Title Details

2014 tax calendar ii

How to use this guide v

Special contents vii

Changes in the tax law you should know about x

Summary of provisions expiring at the end of 2013 and beyond xviii

Important 2013 tax reminders xix

How to avoid 25 common errors xxi

50 of the most easily overlooked deductions xxii

Individual tax organizer xxiii

Income and expense records you should keep in addition to your income tax return xxxi

Part I • The income tax return 1

CHAPTER 1 • Filing information 3

Do I Have To File a Return? 5

Which Form Should I Use? 11

Does My Return Have To Be on Paper? 12

When Do I Have To File? 17

Where Do I File? 32

What Happens After I File? 32

What If I Made a Mistake? 37

CHAPTER 2 • Filing status 45

Marital Status 46

Single 48

Married Filing Jointly 48

Married Filing Separately 51

Head of Household 53

CHAPTER 3 • Personal exemptions and dependents 59

Exemptions 61

Phaseout of Exemptions 87

Social Security Numbers for Dependents 88

CHAPTER 4 • Tax withholding and estimated tax 89

Tax Withholding for 2014 93

Estimated Tax for 2014 106

Credit for Withholding and Estimated Tax for 2013 113

Underpayment Penalty for 2013 117

Part II • Income 119

CHAPTER 5 • Wages, salaries, and other earnings 121

Employee Compensation 123

Miscellaneous Compensation 124

Special Rules for Certain Employees 139

Sickness and Injury Benefits 143

CHAPTER 6 • Tip income 147

Keeping a Daily Tip Record 148

Reporting Tips to Your Employer 149

Allocated Tips 153

CHAPTER 7 • Interest income 157

General Information 159

Taxable Interest 165

When To Report Interest Income 186

How To Report Interest Income 187

CHAPTER 8 • Dividends and other corporate distributions 190

General Information 194

Ordinary Dividends 198

Capital Gain Distributions 203

Nondividend Distributions 204

Other Distributions 207

How To Report Dividend Income 209

CHAPTER 9 • Rental income and expenses 213

Rental Income 214

Rental Expenses 217

Repairs and Improvements 218

Property Changed to Rental Use 221

Renting Part of Property 221

Not Rented for Profit 222

Personal Use of Dwelling Unit (Including Vacation Home) 222

Depreciation 229

Limits on Rental Losses 231

How To Report Rental Income and Expenses 234

CHAPTER 10 • Retirement plans, pensions, and annuities 238

General Information 239

Cost (Investment in the Contract) 245

Taxation of Periodic Payment  246

Taxation of Nonperiodic Payments 249

Rollovers 252

Special Additional Taxes 259

Survivors and Beneficiaries 265

CHAPTER 11 • Social security and equivalent railroad retirement benefits 266

Are Any of Your Benefits Taxable?  267

How To Report Your Benefits 270

Examples 272

Deductions Related to Your Benefits 276

Repayments More Than Gross Benefits 276

CHAPTER 12 • Other income 279

Bartering 281

Canceled Debts 281

Host or Hostess 284

Life Insurance Proceeds 284

Partnership Income 286

S Corporation Income 288

Recoveries 290

Rents from Personal Property 293

Repayments 293

Royalties 295

Unemployment Benefits 296

Welfare and Other Public Assistance Benefit  297

Other Sickness and Injury Benefits 299

Other Income 300

Passive Activity Limitations and At-Risk Limitations 314

Part III • Gains and losses 319

CHAPTER 13 • Basis of property 321

Cost Basis 322

Adjusted Basis 324

Basis Other Than Cost 327

CHAPTER 14 • Sale of property 342

Sales and Trades 343

Capital Gains and Losses 359

CHAPTER 15 • Selling your home 382

Main Home 384

Figuring Gain or Loss 385

Excluding the Gain 390

Business Use or Rental of Home 396

Reporting the Sale 400

Recapturing (Paying Back) a Federal Mortgage Subsidy 401

CHAPTER 16 • Reporting gains and losses 403

Reporting Capital Gains and Losses 406

Part IV • Adjustments to income 423

CHAPTER 17 • Individual retirement arrangements (IRAs) 425

Traditional IRAs 428

Roth IRAs 455

Simplified Employee Pensions (SEPs) 462

Savings Incentive Match Plans for Employees (SIMPLE) 463

CHAPTER 18 • Alimony 464

General Rules 465

Instruments Executed After 1984 467

How To Deduct Alimony Paid 472

How To Report Alimony Received  472

Recapture Rule 472

Other Alimony Issues and Rules 474

CHAPTER 19 • Education related adjustments 478

Student Loan Interest Deduction 479

Tuition and Fees Deduction 482

Educator Expenses 487

CHAPTER 20 • Moving expenses 488

Who Can Deduct Moving Expenses 489

Members of the Armed Forces 495

Retirees or Survivors Who Move to the United States 496

Deductible Moving Expenses 497

Nondeductible Expenses 499

How and When To Report 500

When To Deduct Expenses 501

Part V • Standard and itemized deductions 505

CHAPTER 21 • Standard deduction 507

Standard Deduction Amount 508

Standard Deduction for Dependents 510

Who Should Itemize 511

CHAPTER 22 • Medical and dental expenses 514

What Are Medical Expenses? 515

What Expenses Can You Include This Year? 516

How Much of the Expenses Can You Deduct? 516

Whose Medical Expenses Can You Include? 517

What Medical Expenses Are Includible? 520

How Do You Treat Reimbursements? 528

Damages for Personal Injuries 531

How Do You Figure and Report the Deduction on Your Tax Return? 531

Impairment-Related Work Expenses 532

Health Insurance Costs for Self-Employed Persons 533

CHAPTER 23 • Taxes you may deduct 535

Tests to Deduct Any Tax 537

Income Taxes 537

General Sales Taxes 542

Real Estate Taxes 542

Personal Property Taxes 548

Taxes and Fees You Cannot Deduct 548

Where To Deduct 549

CHAPTER 24 • Interest expense 550

Home Mortgage Interest 551

Investment Interest 564

Items You Cannot Deduct 567

Allocation of Interest 570

How To Report 572

CHAPTER 25 • Contributions Organizations That Qualify To Receive 574

Deductible Contributions 576

Contributions You Can Deduct 578

Contributions You Cannot Deduct 585

When To Deduct 595

Limits on Deductions 596

Records To Keep 599

How To Report 604

CHAPTER 26 • Nonbusiness casualty and theft losses 605

Casualty 607

Theft 610

Loss on Deposits 612

Proof of Loss 613

Figuring a Loss 614

Deduction Limits 623

When To Report Gains and Losses 627

How To Report Gains and Losses 629

CHAPTER 27 • Car expenses and other employee business expenses 630

Travel Expenses 632

Entertainment Expenses 644

Gift Expenses 651

Transportation Expenses 652

Record keeping 661

How To Report 665

CHAPTER 28 • Tax benefits for work-related education 679

Qualifying Work-Related Education 681

Education To Meet Minimum Requirements 683

What Expenses Can Be Deducted 687

Reimbursements 691

Deducting Business Expenses 691

Recordkeeping 692

CHAPTER 29 • Miscellaneous deductions 693

Deductions Subject to the 2% Limit 694

Deductions Not Subject to the 2% Limit 710

Nondeductible Expenses 712

CHAPTER 30 • Limit on itemized deductions 718

Part VI • Figuring your taxes and credits 723

CHAPTER 31 • How to figure your tax 725

Figuring Your Tax 727

Alternative Minimum Tax 730

Additional Medicare Tax 736

Net Investment Income Tax (NIIT) 736

Tax Figured by IRS 737

CHAPTER 32 • Tax on investment income of certain children 741

Which Parent’s Return To Use 743

Parent’s Election To Report Child’s Interest and Dividends 743

Tax for Certain Children Who Have Investment Income of More Than $2,000 748

CHAPTER 33 • Child and dependent care credit 755

Tests To Claim the Credit 756

How To Figure the Credit 765

How To Claim the Credit 771

Employment Taxes for Household Employers 772

CHAPTER 34 • Credit for the elderly or the disabled 776

Are You Eligible for the Credit? 777

Figuring the Credit Yourself 781

CHAPTER 35 • Child tax credit 786

Checking your withholding 786

Amount of Credit 787

Claiming the Credit 788

Additional Child Tax Credit 788

CHAPTER 36 • Education credits and other education tax benefits 789

Who Can Claim an Education Credit 790

Qualified Education Expenses 792

CHAPTER 37 • Other credits including the earned income credit 801

Nonrefundable Credits 803

Refundable Credits 811

Earned Income Credit (EIC) 816

Reminders 816

Do You Qualify for the Credit?  817

Part A. Rules for Everyone 818

Part B. Rules If You Have a Qualifying Child 822

Part C. Rules If You Do Not Have a Qualifying Child 829

Part D. Figuring and Claiming the EIC 831

Examples 832

Part VII • Special situations and tax planning 837

CHAPTER 38 • Self-employment income: How to file Schedule C 839

Who Must File Schedule C 840

What Is Included in Net Self-Employment Earnings?  844

How to Determine Items of Income and Expenses 846

How to Complete Schedule C 849

Sales of Business Property Used in Your Business 863

Business Tax Credit 863

Special Situations 864

How to Complete Schedule SE Line by Line, Briefly 864

CHAPTER 39 • Mutual funds Tax 872

Treatment of Distributions 875

Sales, Exchanges, and Redemptions 881

Keeping Track of Your Basis 882

Gains and Losses 888

Holding Period 888

How to Figure Gains and Losses on Form 8949 and Schedule D 890

Capital Losses 890

Investment Expenses 891

CHAPTER 40 • What to do if you employ domestic help 893

Reminder 894

Employment Taxes for Household Employers  894

Reporting and Paying Taxes on Wages Paid to Household Employees 900

CHAPTER 41 • U.S. citizens working abroad: Tax treatment of foreign earned income 905

How to Qualify for the Foreign Earned Income Exclusion 905

The Foreign Earned Income Exclusion 906

The Foreign Housing Exclusion 908

Employer-Provided Meals and Lodging 909

Foreign Tax Credit 909

CHAPTER 42 • Foreign citizens living in the United States 912

Determining Your Status 912

How Resident Aliens Are Taxed 914

Rules for Individuals Giving Up U.S. Citizenship or U.S. Residency 915

How Nonresident Aliens Are Taxed 918

Departing from the United States 920

CHAPTER 43 • Decedents: Dealing with the death of a family member 921

Personal Representative 922

Final Return for the Decedent 923

Tax Effect on Others 932

CHAPTER 44 • Estate and gift tax planning 938

Getting Started 938

Estate Tax Fundamentals 939

How Your Estate Is Taxed 941

The Fundamentals of the Gift Tax 944

The Generation-Skipping Transfer Tax 949

How to Use Trusts 949

How to Raise Cash to Pay Estate Taxes 951

Concerns Regarding Community Property 952

Estate Planning—Steps to Take Now 952

CHAPTER 45 • Everything you need to know about e-filing 953

Information You’ll Need to E-File 954

Making Tax Payments 956

Methods of E-Filing 957

CHAPTER 46 • If your return is examined 960

IRS Declaration of Taxpayer Rights 960

Examinations, Appeals, Collections, and Refunds 961

The Examination Process 962

Appeals 969

Collections 973

Potential Third Party Contacts 973

Claims for Refunds 973

Past-Due Taxes 974

CHAPTER 47 • Planning ahead for 2014 and beyond 976

Tax Provisions Expiring at the End of 2013 977

Inflation Adjustments for 2014 979

Affordable Care Act (ACA) Individual Provisions 979

A Summary for 2014 and Beyond 985

CHAPTER 48 • 2013 Tax rate schedules 986

Index 988