REPORTING YOUR INCOME

Transcription

1 Contents Chapter by Chapter What s New for 2014 Key Tax Numbers for 2014 xxv xxviii FILING BASICS 1 Do You Have to File a 2014 Tax Return? 3 Filing Tests for Dependents: 2014 Returns 4 Where to File Your 2014 Return 5 Filing Deadlines (on or before) 6 Which Tax Form Should You File? 8 Filing Status Which Filing Status Should You Use? Tax Rates Based on Filing Status Filing Separately Instead of Jointly Filing a Joint Return Nonresident Alien Spouse Community Property Rules Innocent Spouse Rules Separate Liability Relief for Former Spouses Equitable Relief Death of Your Spouse in Qualifying Widow/Widower Status If Your Spouse Died in 2013 or Qualifying as Head of Household Filing for Your Child Return for Deceased Return for an Incompetent Person How a Nonresident Alien Is Taxed How a Resident Alien Is Taxed Who Is a Resident Alien? When an Alien Leaves the United States Expatriation Tax 31 COPYRIGHTED MATERIAL REPORTING YOUR INCOME 33 Wages, Salary, and Other Compensation Salary and Wage Income Constructive Receipt of Year-End Paychecks Pay Received in Property Is Taxed Commissions Taxable When Credited Unemployment Benefits Strike Pay Benefits and Penalties 41 J.K. Lasser s Your Income Tax 2015 v

2 2.7 Nonqualified Deferred Compensation Did You Return Wages Received in a Prior Year? Waiver of Executor s and Trustee s Commissions Life Insurance Benefits Educational Benefits for Employees Children Sick Pay Is Taxable Workers Compensation Is Tax Free Disability Pensions Stock Appreciation Rights (SARs) Stock Options Restricted Stock 50 Fringe Benefits Tax-Free Health and Accident Coverage Under Employer Plans Health Savings Accounts (HSAs) and Archer MSAs Reimbursements and Other Tax-Free Payments From Employer Health and Accident Plans Group-Term Life Insurance Premiums Dependent Care Assistance Adoption Benefits Education Assistance Plans Company Cars, Parking, and Transit Passes Working Condition Fringe Benefits De Minimis Fringe Benefits Employer-Provided Retirement Advice Employee Achievement Awards Employer-Furnished Meals or Lodging Minister s Rental or Housing Allowance Cafeteria Plans Provide Choice of Benefits Flexible Spending Arrangements Company Services Provided at No Additional Cost Discounts on Company Products or Services 73 Dividend and Interest Income Reporting Dividends and Mutual-Fund Distributions Qualified Corporate Dividends Taxed at Favorable Capital Gain Rates Dividends From a Partnership, S Corporation, Estate, or Trust Real Estate Investment Trust (REIT) Dividends Taxable Dividends of Earnings and Profits Stock Dividends on Common Stock Dividends Paid in Property Taxable Stock Dividends Who Reports the Dividends Year Dividends Are Reported Distribution Not Out of Earnings: Return of Capital Reporting Interest on Your Tax Return 81 vi J.K. Lasser s Your Income Tax 2015

3 4.13 Interest on Frozen Accounts Not Taxed Interest Income on Debts Owed to You Reporting Interest on Bonds Bought or Sold Forfeiture of Interest on Premature Withdrawals Amortization of Bond Premium Discount on Bonds Reporting Original Issue Discount on Your Return Reporting Income on Market Discount Bonds Discount on Short-Term Obligations Stripped Coupon Bonds and Stock Sale or Retirement of Bonds and Notes State and City Interest Generally Tax Exempt Taxable State and City Interest Tax-Exempt Bonds Bought at a Discount Treasury Bills, Notes, and Bonds Interest on United States Savings Bonds Deferring United States Savings Bond Interest Minimum Interest Rules Interest-Free or Below-Market-Interest Loans Minimum Interest on Seller-Financed Sales 97 Reporting Property Sales General Tax Rules for Property Sales How Property Sales Are Classified and Taxed Capital Gains Rates and Holding Periods Capital Losses and Carryovers Capital Losses of Married Couples Losses May Be Disallowed on Sales to Related Persons Deferring or Excluding Gain on Small Business Stock Investment Reporting Capital Asset Sales on Form 8949 and on Schedule D Counting the Months in Your Holding Period Holding Period for Securities Holding Period for Real Estate Holding Period: Gifts, Inheritances, and Other Property Calculating Gain or Loss Amount Realized Is the Total Selling Price Finding Your Cost Unadjusted Basis of Your Property Basis of Property You Inherited or Received as a Gift Joint Tenancy Basis Rules for Surviving Tenants Allocating Cost Among Several Assets How To Find Adjusted Basis Tax Advantage of Installment Sales Figuring the Taxable Part of Installment Payments Electing Not To Report on the Installment Method 131 J.K. Lasser s Your Income Tax 2015 vii

4 5.24 Restriction on Installment Sales to Relatives Contingent Payment Sales Using Escrow and Other Security Arrangements Minimum Interest on Deferred Payment Sales Dispositions of Installment Notes Repossession of Personal Property Sold on Installment Boot in Like-Kind Exchange Payable in Installments Interest Tax on Sales Over $150,000 Plus $5 Million Debt Worthless Securities Tax Consequences of Bad Debts Four Rules To Prove a Bad Debt Deduction Family Bad Debts 141 Tax-Free Exchanges of Property Trades of Like-Kind Property Personal Property Held for Business or Investment Receipt of Cash and Other Property Boot Time Limits and Security Arrangements for Deferred Exchanges Qualified Exchange Accommodation Arrangements (QEAAs) for Reverse Exchanges Exchanges Between Related Parties Property Transfers Between Spouses and Ex-Spouses Tax-Free Exchanges of Stock in Same Corporation Joint Ownership Interests Setting up Closely Held Corporations Exchanges of Coins and Bullion Tax-Free Exchanges of Insurance Policies 155 Retirement and Annuity Income Retirement Distributions on Form 1099-R Lump-Sum Distributions Lump-Sum Options If You Were Born Before January 2, Averaging on Form Capital Gain Treatment for Pre-1974 Participation Lump-Sum Payments Received by Beneficiary Tax-Free Rollovers From Qualified Plans Direct Rollover or Personal Rollover Rollover of Proceeds From Sale of Property Distribution of Employer Stock or Other Securities Survivor Annuity for Spouse Court Distributions to Former Spouse Under a QDRO When Retirement Benefits Must Begin Payouts to Beneficiaries Penalty for Distributions Before Age 59½ 171 viii J.K. Lasser s Your Income Tax 2015

5 7.16 Restrictions on Loans From Company Plans Tax Benefits of 401(k) Plans Limit on Salary-Reduction Deferrals Withdrawals From 401(k) Plans Restricted Designated Roth Contributions to 401(k) Plans Annuities for Employees of Tax-Exempts and Schools (403(b) Plans) Government and Exempt Organization Deferred Pay Plans Figuring the Taxable Part of Your Annuity Life Expectancy Tables When You Convert Your Endowment Policy Reporting Employee Annuities Simplified Method for Calculating Taxable Employee Annuity Employee s Cost in Annuity Withdrawals From Employer s Qualified Retirement Plan Before Annuity Starting Date 189 IRAs Starting a Traditional IRA Traditional IRA Contributions Must Be Based on Earnings Contributions to a Traditional IRA If You Are Married IRA Deduction Restrictions for Active Participants in Employer Plan Active Participation in Employer Plan Nondeductible Contributions to Traditional IRAs Penalty for Excess Contributions to Traditional IRAs Taxable Distributions From Traditional IRAs Partially Tax-Free Traditional IRA Distributions Allocable to Nondeductible Contributions Tax-Free Rollovers and Direct Transfers to Traditional IRAs Transfer of Traditional IRA to Spouse at Divorce Penalty for Traditional IRA Withdrawals Before Age 59½ Mandatory Distributions From a Traditional IRA After Age 70½ Inherited Traditional IRAs SEP Basics Salary-Reduction SEP Set Up Before Who Is Eligible for a SIMPLE IRA? SIMPLE IRA Contributions and Distributions Roth IRA Advantages Annual Contributions to a Roth IRA Converting a Traditional IRA to a Roth IRA Recharacterizations and Reconversions Distributions From a Roth IRA Distributions to Roth IRA Beneficiaries 229 J.K. Lasser s Your Income Tax 2015 ix

6 Income From Real Estate Rentals and Royalties Reporting Rental Real Estate Income and Expenses Checklist of Rental Deductions Distinguishing Between a Repair and an Improvement Reporting Rents From a Multi-Unit Residence Depreciation on Converting a Home to Rental Property Renting a Residence to a Relative Personal Use and Rental of a Residence During the Year Counting Personal-Use Days and Rental Days for a Residence Allocating Expenses of a Residence to Rental Days Rentals Lacking Profit Motive Reporting Royalty Income Production Costs of Books and Creative Properties Deducting the Cost of Patents or Copyrights Intangible Drilling Costs Depletion Deduction Oil and Gas Percentage Depletion 245 Loss Restrictions: Passive Activities and At-Risk Limits Rental Activities Rental Real Estate Loss Allowance of up to $25, Real Estate Professionals Participation May Avoid Passive Loss Restrictions Classifying Business Activities as One or Several Material Participation Tests for Business Tax Credits of Passive Activities Limited Determining Passive or Nonpassive Income and Loss Passive Income Recharacterized as Nonpassive Income Working Interests in Oil and Gas Wells Partners and Members of LLCs and LLPs Form Suspended Losses Allowed on Disposition of Your Interest Suspended Tax Credits Personal Service and Closely Held Corporations Sales of Property and of Passive Activity Interests At-Risk Limits What Is At Risk? Amounts Not At Risk At-Risk Investment in Several Activities Carryover of Disallowed Losses Recapture of Losses Where At Risk Is Less Than Zero 274 Other Income Prizes and Awards Lottery and Sweepstake Winnings Gambling Winnings and Losses 276 x J.K. Lasser s Your Income Tax 2015

7 11.4 Gifts and Inheritances Refunds of State and Local Income Tax Deductions Other Recovered Deductions How Legal Damages Are Taxed Cancellation of Debts You Owe Schedule K How Partners Report Partnership Profit and Loss When a Partner Reports Income or Loss Partnership Loss Limitations Unified Tax Audits of Partnerships Stockholder Reporting of S Corp. Income and Loss How Beneficiaries Report Estate or Trust Income Reporting Income in Respect of a Decedent (IRD) Deduction for Estate Tax Attributable to IRD How Life Insurance Proceeds Are Taxed to a Beneficiary A Policy With a Family Income Rider Selling or Surrendering Life Insurance Policy Jury Duty Fees Foster Care Payments 295 CLAIMING DEDUCTIONS 297 Deductions Allowed in Figuring Adjusted Gross Income Figuring Adjusted Gross Income (AGI) Claiming Deductions From Gross Income What Moving Costs Are Deductible? The Distance Test The 39-Week Test for Employees The 78-Week Test for the Self-Employed and Partners Claiming Deductible Moving Expenses Reimbursements of Moving Expenses 307 Claiming the Standard Deduction or Itemized Deductions Claiming the Standard Deduction When To Itemize Husbands and Wives Filing Separate Returns Standard Deduction If 65 or Older or Blind Standard Deduction for Dependents Prepaying or Postponing Itemized Expenses Itemized Deductions Reduced for Higher-Income Taxpayers 314 Charitable Contribution Deductions Deductible Contributions Nondeductible Contributions Contributions That Provide You With Benefits Unreimbursed Expenses of Volunteer Workers Support of a Student in Your Home 322 J.K. Lasser s Your Income Tax 2015 xi

8 14.6 What Kind of Property Are You Donating? Cars, Clothing, and Other Property Valued Below Cost Bargain Sales of Appreciated Property Art Objects Interests in Real Estate Life Insurance Business Inventory Donations Through Trusts Records Needed To Substantiate Your Contributions Form 8283 and Written Appraisal Requirements for Property Donations Penalty for Substantial Overvaluation of Property Ceiling on Charitable Contributions Carryover for Excess Donations Election To Reduce Fair Market Value by Appreciation 339 Itemized Deduction for Interest Expenses Home Mortgage Interest Home Acquisition Loans Home Equity Loans Home Construction Loans Home Improvement Loans Mortgage Insurance Premiums and Other Payment Rules Interest on Refinanced Loans Points Cooperative and Condominium Apartments Investment Interest Limitations Debts To Carry Tax-Exempt Obligations Earmarking Use of Loan Proceeds For Investment or Business Year To Claim an Interest Deduction Prepaid Interest 355 Deductions for Taxes Deductible Taxes Nondeductible Taxes State and Local Income Taxes or General Sales Taxes Deducting Real Estate Taxes Assessments Tenants Payment of Taxes Allocating Taxes When You Sell or Buy Realty Automobile License Fees Taxes Deductible as Business Expenses Foreign Taxes 362 xii J.K. Lasser s Your Income Tax 2015

9 Medical and Dental Expense Deductions Medical and Dental Expenses Must Exceed AGI Threshold Allowable Medical and Dental Care Costs Nondeductible Medical Expenses Reimbursements Reduce Deductible Expenses Expenses of Your Spouse Expenses of Your Dependents Decedent s Medical Expenses Premiums for Health Insurance Travel Costs May Be Medical Deductions Schooling for the Mentally or Physically Disabled Nursing Homes Nurses Wages Home Improvements as Medical Expenses Costs Deductible as Business Expenses Long-Term Care Premiums and Services Life Insurance Used by Chronically ill or Terminally ill Persons 380 Casualty and Theft Losses and Involuntary Conversions Sudden Event Test for Casualty Losses When To Deduct a Casualty Loss Disaster Losses Who May Deduct a Casualty Loss Bank Deposit Losses Damage to Trees and Shrubs Deducting Damage to Your Car Proving a Casualty Loss Theft Losses Proving a Theft Loss Nondeductible Casualty and Theft Losses Floors for Personal-Use Property Losses Figuring Your Loss on Form Personal and Business Use of Property Repairs May Be a Measure of Loss Insurance Reimbursements Excess Living Costs Paid by Insurance Are Not Taxable Do Your Casualty or Theft Losses Exceed Your Income? Defer Gain by Replacing Property Involuntary Conversions Qualifying for Tax Deferral How To Elect To Defer Tax Time Period for Buying Replacement Property Types of Qualifying Replacement Property Cost of Replacement Property Determines Postponed Gain Special Assessments and Severance Damages Reporting Gains From Casualties 405 J.K. Lasser s Your Income Tax 2015 xiii

10 Deducting Job Costs and Other Miscellaneous Expenses 406 xiv J.K. Lasser s Your Income Tax % AGI Floor Reduces Most Miscellaneous Expenses Effect of 2% AGI Floor on Miscellaneous Deductions Checklist of Job Expenses Subject to the 2% AGI Floor Job Expenses Not Subject to the 2% AGI Floor Dues and Subscriptions Uniforms and Work Clothes Expenses of Looking for a New Job Local Transportation Costs Unusual Job Expenses Computers Bought for Work Cell Phones, Calculators, Copiers and Fax Machines Small Tools Employee Home Office Deductions Telephone Costs Checklist of Deductible Investment Expenses Costs of Tax Return Preparation and Audits Deducting Legal Costs Contingent Fees Paid Out of Taxable Awards 419 Travel and Entertainment Expense Deductions Deduction Guide for Travel and Transportation Expenses Commuting Expenses Overnight-Sleep Test Limits Deduction of Meal Costs IRS Meal Allowance Business Trip Deductions Local Lodging Costs When Are You Away From Home? Fixing a Tax Home If You Work in Different Locations Tax Home of Married Couple Working in Different Cities Deducting Living Costs on Temporary Assignment Business-Vacation Trips Within the United States Business-Vacation Trips Outside the United States Deducting Expenses of Business Conventions Travel Expenses of a Spouse, Dependent, or Business Associate Restrictions on Foreign Conventions and Cruises % Deduction Limit The Restrictive Tests for Meals and Entertainment Directly Related Dining and Entertainment Goodwill Entertainment Home Entertaining Your Personal Share of Entertainment Costs Entertainment Costs of Spouses Entertainment Facilities and Club Dues Restrictive Test Exception for Reimbursements % Cost Limitation on Meals and Entertainment 436

11 20.26 Business Gift Deductions Are Limited Record-Keeping Requirements Proving Travel and Entertainment Expenses Reporting T&E Expenses If You Are Self-Employed Employee Reporting of Unreimbursed T&E Expenses Tax Treatment of Reimbursements What Is an Accountable Plan? Per Diem Travel Allowance Under Accountable Plans Automobile Mileage Allowance Reimbursements Under Non-Accountable Plans 445 Personal Exemptions How Many Exemptions May You Claim? Your Spouse as an Exemption Qualifying Children Qualifying Relatives Meeting the Support Test for a Qualifying Relative Multiple Support Agreements Special Rule for Divorced or Separated Parents The Dependent Must Meet a Citizen or Resident Test The Dependent Does Not File a Joint Return Spouses Names and Social Security Numbers on Joint Return Reporting Social Security Numbers of Dependents Phaseout of Personal Exemptions 458 PERSONAL TAX COMPUTATIONS 461 Figuring Your Regular Income Tax Liability Taxable Income and Regular Income Tax Liability Using the Tax Table Tax Computation Worksheet Tax Calculation If You Have Net Capital Gain or Qualified Dividends Foreign Earned Income Tax Worksheet Income Averaging for Farmers and Fishermen Tax Credits Additional Medicare Taxes 466 Alternative Minimum Tax (AMT) Computing Alternative Minimum Tax on Form Adjustments and Preferences for AMT Tax Credits Allowed Against AMT AMT Tax Credit From Regular Tax Avoiding AMT 474 J.K. Lasser s Your Income Tax 2015 xv

12 Computing the Kiddie Tax on Your Child s Investment Income 475 xvi J.K. Lasser s Your Income Tax Filing Your Child s Return Children Subject to Kiddie Tax for Computing Kiddie Tax on Child s Return Parent s Election To Report Child s Dividends and Interest 479 Personal Tax Credits Reduce Your Tax Liability Overview of Personal Tax Credits Child Tax Credit for Children Under Age Figuring the Child Tax Credit Qualifying for Child and Dependent Care Credit Limits on the Dependent Care Credit Earned Income Test for Dependent Care Credit Credit Allowed for Care of Qualifying Persons Expenses Qualifying for the Dependent Care Credit Dependent Care Credit Rules for Separated Couples Qualifying Tests for EIC Income Tests for Earned Income Credit (EIC) Look up EIC in Government Tables Qualifying for the Adoption Credit Claiming the Adoption Credit on Form Eligibility for the Saver s Credit Figuring the Saver s Credit Premium Tax Credit Mortgage Interest Credit Residential Energy Credits Credits for Fuel Cell Vehicles and Plug-in Electric Vehicles Repayment of the First-Time Homebuyer Credit 499 Tax Withholdings Withholdings Should Cover Estimated Tax Income Taxes Withheld on Wages Low Earners May Be Exempt From Withholding Are You Withholding the Right Amount? Voluntary Withholding on Government Payments When Tips Are Subject to Withholding Withholding on Gambling Winnings FICA Withholdings Withholding on Distributions from Retirement Plans and Commercial Annuities Backup Withholding 506 Estimated Tax Payments Do You Owe an Estimated Tax Penalty for 2014? Planning Estimated Tax Payments for Dates for Paying Estimated Tax Installments for Estimates by Husband and Wife Adjusting Your Payments During the Year 512

13 Additional Medicare Taxes Higher-Income Taxpayers May be Subject to Additional Medicare Taxes Additional 0.9% Medicare Tax on Earnings Additional 3.8% Medicare Tax on Net Investment Income 515 TAX PLANNING 519 Tax Savings for Residence Sales Avoiding Tax on Sale of Principal Residence Meeting the Ownership and Use Tests Home Sales by Married Persons Reduced Maximum Exclusion Figuring Gain or Loss Figuring Adjusted Basis Personal and Business Use of a Home No Loss Allowed on Personal Residence Loss on Residence Converted to Rental Property Loss on Residence Acquired by Gift or Inheritance 534 Tax Rules for Investors in Securities Planning Year-End Securities Transactions Earmarking Stock Lots Sale of Stock Dividends Stock Rights Short Sales of Stock Wash Sales Convertible Stocks and Bonds Stock Options Sophisticated Financial Transactions Investing in Tax-Exempts Ordinary Loss for Small Business Stock (Section 1244) Series EE Bonds I Bonds Trader, Dealer, or Investor? Mark-to-Market Election for Traders 549 Tax Savings for Investors in Real Estate Real Estate Ventures Sales of Subdivided Land Dealer or Investor? Exchanging Real Estate Without Tax Timing Your Real Property Sales Cancellation of a Lease Sale of an Option Granting of an Easement Special Tax Credits for Real Estate Investments 558 J.K. Lasser s Your Income Tax 2015 xvii

14 31.9 Foreclosures, Repossessions, Short Sales, and Voluntary Conveyances to Creditors Restructuring Mortgage Debt Abandonments Seller s Repossession After Buyer s Default on Mortgage Foreclosure on Mortgages Other Than Purchase Money Foreclosure Sale to Third Party Transferring Mortgaged Realty 564 Tax Rules for Investors in Mutual Funds Timing of Your Investment Can Affect Your Taxes Reinvestment Plans Mutual-Fund Distributions Reported on Form 1099-DIV Tax-Exempt Bond Funds Fund Expenses Tax Credits From Mutual Funds How To Report Mutual Fund Distributions Redemptions and Exchanges of Fund Shares Basis of Redeemed Shares Comparison of Basis Methods Mutual Funds Compared to Exchange-Traded Funds 572 Educational Tax Benefits 574 xviii J.K. Lasser s Your Income Tax Scholarships and Grants Tuition Reductions for College Employees How Fulbright Awards Are Taxed United States Savings Bond Tuition Plans Contributing to a Qualified Tuition Program (Section 529 Plan) Distributions From Qualified Tuition Programs (Section 529 Plans) Education Tax Credits American Opportunity Credit Lifetime Learning Credit Contributing to a Coverdell Education Savings Account (ESA) Distributions From Coverdell ESAs Tuition and Fees Deduction Student Loan Interest Deduction Types of Deductible Work-Related Costs Work-Related Tests for Education Costs Local Transportation and Travel Away From Home To Take Courses 590

15 Special Tax Rules for Senior Citizens Senior Citizens Get Certain Filing Breaks Social Security Benefits Subject to Tax Computing Taxable Social Security Benefits Election for Lump-Sum Social Security Benefit Payment Retiring on Social Security Benefits How Tax on Social Security Reduces Your Earnings Eligibility for the Credit for the Elderly or the Disabled Figuring the Credit for the Elderly or Disabled Tax Effects of Moving to a Continuing Care Facility Medicare Part B and Part D Premiums for Members of the Armed Forces Taxable Armed Forces Pay and Benefits Tax Breaks for Armed Forces Members Deductions for Armed Forces Personnel Tax-Free Pay for Service in Combat Zone Tax Deadlines Extended for Combat Zone or Contingency Operation Service Tax Forgiveness for Combat Zone or Terrorist or Military Action Deaths Extension To Pay Your Tax When Entering the Service Tax Information for Reservists 607 How To Treat Foreign Earned Income Claiming the Foreign Earned Income Exclusion What Is Foreign Earned Income? Qualifying for the Foreign Earned Income Exclusion How To Treat Housing Costs Meeting the Foreign Residence or Physical Presence Test Claiming Deductions Exclusion Not Established When Your Return Is Due Tax-Free Meals and Lodging for Workers in Camps U. S. Virgin Islands, Samoa, Guam, and Northern Marianas Earnings in Puerto Rico Tax Treaties With Foreign Countries Exchange Rates and Blocked Currency Foreign Tax Credit or Deduction 617 Planning Alimony and Marital Settlements Planning Alimony Agreements Decree or Agreement Required Cash Payments Required Payments Must Stop at Death Child Support Payments Are Not Alimony No Minimum Payment Period for Alimony rd Year Recapture If Alimony Drops by More Than $15, Legal Fees of Marital Settlements 625 J.K. Lasser s Your Income Tax 2015 xix

16 Other Taxes Overview of Household Employment Taxes Social Security and Medicare (FICA) Taxes for Household Employees Filing Schedule H To Report Household Employment Taxes Federal Unemployment Taxes (FUTA) for Household Employees Individual Responsibility Penalty Exemption from Individual Responsibility Payment 632 Gift and Estate Tax Planning Basics Gifts of Appreciated Property Gift Tax Basics Filing a Gift Tax Return Gift Tax Credit Custodial Accounts for Minors Trusts in Family Planning What is the Estate Tax? Take Inventory and Estimate the Value of Your Potential Estate Estate Tax for Planning for a Potential Estate Tax 640 BUSINESS TAX PLANNING 643 Income or Loss From Your Business or Profession 645 xx J.K. Lasser s Your Income Tax Forms of Doing Business Reporting Self-Employed Income Accounting Methods for Reporting Business Income Tax Reporting Year for Self-Employed Reporting Certain Payments and Receipts to the IRS Filing Schedule C Deductions for Professionals Nondeductible Expense Items How Authors and Artists May Write Off Expenses Deducting Expenses of a Sideline Business or Hobby Deducting Expenses of Looking for a New Business Home Office Deduction Write-Off Methods for Home Office Expenses Allocating Expenses to Business Use Business Income May Limit Home Office Deductions Home Office for Sideline Business Depreciation of Office in Cooperative Apartment Net Operating Losses (NOLs) Your Net Operating Loss How To Report a Net Operating Loss How To Carry Back Your Net Operating Loss Election To Carry Forward Losses Overview of the Domestic Production Activities Deduction 669

17 40.24 Qualified Production Activities Figuring the Deduction Business Credits Filing Schedule F Farming Expenses 672 Retirement and Medical Plans for Self-Employed Overview of Retirement and Medical Plans Choosing a Qualified Retirement Plan Choosing a SEP Deductible Contributions How To Claim the Deduction for Contributions How To Qualify a Retirement Plan or SEP Plan Annual Qualified Retirement Plan Reporting How Qualified Retirement Plan Distributions Are Taxed SIMPLE IRA Plans Health Savings Account (HSA) Basics Limits on Deductible HSA Contributions Distributions From HSAs Archer MSAs Small Business Health Insurance Credit 682 Claiming Depreciation Deductions What Property May Be Depreciated? Claiming Depreciation on Your Tax Return First-Year Expensing Deduction MACRS Recovery Periods MACRS Rates Half-Year Convention for MACRS Last Quarter Placements Mid-Quarter Convention % Rate Election Straight-Line Depreciation Computers and Other Listed Property Assets in Service Before MACRS for Real Estate Placed in Service After Demolishing a Building Leasehold Improvements Depreciating Real Estate Placed in Service After 1980 and Before When MACRS Is Not Allowed Amortizing Goodwill and Other Intangibles (Section 197) Deducting the Cost of Computer Software Amortizing Song Rights Bonus Depreciation 699 J.K. Lasser s Your Income Tax 2015 xxi

18 Deducting Car and Truck Expenses Standard Mileage Rate Expense Allocations Depreciation Restrictions on Cars, Trucks, and Vans Annual Ceilings on Depreciation MACRS Rates for Cars, Trucks, and Vans Straight-Line Method Depreciation for Year Vehicle Is Disposed Of Depreciation After Recovery Period Ends Trade-in of Business Vehicle Recapture of Deductions on Business Car, Truck, or Van Keeping Records of Business Use Leased Business Vehicles: Deductions and Income 713 Sales of Business Property Depreciation Recaptured as Ordinary Income on Sale of Personal Property Depreciation Recaptured as Ordinary Income on Sale of Real Estate Recapture of First-Year Expensing Gifts and Inheritances of Depreciable Property Involuntary Conversions and Tax-Free Exchanges Installment Sale of Depreciable Property Sale of a Proprietorship Property Used in a Business (Section 1231 Assets) Sale of Property Used for Business and Personal Purposes Should You Trade in Business Equipment? Corporate Liquidation Additional Medicare Taxes 720 Figuring Self-Employment Tax What Is Self-Employment Income? Partners Pay Self-Employment Tax Schedule SE How Wages Affect Self-Employment Tax Optional Method If 2014 Was a Low-Income or Loss Year Self-Employment Tax Rules for Certain Positions 727 FILING YOUR RETURN AND WHAT HAPPENS AFTER YOU FILE 729 Filing Your Return 731 xxii J.K. Lasser s Your Income Tax Keeping Tax Records Getting Ready To File Your Return Applying for an Extension Getting Your Refund Paying Taxes Due 735

19 46.6 Electronic Filing Notify the IRS of Address Changes Interest on Tax Underpayments Tax Penalties for Late Filing and Late Payment 737 Filing Refund Claims, and Amended Returns Filing An Amended Return When To File a Refund Claim Stating the Reasons for Refund Claim Quick Refund Claims Interest Paid on Refund Claims Refunds Withheld To Cover Debts Amended Returns Showing Additional Tax Penalty for Filing Excessive Refund Claim 746 If the IRS Examines Your Return Odds of Being Audited When the IRS Can Assess Additional Taxes Audit Overview Preparing for the Audit Handling the Audit Tax Penalties for Inaccurate Returns Penalties for Not Reporting Foreign Financial Accounts Agreeing to the Audit Changes Disputing the Audit Changes Offer in Compromise Recovering Costs of a Tax Dispute Suing the IRS for Unauthorized Collection SAMPLE TAX FORMS 759 Form Schedule A 763 Schedule B 764 Schedule C 765 Schedule D 767 Schedule E 769 Schedule SE 771 Form Form Form GLOSSARY 779 INDEX 785 J.K. Lasser s Your Income Tax 2015 xxiii

20