ii 2014 tax calendar
v How to use this guide
viii Special contents
x Changes in the tax law you should know about
xviii Summary of provisions expiring at the end of 2013 and beyond
xix Important 2013 tax reminders
xxi How to avoid 25 common errors
xxii 50 of the most easily overlooked deductions
xxiii Individual tax organizer
xxxi Income and expense records you should keep in addition to your income tax return
Part I • The income tax return / 1
3 CHAPTER 1 • Filing information
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
45 CHAPTER 2 • Filing status
Marital Status / 46
Single / 48
Married Filing Jointly / 48
Married Filing Separately / 51
Head of Household / 53
59 CHAPTER 3 • Personal exemptions and dependents
Exemptions / 61
Phaseout of Exemptions / 87
Social Security Numbers for Dependents / 88
89 CHAPTER 4 • Tax withholding and estimated tax
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
121 CHAPTER 5 • Wages, salaries, and other earnings
Employee Compensation / 123
Miscellaneous Compensation / 124
Special Rules for Certain Employees / 139
Sickness and Injury Benefits / 143
147 CHAPTER 6 • Tip income
Keeping a Daily Tip Record / 148
Reporting Tips to Your
Employer / 149
Allocated Tips / 153
157 CHAPTER 7 • Interest income
General Information / 159
Taxable Interest / 165
When To Report Interest Income / 186
How To Report Interest Income / 187
190 CHAPTER 8 • Dividends and other corporate distributions
General Information / 194
Ordinary Dividends / 198
Capital Gain Distributions / 203
Nondividend Distributions / 204
Other Distributions / 207
How To Report Dividend Income / 209
213 CHAPTER 9 • Rental income and expenses
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
238 CHAPTER 10 • Retirement plans, pensions, and annuities
General Information / 239
Cost (Investment in the Contract) / 245
Taxation of Periodic Payments / 246
Taxation of Nonperiodic Payments / 249
Rollovers / 252
Special Additional Taxes / 259
Survivors and Beneficiaries / 265
266 CHAPTER 11 • Social security and equivalent railroad retirement benefits
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
279 CHAPTER 12 • Other income
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 Benefits / 297
Other Sickness and Injury
Benefits / 299
Other Income / 300
Passive Activity Limitations and At-Risk Limitations / 314
Part III • Gains and losses / 319
321 CHAPTER 13 • Basis of property
Cost Basis / 322
Adjusted Basis / 324
Basis Other Than Cost / 327
342 CHAPTER 14 • Sale of property
Sales and Trades / 343
Capital Gains and Losses / 359
382 CHAPTER 15 • Selling your home
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
403 CHAPTER 16 • Reporting gains and losses
Reporting Capital Gains and Losses / 406
Part IV • Adjustments to income / 423
425 CHAPTER 17 • Individual retirement arrangements (IRAs)
Traditional IRAs / 428
Roth IRAs / 455
Simplified Employee Pensions (SEPs) / 462
Savings Incentive Match Plans for Employees (SIMPLE) / 463
464 CHAPTER 18 • Alimony
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
478 CHAPTER 19 • Educationrelated adjustments
Student Loan Interest Deduction / 479
Tuition and Fees Deduction / 482
Educator Expenses / 487
488 CHAPTER 20 • Moving expenses
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
507 CHAPTER 21 • Standard deduction
Standard Deduction Amount / 508
Standard Deduction for Dependents / 510
Who Should Itemize / 511
514 CHAPTER 22 • Medical and dental expenses
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
535 CHAPTER 23 • Taxes you may deduct
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
550 CHAPTER 24 • Interest expense
Home Mortgage Interest / 551
Investment Interest / 564
Items You Cannot Deduct / 567
Allocation of Interest / 570
How To Report / 572
574 CHAPTER 25 • Contributions Organizations That Qualify To Receive
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
605 CHAPTER 26 • Nonbusiness casualty and theft losses
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
630 CHAPTER 27 • Car expenses and other employee business expenses
Travel Expenses / 632
Entertainment Expenses / 644
Gift Expenses / 651
Transportation Expenses / 652
Recordkeeping / 661
How To Report / 665
679 CHAPTER 28 • Tax benefits for work-related education
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
693 CHAPTER 29 • Miscellaneous deductions
Deductions Subject to the 2% Limit / 694
Deductions Not Subject to the 2% Limit / 710
Nondeductible Expenses / 712
718 CHAPTER 30 • Limit on itemized deductions
Part VI • Figuring your taxes and credits / 723
725 CHAPTER 31 • How to figure your tax
Figuring Your Tax / 727
Alternative Minimum Tax / 730
Additional Medicare Tax / 736
Net Investment Income Tax (NIIT) / 736
Tax Figured by IRS / 737
741 CHAPTER 32 • Tax on investment income of certain children
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
755 CHAPTER 33 • Child and dependent care credit
Tests To Claim the Credit / 756
How To Figure the Credit / 765
How To Claim the Credit / 771
Employment Taxes for Household Employers / 772
776 CHAPTER 34 • Credit for the elderly or the disabled
Are You Eligible for the Credit? / 777
Figuring the Credit Yourself / 781
786 CHAPTER 35 • Child tax credit
Checking your withholding / 786
Amount of Credit / 787
Claiming the Credit / 788
Additional Child Tax Credit / 788
789 CHAPTER 36 • Education credits and other education tax benefits
Who Can Claim an Education Credit / 790
Qualified Education Expenses / 792
801 CHAPTER 37 • Other credits including the earned income credit
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
839 CHAPTER 38 • Self-employment income: How to file Schedule C
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
872 CHAPTER 39 • Mutual funds Tax
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
893 CHAPTER 40 • What to do if you employ domestic help
Reminder / 894
Employment Taxes for Household Employers / 894
Reporting and Paying Taxes on Wages Paid to Household Employees / 900
905 CHAPTER 41 • U.S. citizens working abroad: Tax treatment of foreign earned income
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
912 CHAPTER 42 • Foreign citizens living in the United States
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
921 CHAPTER 43 • Decedents: Dealing with the death of a family member
Personal Representative / 922
Final Return for the Decedent / 923
Tax Effect on Others / 932
938 CHAPTER 44 • Estate and gift tax planning
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
953 CHAPTER 45 • Everything you need to know about e-filing
Information You’ll Need to E-File / 954
Making Tax Payments / 956
Methods of E-Filing / 957
960 CHAPTER 46 • If your return is examined
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
976 CHAPTER 47 • Planning ahead for 2014 and beyond
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
986 CHAPTER 48 • 2013 Tax rate schedules
988 Index
