 2106, reducing expense by any amount reimbursed by your employer. Or use Form 2106-EZ if you received no reimbursements and otherwise qualify.
!See Business Meals deduction for additional requirements on meals away from home. Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 463
?You may be able to deduct the cost of business travel for expenses not reimbursed by your employer.
*383,1
~Work Clothes
%I paid for the cost and upkeep of special work clothes, uniforms or protective clothing.
%The clothes are required to keep my job and are not suitable for everyday wear.
=(1,2)
@Deduct as Other Business Expenses on Form 2106 or as Unreimbursed Employee Expenses on Schedule A.
!Employee business expenses are included with other miscellaneous itemized deductions on Schedule A, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475- if married filing separately).
?If your employer requires you to purchase uniforms or specific types of clothing as a condition of employment, you may be able to deduct those expenses.
*385,1
$Employee's other deductions
~Education
%I paid for tuition, books, and other expenses for job-related education.
%This education is required by my employer or the law to keep my present job, or maintain or improve skills needed in my present job.
%The education is not necessary to meet the minimum educational requirements of my job.
%The education is not part of a program to qualify me for a new trade or business.
=(1,2,3,4)
@Deduct expenses on Schedule A as Unreimbursed Employee Expenses. You should also complete Form 2106 or 2106-EZ.
!Your total miscellaneous itemized deductions are reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 508 - Educational Expenses
?The cost of education required by your employer or the law for your current job may be tax deductible.
*486,1
~Impairment-Related
%My physical or mental disability limits my being employed or major life activities.
%I spent money for attendant care services or other such expenses in connection with my place of work.
%The expenses were ordinary and necessary to enable me to work.
=(1,2,3)
@Deduct expenses on Schedule A as Other Miscellaneous Deductions. You should also complete Form 2106 or 2106-EZ.
!Your impairment-related work expenses are not subject to the 2% limit that applies to most other employee business expenses. Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?If you're disabled or otherwise impaired and had expenses that enabled you to work, you may be able to deduct those expenses.
*523,1
~Job Search
%I paid expenses searching employment in my trade or business.
%I was not seeking my first job or a job in a different line of work.
=(1,2)
@Deduct expenses on Schedule A as Unreimbursed Employee Expenses. You should also complete Form 2106 or 2106-EZ.
!Your total miscellaneous itemized deductions are reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 529
?Check this box if you spent money in the past year searching for employment.
*486,1
~Moving - Employee
%I paid expenses to move to a new workplace.
%The move was related to a change in my job location.
%The move was due to a permanent change of station in the armed forces.
%My new workplace is at least 50 miles further from my old home than was my old workplace. (If I had no old workplace, the new workplace is at least 50 miles from my old home.)
%I worked (or will work) at least 39 weeks during the 12 months right after the move.
%My new job ended because of disability, death, transfer, layoff or discharge.
=(1,2,4,5)(1,2,4,6)(1,3)
@Complete Form 3903. If the move was to a workplace outside the U.S., use Form 3903-F. The allowable expense is deducted as an Adjustment on Form 1040.
!Your moving expenses must be reasonable for the circumstances of your move. For example, the cost of traveling to your new home should be by the shortest, most direct route available by conventional transportation. You can include the cost of moving yourself and members of your household. Do not include meals or pre-move househunting expenses.
#See IRS Publication 17 and Publication 521 - Moving Expenses
?If you had unreimbursed expenses for moving to a new job, you may be able to take a moving expense adjustment to income.
*407,1
~Taxes - State Benefit
%I paid state-required employee wage-loss insurance in CA, NJ, NY, RI, or WA.
=(1)
@Deduct on Schedule A as State and Local Income Taxes.
!Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 17
?If you live in California, New Jersey, New York or the state of Washington, you may be able to deduct payments to certain state-administered benefit funds.
*275,1
$Deductions - Investors
~Dividend Reinvestment
%I paid fees to the sponsor of a dividend reinvestment or similar plan.
%The fee was paid for services performed by the custodian for holding my shares, collecting and reinvesting dividends, and record keeping.
=(1,2)
@Deduct custodial fees on Schedule A. Fees and commissions paid to buy stock through the plan must be added to the cost of the shares, instead of deducted.
!Investment expenses are included with miscellaneous itemized deductions, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 550
?Your costs for reinvesting dividend income may be included as miscellaneous deductions.
*282,1
~Interest - Investment
%I paid interest on money I borrowed to acquire investment property.
%The investment did not produce tax-exempt income.
%The funds I borrowed were deposited to an investment account, or were used for investment within 30 days before or after receiving the loan proceeds.
%If the money I borrowed was used for business or personal purposes and for investment, I'm deducting only interest on debt allocated to investment purposes.
=(1,2,3,4)
@Use Form 4952 to figure the deduction and deduct as Investment Interest on Schedule A.
!Your deduction is limited to your net investment income. You can carry forward any excess deduction to the next tax year.
#See IRS Publication 550
?If you borrowed money to purchase investments, you may be able to deduct the interest expense.
*426,1
~Investment Advice
%I paid for investment advice.
%The money I spent on advice was related to investments that produce taxable income.
=(1,2)
@Deduct on Schedule A
!Investment expenses are included with miscellaneous itemized deductions, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 550
?If you paid a financial planner or other advisors for investment advice, the fees may be included with your miscellaneous deductions.
*486,1
~Investment Fees
%I paid custodial, investment, or trust administration fees to manage my investments.
%The investments produce taxable income.
=(1,2)
@Investment expenses are included with miscellaneous itemized deductions, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
!Deduct on Schedule A.
#See IRS Publication 550
?Fees you pay for investment management or custodial services may qualify as miscellaneous deductions.
*486,1
~Office Clerical Help
%I paid office expenses related to my investments or collecting taxable income on the investments.
=(1)
@Deduct on Schedule A.
!Investment expenses are included with miscellaneous itemized deductions, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 550
?Did you employ someone to handle clerical work related to your investments? If so, the cost of rent, wages and other expenses may be deductible.
*486,1
~Safe Deposit
%I paid rent for a safety deposit box or for the cost of installing a safe in my home.
%I used the box to store taxable income-producing securities or investment-related papers and documents.
=(1,2)
@Deduct on Schedule A.
!Investment expenses are included with miscellaneous itemized deductions, and the total is reduced by 2% of adjusted gross income (AGI). Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married and filing separately).
#See IRS Publication 550
?If you leased a safety deposit box or had one installed in your home, the fees may qualify as a miscellaneous deduction.
*486,1
~Savings - Early Withdrawal Penalty
%I paid a penalty for an early withdrawal from a time-deposit savings account.
=(1)
@Deduct as an Adjustment, Penalty on early withdrawal of savings, on Form 1040.
!The entire amount of interest reported to you on Form 1099-INT is included in income and the penalty is deducted as an adjustment, even if it is more than the income.
#See IRS Publication 550
?Did you incur an early withdrawal penalty on your savings? The amount of the penalty may be tax-deductible.
*265,1
$Business expenses (self-employed)
~Advertising
%I paid for advertising expenses related to my business.
%The advertising was ordinary and necessary for my business.
%I paid for public service advertising which relates to expected future business gain.
%The purpose of the advertising was not to lobby or influence legislation.
=(1,2,4)(1,3,4)
@Deduct on Schedule C as Advertising or include in Total Expenses on Schedule C-EZ.
!Amounts must be reasonable.
#See IRS Publication 535
?The cost of advertising or marketing associated with your business may be deductible.
*304,1
~Bad Debt - Business
%I was unable to collect money owed to me or to my business.
%The debt arose because of my trade or business or was closely related to it.
%The debt became partly or totally worthless during this year.
%I have previously included the uncollectible amount in income, or it was a cash loan.
=(1,2,3,4)
@Deduct your loss from business bad debts from your business income on Schedule C.
!You can deduct the amount of business debts and partial debts that are definitely uncollectible, up to the amount you included in income in prior years. You cannot deduct bad debts for sales that you have not previously included in taxable income.
#See IRS Publication 535
*305,1
~Self-Employed Gifts
%I gave gifts to business customers, clients or employees in the course of my business.
%The expense was both ordinary and necessary for my trade or business.
=(1,2)
@Deduct as Other Business Expenses on Schedule C or include in Total Expenses on Schedule C-EZ.
!Business gifts are limited to $25 to any person. (The limit doesn't include things like advertising or promotional items priced at less than $4 each.)* There are special exceptions for tax free scholarships, prizes and awards, and employee achievement awards.
#See IRS Publication 463, Publication 529, and Publication 535
?Gifts to clients, business associates or others related to your work may be deductible.
*302,1
~Self-Employed Entertainment
%I paid for entertaining clients, customers or employees.
%The expense was both ordinary and necessary to my trade or business.
%The entertainment was directly related to the active conduct of my business.
%The entertainment directly preceded or followed a substantial business discussion.
%The expense was not lavish or extravagant under the circumstances.
%I kept adequate records of my expenses.
=(1,2,3,5,6)(1,2,4,5,6)
@Deduct as Meals and Entertainment Expenses on Schedule C or include in Total Expenses on Schedule C-EZ.
!Only 50% of the entertainment expense is deductible, except for certain cases where meals and entertainment are treated as compensation, for an employee party or business meeting, sold to the public, or reimbursed by a client or customer.
#See IRS Publication 535 and Publication 463
?As a self-employed person, you may be able to deduct a portion of your entertainment expenses incurred in the course of doing business.
*294,1
~Self-Employed Meals
%I paid for meals related to overnight travel, entertainment or employee benefits.
%The expense was both ordinary and necessary to my trade or business.
%The meals were not lavish or extravagant under the circumstances.
%I kept adequate records of my expenses.
=(1,2,3,4)
@Deduct as Meals and Entertainment Expenses on Schedule C or include in Total Expenses on Schedule C-EZ.
!Only 50% of the meal expense is deductible, except for certain cases where meals and entertainment are treated as compensation, for an employee party or business meeting, sold to the public, or reimbursed by a client or customer.
#See IRS Publication 535 and Publication 463
?You may be able to deduct a portion of the cost of business-related meals for yourself and others.
*294,1
~Car and Truck
%I used my car or truck in my business, or reimbursed my employees for car or truck expenses.
%If employees used my company car, I allowed only business use, or reported the personal portion of their expenses on their W-2 as compensation.
%I kept written records.
%The vehicle is unlikely to be used for personal purposes (such as a delivery truck that seats only the driver).
=(1,2,3)(1,2,4)
@Deduct on Schedule C as Car and Truck Expenses, or include in Total Expenses on Schedule C-EZ. If you are claiming actual expenses, including depreciation, you must also complete Form 4562 and can't use Schedule C-EZ.
!You may deduct the business portion of actual expenses including depreciation. Depreciation deductions are limited, and special rules apply if business use of your car is 50% or less. You may be able to claim the standard mileage rate if you own the car, don't use more than one car at a time in your business, and haven't previously used actual expenses for the same car.
#See IRS Publication 334, Car and Truck Expenses; Publication 463; and Publication 535
?The cost of using a vehicle for business may be deductible at either a standard per-mile rate or by calculating actual operating expenses.
*306,1
~Casualty - Business
%My business property was damaged or destroyed.
%The event was sudden, unexpected or unusual, such as a hurricane, fire, car accident or similar event.
%The property wasn't covered by insurance.
%I filed a timely insurance claim and have reduced the amount of my loss by any reimbursement or expected reimbursement.
=(1,2,3)(1,2,4)
@Report on Form 4684 - Casualties and Thefts (use Section B - Business and Income-Producing Property). If insurance or other reimbursement was more than the cost of the damaged property and you didn't replace it, you may have a gain.
!The loss is limited to the lesser of the property's adjusted cost or its value immediately before the loss.
#See IRS Publication 547 - Casualties, Disasters, and Thefts.
?If your business was damaged by fire, wind or some other catastrophic event, you may be able to deduct a portion of your loss.
*413,1
~Cost of Goods Sold
%My business manufactures products or purchases them for resale.
%I maintain inventories to determine the cost of goods sold.
=(1,2)
@Deduct the cost of goods that you sold on Schedule C, Part III, Cost of Goods Sold. You may not use Schedule C-EZ if you had inventory at any time during the year.
#See IRS Publication 334 and Publication 535
?You can deduct the cost of merchandise that you sold in your business.
*496,1
~Disabled Access
%I improved access or use of a facility or public transport vehicle for disabled or elderly.
%I owned or leased the facility or vehicle use in connection with my trade or business.
%I didnÆt completely renovate or build a new facility or vehicle, or replace depreciable property.
%The improvements meet specific standards for improved access for the disabled or elderly.
=(1,2)
@Deduct as a separate item in Other Expenses on Schedule C for your business. You can choose to deduct qualified costs that would normally be depreciated (see Depreciation deduction). Or you receive a greater tax benefit by taking a disabled-access credit of 50% of the first $10,000 you spent on Form 8826. If you take the credit, you can still deduct the excess.
!The most you can claim for this deduction in any tax year is $15,000. However, any amount over this limit can be added to the basis of the property and depreciated.
#See IRS Publication 535
?Did you make your business more accessible to the disabled or handicapped? Those expenses may qualify you for a tax credit or deduction.
*302,1
~Depreciable Property
%I bought something with a useful life of more than one year to use in my trade or business.
%The item wears out, decays, gets used up, becomes obsolete, or loses value from natural causes.
=(1,2)
@Complete Form 4562; deduct the expense as Depreciation on Schedule C, or include in Total Expenses on Schedule C-EZ.
!The cost of depreciable property is spread over more than one tax year and partially deducted each year. (See "Section 179 Expense" to learn about deducting the cost in the year of purchase.) Depreciation rules can be quite complex; for more information, see Publication 946, How to Depreciate Property. Deductions are further limited for "listed property," which includes vehicles, computer equipment, cellular telephones and property generally used for entertainment, recreation or amusement.
#See IRS Publication 334.
?Real or personal property, not including land, may be depreciated over time and a portion of its value deducted each year from your taxes.
*302,1
~Education for Employees
%I paid or reimbursed education expenses for an employee of my business.
%The employeeÆs education was related to the job.
%The expenses were paid through a "qualified" educational assistance program and I paid $5,250 or less on the employeeÆs behalf.
%The employee could have deducted the cost as a trade or business expense if the employee paid it. (See Education under the category Employee - Other Deductions).
%The cost was reported on the employeeÆs Form W-2 as additional income.
=(1,2)(1,3)(1,4)(1,5)
@Deduct the expense on Schedule C. You may need to report all or part of your cost as income on the employeeÆs Form W-2. Where you report the deduction, and whether or not you report income to the employee, depend on the circumstances.<p>If the education was directly job-related, deduct as Other Expense and donÆt report on the employeeÆs Form W-2, Wage and Tax Statement. If the expense was part of a qualified educational assistance program, deduct as Employee Benefit Programs and donÆt report on the employeeÆs Form W-2. If you reported the income on the employee's Form W-2, deduct as Wages.
#See IRS Publication 535.
?If you paid education-related expenses for your employees, you may be able to deduct those costs.
*302,1
~Employee Benefits
%I paid for benefit programs for my employees, such as health plan, educational assistance programs.
%The expense of salaries and other payments for services are ordinary and necessary to carry on my trade or business.
%My costs, plus other pay, for each employee were reasonable.
%The payments do not benefit me or my family.
=(1,2,3,4)
@Deduct on Schedule C as Employee Benefit Programs. You cannot use Schedule C-EZ if you have employees. You may be able to exclude part of the benefits' cost from the employee's wages as you withhold, pay and report employment taxes.
!Reasonable amounts.
#See IRS Publication 334 and Publication 535
?Benefits you provided as an employer to your workers may be deductible as a business expense.
*308,1
~Home Business Use - Self-Employed
%I regularly used part of my home in connection with my trade or business.
%I used my home's business area only for business or inventory, or I ran a day-care.
%I used the business part of my home as my principal place of business (or to conduct management and administrative duties if my home is the only place I conduct those duties).
%I used the business part of my home to meet or deal with patients, clients or customers.
%The business part was a separate structure, not attached to my home.
=(1,2,3)(1,2,4)(1,2,5)
@Complete Form 8829 and deduct allowable expense on Schedule C as Expenses for Business Use of Your Home. You cannot use Schedule C-EZ.
!Your deduction is limited to the amount of income left after other expenses have been deducted. The amount not allowed because of the limitation can be carried over to the following year.
#See IRS Publication 587 - Business Use of Your Home, and Publication 334
?If you regularly conduct business out of your home, you may qualify to deduct expenses related to the portion of the home used for business.
*542,1
~Insurance
%I paid for insurance premiums for the protection of my business.
%The insurance was ordinary and necessary to my trade or business.
%The premiums were not for life insurance on my own life, self-insurance reserve funds, or a loss-of-earnings policy.
=(1,2,3)
@Deduct on Schedule C as Insurance or include in Total Expenses on Schedule C-EZ.
!Prepaid insurance premiums are deducted ratably over the term of the policy.
#See IRS Publication 334 and Publication 535
?Premiums you paid for certain types of insurance may be deductible as a business expense.
*310,1
~Interest - Mortgage
%I paid interest during the year on debts related to my business.
%I am legally liable for the debt.
%Both the lender and I intend that the debt be repaid, and we have a true debtor-creditor relationship.
%The debt is secured by property I own (if not, see Interest - Other).
=(1,2,3,4)
@Deduct on Schedule C as Interest - Mortgage, or include in Total Expenses on Schedule C-EZ. Home mortgage interest that is not deductible on Schedule A due to limitations may be deductible here if the borrowed funds were used in your business.
!Prepaid business interest can only be deducted in the year to which it applies.
#See IRS Publication 535
?You can deduct the interest you paid on the mortgage for the office or building that houses your business.
*311,1
~Interest - Other
%I paid interest during the year on debts related to my business.
%I am legally liable for the debt.
%Both the lender and I intend that the debt be repaid, and we have a true debtor-creditor relationship.
=(1,2,3,4)
@Deduct on Schedule C as Interest - Other or include in Total Expenses on Schedule C-EZ.
!Prepaid interest can only be deducted in the year to which it applies.
#See IRS Publication 535
?Most types of interest paid in relation to operating your business qualifies for a tax deduction.
*312,1
~Legal and Professional Services
%I paid legal, accounting and other fees directly related to operating my business.
%The expenses were ordinary and necessary for my business.
%The fees were not paid for work of a personal nature (such as making a will).
%The fees were not paid for preparing that part of my tax return not relating to my business as a sole proprietor.
%Legal fees were not paid to acquire business assets (those should be added to the cost of the assets).
=(1,2,3,4,5)
@Deduct on Schedule C as Legal and Professional Services, or include in Total Expenses on Schedule C-EZ.
!Reasonable amounts.
#See IRS Publication 334 and Publication 535
?The cost of legal or professional services needed to operate your business may be deductible.
*298,1
~Pension and Profit - Sharing Employee
%I contributed to a pension or profit-sharing plan for my employees' benefit.
=(1)
@Deduct contributions for your employees as Pension and Profit-Sharing Plans on Schedule C. Contributions for your own account are deducted as an Adjustment on Form 1040. If you have a Keogh plan, you must also file an information return, Form 5500, 5500-C/R or 5500-EZ.
!See limits for Keogh, SEP and SIMPLE retirement plans in the category Self-Employed - Other.
?The portion you as an employer contribute for pension or profit-sharing for your employees may be deductible.
*314,1
~Renter Lease
%I paid rent for the use of property in my trade or business.
%I did not own the property, and payments weren't made under a conditional-sales contract that gives me equity in or title to the property.
%If paid to a related party, the amounts are the same as I would pay to a stranger for use of the same property.
%If paid in advance, I am deducting only the amount that applies to my use of the rented property during the tax year.
%The use of the property is common and accepted in my field of business, and appropriate and helpful for my business.
=(1,2,3,4,5)
@Deduct on Schedule C as Rent or Lease, or include in Total Expenses on Schedule C-EZ.
!Rent must be reasonable under the circumstances.
#See IRS Publication
?If you rented or leased property used in connection with your business, you may be able to deduct those expenses.
*300,1
~Repair and Maintenance
%I spent money to maintain my business property in normal, efficient operating condition.
%The expenses don't add to the value of the property or significantly increase its life.
=(1,2)
@Deduct as Repairs and Maintenance on Schedule C, or include in Total Expenses on Schedule C-EZ.
!Expenses to restore or replace property, such as major remodeling or a new roof, must be capitalized instead of deducted in the current year.
#See IRS Publication 535
?Did you pay for repairs or maintenance on your business property? Deduct those costs for the year you pay them.
*315,1
~Returns Allowances
%My gross receipts or sales were reduced by returns, rebates or sales-price allowances.
=(1)
@Subtract from income on Schedule C as Returns and Allowances, or subtract from Gross Receipts on Schedule C-EZ.
?The cost of returns, rebates or allowances from the sales price reduce your taxable business income.
*296,1
~Section 179 Deduction
%I bought personal (as opposed to real) property with useful life one or more years that will be used for business.
%I did not buy it from a related party, and I had not previously used it for personal purposes.
%Use of the property was more than 50% for business, and the cost is allocated between business and personal use, if any.
=(1,2,3)
@You can elect to deduct a limited amount of the cost of depreciable personal property in the year you place it in service. This is called a Section 179 deduction. Complete Form 4562 and deduct the expense on Schedule C as Depreciation and Section 179 Expense Deduction. If your business use of the property falls below 50% in future years, you may have to "recapture" part of this deduction by including an amount in your income.
!The maximum first-year deduction for all businesses owned by an individual is $24,000 for 2001 and 2002, and $25,000 for 2003. Your basis in the property is reduced by the amount of the Section 179 deduction, and any remainder is depreciated over the life of the asset. Your Section 179 deduction may not exceed your net taxable income from all businesses, including wages, however you can carry over any excess to the next year.
#See IRS Publication 946, How to Depreciate Property, Publication 334, and Publication 535
?Certain types of business property - such as a equipment or office furniture - may qualify for a form of accelerated depreciation, known as a Section 179 deduction.
*302,1
~Start-Up Costs
%I spent money to investigate setting up or to set up an active trade or business.
%The spending occurred before I began business operations.
%The costs would have been deductible if paid to operate an existing trade or business.
%The costs were common and accepted, as well as appropriate and helpful, in my business.
%I will amortize (deduct over a period of time) the costs for 60 months or more, beginning with the month I began business operations.
=(1,2,3,4,5)
@Deduct the amount of amortization on Schedule C as Other Expenses. Complete Part VI of Form 4562 and attach it to your tax return for the first tax year you are in business. You must also a attach a separate statement of information, as described in Publication 535.
!Expenses must be reasonable.
#See IRS Publication 535
?If your business is less than two years old, you can deduct the costs, such as legal fees, that are associated with beginning a business.
*302,1
~Supplies
%I used materials and supplies during the tax year as a part of business.
%I have accounted for inventory of supplies and materials on hand at the beginning and end of the tax year.
%I don't keep a record of when supplies are used or take an inventory of the amount on hand, and this method doesn't distort my income.
%The use of the supplies is common and accepted in my field of business, and appropriate and helpful for my business.
=(1,2,4)(1,3,4)
@Materials and supplies which actually become a part of the product sold should be listed as part of Cost of Goods Sold in Part III of Schedule C. Other supplies are deducted in Part II as Supplies. If you did not have any inventory during the year, supplies can be included in Total Expenses on Schedule C-EZ.
!Amounts must be reasonable.
#See Publication 535
?You can deduct the reasonable cost of supplies used in the course of conducting your business.
*301,1
~Taxes & Licenses
%I paid federal, state, local, or foreign taxes or license fees in the course of my business.
%The taxes were ordinary and necessary to the conduct of my business.
%Taxes paid on behalf of others, such as sales tax collected from customers, have not been included in gross income and are not deductible.
=(1,2,3)
@You cannot deduct federal income taxes. State income taxes paid by an individual are deductible only as an itemized deduction on Schedule A. Other deductible taxes related to your business are listed on Schedule C as Taxes and Licenses, or included in total expenses on Schedule C-EZ. Taxes withheld from employee wages should be included in total wages, not taxes.
#See Publication 535
?You can deduct taxes and fees paid to state and local agencies in connection with your business.
*316,1
~Theft - Self-Employed
%Some of my business property or money was stolen.
%The theft was illegal under state law and done with criminal intent.
%The property wasn't insured.
%I filed a timely insurance claim and have reduced the amount of my loss by any reimbursement or expected reimbursement.
%I can prove the amount of my loss.
=(1,2,3,5)(1,2,4,5)
@Report on Form 4684 - Casualties and Thefts (use Section B, Business and Income-Producing Property). If insurance or other reimbursement was more than the cost of the damaged property and you didn't replace it, you may have a gain.
!The loss is limited to the lesser of the property's adjusted cost or its value immediately before the loss.
#See Publication 17
?Was your business victimized by theft? Any losses not covered by insurance may be deductible.
*413,1
~Travel - Self-Employed
%I spent money for myself or my employees traveling on business.
%The trip was to perform duties that required being away from the general area of our regular place of business for substantially longer than one day's work.
%The assignment away from home was temporary.
%Sleep and rest were needed to meet the demands of the work while away from home.
%The expense was ordinary and necessary for the work and not lavish or extravagant.
%I kept adequate records.
=(1,2,3,4,5,6)
@Deduct your own expenses for travel on Schedule C or include in Total Expenses on Schedule C-EZ. If you reimbursed your employees for their expenses under an accountable plan, you should also deduct as travel. If you have a nonaccountable plan, you must report the reimbursements as wages on the employees' Form W-2 and deduct as Wages on Schedule C.
!See Business Meals deduction for additional requirements on meals away from home.
#See Publication 334, Publication 535, and Publication 463, Section 1.
?Business-related travel for you or your employees may be deductible.
*317,1
~Utilities
%I paid for heat, lights, power, and telephone for my business.
%None of this spending was for my personal use.
%I am not deducting any of the cost of basic local telephone service for the first phone line in my home.
%The costs were common and accepted in my field of business, and appropriate and helpful for my own business.
=(1,2,3,4)
@Deduct as Utilities on Schedule C, or include in Total Expenses on Schedule C-EZ.
!Amounts must be reasonable.
#See Publication 535
?You use electricity and other utilities to run your business - whether it's in your home or in another location. Be sure to deduct your business utility and telephone expenses.
*318,1
~Wages
%I paid wages and salaries which were directly connected to my business.
%The actual services performed by the employees are common and accepted in my field of business, and appropriate and helpful for my business.
%The amount of pay is reasonable, and an amount that similar enterprises ordinarily would pay for the same work under the circumstances.
=(1,2,3)
@Deduct as Wages on Schedule C. You cannot file Form C-EZ for your business if you had employees during the year.
!If you are a sole proprietor (are not incorporated or a partnership), you cannot deduct your own salary or any personal withdrawals you make from your business.
#See Publication 535 and Publication 334
?Any wages you pay yourself (if your company is incorporated) and your employees can generally be deducted as a business expense.
*297,1
$Other deductions (self-employed)
~Education - Self-Employed
%I paid for tuition, books and other expenses for business-related education.
%The education maintains or improves skills required in my trade or business, or is legally required to keep my pay, status or job.
%The education is not necessary to meet the minimum educational requirements of my present trade or business.
%The education is not part of a program to qualify me for a new trade or business.
=(1,2,3,4)
@Deduct expenses on Schedule C under Other Expenses, or include in total expenses on Schedule C-EZ.
!Must be reasonable.
#See Publication 535
?The cost of education needed to maintain your current job skills may be deductible.
*302,1
~Impairment Related
%My physical or mental disability limits my ability to work or major life activities.
%I paid expenses for attendant care services at my place of work or other expenses in connection with my place of work.
%The expenses were ordinary and necessary to enable me to work.
=(1,2,3)
@Deduct expenses on Schedule A as Other Miscellaneous Deductions.
!Your impairment-related work expenses are not subject to the 2% reduction. Your total itemized deductions are limited if your AGI exceeds $132,950 ($66,475 if married filing separately).
#See Publication 529 and Publication 17
?Do you have a disability that limits your ability to work without special accommodations or services? You can deduct the cost of the accommodations or services.
*523,1
~Keogh - Self or Spouse
%I've set up an exclusive qualified retirement plan for my employees, including myself.
%The plan is a profit-sharing plan which lets my employees (if any) or their beneficiaries share in the profits of my business.
%The plan has a definite formula for allocating the contributions made to the plan among the participants and for distributing funds in the plan.
%The plan is a money purchase pension, where contributions are a stated amount or are based on a stated formula that is not subject to my discretion.
%My contributions to the plan are not based on my profits.
%The plan was set up before the close of the taxable year, and I made contributions not later than the due date (plus extensions) of my tax return for that year.
=(1,2,3,6)(1,4,5,6)
@Contributions for your employees are deducted on Schedule C to compute profit or loss from your business. Contributions for your own account are deducted as an Adjustment on Form 1040. If you maintain a plan, you generally must also file an information return, Form 5500, 5500-C/R or 5500-EZ.
!For Keogh plans, contributions for employees are limited to the lesser of a percentage of their wages and a set limit. Contributions for sole proprietors are limited to a percentage of self-employment income after deducting 1/2 of self-employment tax and a set limit. The percentages and limits vary by type of Keogh plan.
#See Publication 535
?As a self-employed person, you can open a Keogh retirement plan for yourself and your employees and deduct qualified contributions.
*263,1
~Moving - Self-Employed
%I spent money moving to a new workplace.
%The move was related to a change in my work location.
%My new workplace is at least 50 miles further from my old home than was my old workplace. (If I had no old workplace, the new workplace is at least 50 miles from my old home.)
%After the move, I worked (or will work) full-time for at least 39 weeks during the first 12 months, and for at least 78 weeks during the first 24 months.
%My new job ended because of death or disability.
=(1,2,3,4)
@Complete Form 3903. If the move was to a workplace outside the U.S., use Form 3903-F. Qualified moving expenses are deducted as an Adjustment on Form 1040.
!Amounts must be reasonable for the circumstances of your move. For example, the cost of traveling to your new home should be by the shortest, most direct route available by conventional transportation. Deduct only the cost of moving yourself and your household. Do not include meals or house-hunting trips.
#See Publication 17 and Publication 521 - Moving Expenses
?If you decide to move your operations for business reasons, you may be able to deduct the costs.
*406,1
~Health Insurance - Self-Employed
%I paid for medical insurance or qualified long-term care insurance for myself and my family.
%I am self-employed, a general partner (or limited partner with guaranteed payments), or a shareholder owning more than 2% of an S corporation.
%I paid the premiums, or my partnership or S corporation paid the premiums and included them in my gross income.
%I was not eligible to participate in any employer subsidized health plan (including my spouse's) during any month for which I am taking a deduction.
=(1,2,3,4)
@You can deduct 60% (for 2001) of your self-employed health insurance premiums as an Adjustment on Form 1040. For 2002, you can deduct 70%, and for 2003 and thereafter, 100%. Deduct the remaining portion of the premiums as medical expenses on Schedule A.
!You can't deduct more for self-employed health insurance premiums than your net earnings from the trade or business in which the insurance plan is established or your S-corporation wages.
#See Publication 535
?A portion of your health insurance costs are deductible as a self-employed person.
*484,1
~Simplified Employee Pension (SEP)
%I've set up a written retirement plan, contributed each qualified employee's SEP IRA.
%Contributions are based on a written allocation formula and donÆt discriminate in favor of owners of the business or highly compensated employees.
%I set up the SEP IRAs and made contributions for the year not later than the due date (plus extensions) of my tax return for that year.
=(1)
@Contributions for your employees are deducted on Schedule C to compute profit or loss from your business. Contributions for your own account are deducted as an Adjustment on Form 1040.
!Contributions for employees canÆt exceed the smaller of 15% of the employeeÆs compensation up to a maximum contribution of $25,500. Your deduction for yourself is limited to the smaller of $25,500 or 13.0435% of your net earnings from the trade or business that has the plan.
#See Publication 535
?Do you have a Simplified Employment Plan (SEP)? Qualified contributions to the SEP are deductible.
*517,1
~SIMPLE Retirement Plans
%I contributed to a written salary-reduction plan for my employees, including myself.
%My business has 100 or fewer employees and does not maintain another retirement plan.
%Employee earning $5,000 or more in any two preceding years can contribute to SIMPLE accounts, up to $6,000 per yr.
%I made a matching contribution to the simple retirement account on behalf of each employee who made elective deferrals.
%I made matching contributions of up to 3% of compensation for each eligible employee.
=(1,2,3,5)(1,2,3,4)
@Contributions for your employees are deducted on Schedule C to compute profit or loss from your business. Contributions for your own account are deducted as an Adjustment on Form 1040. Compensation for the self-employed individual is defined as net earnings from self-employment.
!Your plan must provide that you will make matching contributions or non-elective contributions. Each employeeÆs salary deferral contribution is limited to $6,000 ($12,000 with employer match). Non-elective employer contributions are 3% of compensation for each employee who earns at least $5,000. The annual compensation taken into account is limited to $160,000.
#See Publication 535
?Contributions on behalf of your employees made to a Savings Incentives Match Plan for Employees (SIMPLE) may be deductible as a business expense.
