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1040 Ez 2014

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1040 Ez 2014

1040 ez 2014 7. 1040 ez 2014   Filing Information Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: What, When, and Where To FileResident Aliens Nonresident Aliens Amended Returns and Claims for Refund Other Forms You May Have To File PenaltiesCivil Penalties Criminal Penalties Introduction This chapter provides the basic filing information that you may need. 1040 ez 2014 Topics - This chapter discusses: Forms aliens must file, When and where to file, Penalties, and Amended returns and claims for refund. 1040 ez 2014 Useful Items - You may want to see: Forms (and Instructions) 1040 U. 1040 ez 2014 S. 1040 ez 2014 Individual Income Tax Return 1040A U. 1040 ez 2014 S. 1040 ez 2014 Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. 1040 ez 2014 S. 1040 ez 2014 Nonresident Alien Income Tax Return 1040NR-EZ U. 1040 ez 2014 S. 1040 ez 2014 Income Tax Return for Certain Nonresident Aliens With No Dependents See chapter 12 for information about getting these forms. 1040 ez 2014 What, When, and Where To File What return you must file as well as when and where you file that return, depends on your status at the end of the tax year as a resident or a nonresident alien. 1040 ez 2014 Resident Aliens Resident aliens should file Form 1040EZ, 1040A, or 1040 at the address shown in the instructions for that form. 1040 ez 2014 The due date for filing the return and paying any tax due is April 15 of the year following the year for which you are filing a return (but see the Tip, later). 1040 ez 2014 Under U. 1040 ez 2014 S. 1040 ez 2014 immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. 1040 ez 2014 Extensions of time to file. 1040 ez 2014   You are allowed an automatic extension to June 15 to file if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. 1040 ez 2014 You can get an extension of time to October 15 to file your return if you get an extension by April 15 (June 15 if you qualify for the June 15 extension). 1040 ez 2014 Use Form 4868 to get the extension to October 15. 1040 ez 2014 In addition to this 6-month extension, taxpayers who are out of the country (as defined in the Form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). 1040 ez 2014 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. 1040 ez 2014 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. 1040 ez 2014   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U. 1040 ez 2014 S. 1040 ez 2014 citizens and resident aliens abroad who expect to qualify for special tax treatment). 1040 ez 2014    If the due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day which is not a Saturday, Sunday, or legal holiday. 1040 ez 2014 You may be able to file your return electronically. 1040 ez 2014 See IRS e-file in your form instructions. 1040 ez 2014 Nonresident Aliens Nonresident aliens who are required to file an income tax return should use Form 1040NR or, if qualified, Form 1040NR-EZ. 1040 ez 2014 If you are any of the following, you must file a return. 1040 ez 2014 A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during 2013. 1040 ez 2014 (But see Exceptions , later. 1040 ez 2014 ) You must file even if: Your income did not come from a trade or business conducted in the United States, You have no income from U. 1040 ez 2014 S. 1040 ez 2014 sources, or Your income is exempt from income tax. 1040 ez 2014 A nonresident alien individual not engaged in a trade or business in the United States with U. 1040 ez 2014 S. 1040 ez 2014 income on which the tax liability was not satisfied by the withholding of tax at the source. 1040 ez 2014 A representative or agent responsible for filing the return of an individual described in (1) or (2). 1040 ez 2014 A fiduciary for a nonresident alien estate or trust. 1040 ez 2014 You must also file if you want to: Claim a refund of overwithheld or overpaid tax, or Claim the benefit of any deductions or credits. 1040 ez 2014 For example, if you have no U. 1040 ez 2014 S. 1040 ez 2014 business activities but have income from real property that you choose to treat as effectively connected income (discussed in chapter 4), you must timely file a true and accurate return to take any allowable deductions against that income. 1040 ez 2014 For information on what is timely, see When to file for deductions and credits under When To File, later. 1040 ez 2014 Exceptions. 1040 ez 2014   You do not need to file Form 1040NR or Form 1040NR-EZ if you meet either of the following conditions. 1040 ez 2014 Your only U. 1040 ez 2014 S. 1040 ez 2014 trade or business was the performance of personal services, and Your wages were less than $3,900, and You have no other need to file a return to claim a refund of overwithheld taxes, to satisfy additional withholding at source, or to claim income exempt or partly exempt by treaty. 1040 ez 2014 You were a nonresident alien student, teacher, or trainee who was temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa and you have no income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. 1040 ez 2014 Even if you have left the United States and filed a Form 1040-C, U. 1040 ez 2014 S. 1040 ez 2014 Departing Alien Income Tax Return, on departure, you still must file an annual U. 1040 ez 2014 S. 1040 ez 2014 income tax return. 1040 ez 2014 If you are married and both you and your spouse are required to file, you must each file a separate return. 1040 ez 2014 Form 1040NR-EZ You can use Form 1040NR-EZ if all of the following conditions are met. 1040 ez 2014 You do not claim any dependents. 1040 ez 2014 You cannot be claimed as a dependent on someone else's U. 1040 ez 2014 S. 1040 ez 2014 tax return. 1040 ez 2014 If you were married, you do not claim an exemption for your spouse. 1040 ez 2014 Your taxable income is less than $100,000. 1040 ez 2014 The only itemized deduction you can claim is for state and local income taxes. 1040 ez 2014 Note. 1040 ez 2014 Residents of India who were students or business apprentices may be able to take the standard deduction instead of the itemized deduction for state and local income taxes. 1040 ez 2014 See chapter 5. 1040 ez 2014 Your only U. 1040 ez 2014 S. 1040 ez 2014 source income is from wages, salaries, tips, taxable refunds of state and local income taxes, scholarship or fellowship grants, and nontaxable interest or dividends. 1040 ez 2014 (If you had taxable interest or dividend income, you cannot use this form. 1040 ez 2014 ) You are not claiming any adjustments to income other than the student loan interest deduction or scholarship and fellowship grants excluded. 1040 ez 2014 You are not claiming any tax credits. 1040 ez 2014 This is not an “expatriation return. 1040 ez 2014 ” See Expatriation Tax in chapter 4. 1040 ez 2014 The only taxes you owe are: The income tax from the Tax Table. 1040 ez 2014 The social security and Medicare tax from Form 4137 or Form 8919. 1040 ez 2014 You are not claiming a credit for excess social security and tier 1 RRTA tax withheld. 1040 ez 2014 You are not filing Form 8959, to figure the amount of Additional Medicare Tax you owe and/or the amount of Additional Medicare Tax withheld by your employer, if any. 1040 ez 2014 If you do not meet all of the above conditions, you must file Form 1040NR. 1040 ez 2014 When To File If you are an employee and you receive wages subject to U. 1040 ez 2014 S. 1040 ez 2014 income tax withholding, you will generally file by the 15th day of the 4th month after your tax year ends. 1040 ez 2014 For the 2013 calendar year, file your return by April 15, 2014. 1040 ez 2014 If you are not an employee who receives wages subject to U. 1040 ez 2014 S. 1040 ez 2014 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. 1040 ez 2014 For the 2013 calendar year, file your return by June 16, 2014 (because June 15 is a Sunday. 1040 ez 2014 ) Extensions of time to file. 1040 ez 2014   If you cannot file your return by the due date, file Form 4868 or use one of the electronic filing options explained in the Form 4868 instructions. 1040 ez 2014 For the 2013 calendar year, this will extend the due date to October 15, 2014 (December 15, 2014, if the regular due date of your return is June 16, 2014). 1040 ez 2014 You must file the extension by the regular due date of your return. 1040 ez 2014   In addition to the 6-month extension to October 15, taxpayers whose main place of business is outside the United States and Puerto Rico and who live outside those jurisdictions can request a discretionary 2-month extension of time to file their returns (to December 15 for calendar year taxpayers). 1040 ez 2014 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. 1040 ez 2014 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. 1040 ez 2014 When to file for deductions and credits. 1040 ez 2014   To get the benefit of any allowable deductions or credits, you must timely file a true and accurate return. 1040 ez 2014 For this purpose, a return is timely if it is filed within 16 months of the due date just discussed. 1040 ez 2014 However, if you did not file a 2012 tax return and 2013 is not the first year for which you are required to file one, your 2013 return is timely for this purpose if it is filed by the earlier of: The date that is 16 months after the due date for filing your 2013 return, or The date the IRS notifies you that your 2013 return has not been filed and that you cannot claim certain deductions and credits. 1040 ez 2014 The allowance of the following credits is not affected by this time requirement. 1040 ez 2014 Credit for withheld taxes. 1040 ez 2014 Credit for excise tax on certain uses of gasoline and special fuels. 1040 ez 2014 Credit for tax paid by a mutual fund (or other regulated investment company) or a real estate investment trust on undistributed long-term capital gains. 1040 ez 2014 Protective return. 1040 ez 2014   If your activities in the United States were limited and you do not believe that you had any gross income effectively connected with a U. 1040 ez 2014 S. 1040 ez 2014 trade or business during the year, you can file a protective return (Form 1040NR) by the deadline explained above. 1040 ez 2014 By filing a protective return, you protect your right to receive the benefit of deductions and credits in the event it is later determined that some or all of your income is effectively connected. 1040 ez 2014 You are not required to report any effectively connected income or any deductions on the protective return, but you must give the reason the return is being filed. 1040 ez 2014   If you believe some of your activities resulted in effectively connected income, file your return reporting that income and related deductions by the regular due date. 1040 ez 2014 To protect your right to claim deductions or credits resulting from other activities, attach a statement to that return explaining that you wish to protect your right to claim deductions and credits if it is later determined that the other activities produced effectively connected income. 1040 ez 2014   You can follow the same procedure if you believe you have no U. 1040 ez 2014 S. 1040 ez 2014 tax liability because of a U. 1040 ez 2014 S. 1040 ez 2014 tax treaty. 1040 ez 2014 Be sure to also complete item L on page 5 of Form 1040NR. 1040 ez 2014 Waiver of filing deadline. 1040 ez 2014   The IRS may waive the filing deadline if you establish that, based on the facts and circumstances, you acted reasonably and in good faith in failing to file a U. 1040 ez 2014 S. 1040 ez 2014 income tax return (including a protective return) and you cooperate with the IRS in determining your U. 1040 ez 2014 S. 1040 ez 2014 income tax liability for the tax year for which you did not file a return. 1040 ez 2014 Where To File If you are not enclosing a payment, file Form 1040NR-EZ and Form 1040NR at the following address. 1040 ez 2014  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. 1040 ez 2014 O. 1040 ez 2014 Box 1303 Charlotte, NC 28201-1303 Aliens from the U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islands. 1040 ez 2014    If you are a bona fide resident of the U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islands during your entire tax year and work temporarily in the United States, you must pay your income taxes to the U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islands and file your income tax returns at the following address. 1040 ez 2014 Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. 1040 ez 2014 Thomas, VI 00802   Report all income from U. 1040 ez 2014 S. 1040 ez 2014 sources, as well as income from other sources, on your return. 1040 ez 2014 For information on filing U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islands returns, contact the U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islands Bureau of Internal Revenue. 1040 ez 2014   Chapter 8 discusses withholding from U. 1040 ez 2014 S. 1040 ez 2014 wages of U. 1040 ez 2014 S. 1040 ez 2014 Virgin Islanders. 1040 ez 2014 Aliens from Guam or the Commonwealth of the Northern Mariana Islands. 1040 ez 2014   If you are a bona fide resident of Guam or the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you must file your return with, and pay any tax due to, Guam or the CNMI. 1040 ez 2014 Report all income, including income from U. 1040 ez 2014 S. 1040 ez 2014 sources, on your return. 1040 ez 2014 It is not necessary to file a separate U. 1040 ez 2014 S. 1040 ez 2014 income tax return. 1040 ez 2014    Bona fide residents of Guam should file their Guam returns at the following address. 1040 ez 2014   Department of Revenue and Taxation Government of Guam P. 1040 ez 2014 O. 1040 ez 2014 Box 23607 GMF, GU 96921    Bona fide residents of the CNMI should file their CNMI income tax returns at the following address. 1040 ez 2014   Department of Finance Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. 1040 ez 2014 O. 1040 ez 2014 Box 5234 CHRB Saipan, MP 96950   If you are not a bona fide resident of Guam or the CNMI, see Pub. 1040 ez 2014 570, Tax Guide for Individuals With Income From U. 1040 ez 2014 S. 1040 ez 2014 Possessions, for information on where to file your return. 1040 ez 2014 Amended Returns and Claims for Refund If you find changes in your income, deductions, or credits after you mail your return, file Form 1040X, Amended U. 1040 ez 2014 S. 1040 ez 2014 Individual Income Tax Return. 1040 ez 2014 Also use Form 1040X if you should have filed Form 1040, 1040A, or 1040EZ instead of Form 1040NR or 1040NR-EZ, or vice versa. 1040 ez 2014 If you amend Form 1040NR or Form 1040NR-EZ or file the correct return, attach the corrected return (Form 1040, Form 1040NR, etc. 1040 ez 2014 ) to Form 1040X. 1040 ez 2014 Print “Amended” across the top. 1040 ez 2014 Ordinarily, an amended return claiming a refund must be filed within 3 years from the date your return was filed or within 2 years from the time the tax was paid, whichever is later. 1040 ez 2014 A return filed before the final due date is considered to have been filed on the due date. 1040 ez 2014 Other Forms You May Have To File You may be required to file information returns to report certain foreign income or assets, or monetary transactions. 1040 ez 2014 FinCen Form 105 FinCEN Form 105 (formerly Customs Form 4790), Report of International Transportation of Currency or Monetary Instruments, must be filed by each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped, currency or other monetary instruments in a total amount of more than $10,000 at one time from the United States to any place outside the United States, or into the United States from any place outside the United States. 1040 ez 2014 The filing requirement also applies to each person who receives in the United States currency or monetary instruments totaling more than $10,000 at one time from any place outside of the United States. 1040 ez 2014 The term “monetary instruments” means the following: Coin and currency of the United States or of any other country, Travelers' checks in any form, Investment securities or stock in bearer form or otherwise in such form that title to them passes upon delivery, Negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title to them passes upon delivery, and Checks, promissory notes, and money orders which are signed but on which the name of the payee has been omitted. 1040 ez 2014 However, the term does not include: Checks or money orders made payable to the order of a named person which have not been endorsed or which contain restrictive endorsements, Warehouse receipts, or Bills of lading. 1040 ez 2014 A transfer of funds through normal banking procedures (wire transfer) that does not involve the physical transportation of currency or monetary instruments is not required to be reported on FinCEN Form 105. 1040 ez 2014 Filing requirements. 1040 ez 2014   FinCEN Form 105 filing requirements follow. 1040 ez 2014 Recipients. 1040 ez 2014   Each person who receives currency or other monetary instruments in the United States must file FinCEN Form 105 within 15 days after receipt, with the Customs officer in charge at any port of entry or departure, or by mail at the following address. 1040 ez 2014 Commissioner of Customs  Attention: Currency Transportation Reports Washington, DC 20229 Shippers or mailers. 1040 ez 2014   If the currency or other monetary instrument does not accompany the person entering or departing the United States, FinCEN Form 105 can be filed by mail at the above address on or before the date of entry, departure, mailing, or shipping. 1040 ez 2014 Travelers. 1040 ez 2014   Travelers must file FinCEN Form 105 with the Customs officer in charge at any Customs port of entry or departure, when entering or departing the United States. 1040 ez 2014 Penalties. 1040 ez 2014   Civil and criminal penalties are provided for failing to file a report, filing a report containing material omissions or misstatements, or filing a false or fraudulent report. 1040 ez 2014 Also, the entire amount of the currency or monetary instrument may be subject to seizure and forfeiture. 1040 ez 2014 More information. 1040 ez 2014   More information regarding the filing of FinCEN Form 105 can be found in the instructions on the back of the form. 1040 ez 2014 Form 8938 You may have to file Form 8938, Statement of Specified Foreign Financial Assets, to report the ownership of specified foreign financial asset(s) if you are one of the following individuals. 1040 ez 2014 A resident alien of the United States for any part of the tax year. 1040 ez 2014 A resident alien of the United States who elects to be treated as a resident of a foreign country under the provisions of a U. 1040 ez 2014 S. 1040 ez 2014 income tax treaty. 1040 ez 2014 See Effect of Tax Treaties in chapter 1. 1040 ez 2014 A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. 1040 ez 2014 See chapter 1 for information about this election. 1040 ez 2014 A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. 1040 ez 2014 See Publication 570, Tax Guide for Individuals With Income From U. 1040 ez 2014 S. 1040 ez 2014 Possessions, for a definition of bona fide resident. 1040 ez 2014 You must file Form 8938 if the total value of those assets exceeds an applicable threshold (the “reporting threshold”). 1040 ez 2014 The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. 1040 ez 2014 Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. 1040 ez 2014 S. 1040 ez 2014 person. 1040 ez 2014 You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. 1040 ez 2014 More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. 1040 ez 2014 Penalties The law provides penalties for failure to file returns or pay taxes as required. 1040 ez 2014 Civil Penalties If you do not file your return and pay your tax by the due date, you may have to pay a penalty. 1040 ez 2014 You may also have to pay a penalty if you substantially understate your tax, file a frivolous tax submission, or fail to supply your taxpayer identification number. 1040 ez 2014 If you provide fraudulent information on your return, you may have to pay a civil fraud penalty. 1040 ez 2014 Filing late. 1040 ez 2014   If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. 1040 ez 2014 The penalty is based on the tax not paid by the due date (without regard to extensions). 1040 ez 2014 The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. 1040 ez 2014 Fraud. 1040 ez 2014   If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%. 1040 ez 2014 Return over 60 days late. 1040 ez 2014   If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. 1040 ez 2014 Exception. 1040 ez 2014   You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect. 1040 ez 2014 Paying tax late. 1040 ez 2014   You will have to pay a failure-to-pay penalty of ½ of 1% (. 1040 ez 2014 50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. 1040 ez 2014 This penalty does not apply during the automatic 6-month extension of time to file period, if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return. 1040 ez 2014   The monthly rate of the failure-to-pay penalty is half the usual rate (. 1040 ez 2014 25% instead of . 1040 ez 2014 50%) if an installment agreement is in effect for that month. 1040 ez 2014 You must have filed your return by the due date (including extensions) to qualify for this reduced penalty. 1040 ez 2014   If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at least 10 days after the day that the notice is issued. 1040 ez 2014 If a notice and demand for immediate payment is issued, the rate will increase to 1% at the start of the first month beginning after the day that the notice and demand is issued. 1040 ez 2014   This penalty cannot be more than 25% of your unpaid tax. 1040 ez 2014 You will not have to pay the penalty if you can show that you had a good reason for not paying your tax on time. 1040 ez 2014 Combined penalties. 1040 ez 2014   If both the failure-to-file penalty and the failure-to-pay penalty (discussed earlier) apply in any month, the 5% (or 15%) failure-to-file penalty is reduced by the failure-to-pay penalty. 1040 ez 2014 However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. 1040 ez 2014 Accuracy-related penalty. 1040 ez 2014   You may have to pay an accuracy-related penalty if you underpay your tax because: You show negligence or disregard of rules or regulations, You substantially understate your income tax, You claim tax benefits for a transaction that lacks economic substance, or You fail to disclose a foreign financial asset. 1040 ez 2014 The penalty is equal to 20% of the underpayment. 1040 ez 2014 The penalty is 40% of any portion of the underpayment that is attributable to an undisclosed noneconomic substance transaction or an undisclosed foreign financial asset transaction. 1040 ez 2014 The penalty will not be figured on any part of an underpayment on which the fraud penalty (discussed later) is charged. 1040 ez 2014 Negligence or disregard. 1040 ez 2014   The term “negligence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. 1040 ez 2014 Negligence also includes failure to keep adequate books and records. 1040 ez 2014 You will not have to pay a negligence penalty if you have a reasonable basis for a position you took. 1040 ez 2014   The term “disregard” includes any careless, reckless, or intentional disregard. 1040 ez 2014 Adequate disclosure. 1040 ez 2014   You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a position that has at least a reasonable basis. 1040 ez 2014 See Disclosure statement , later. 1040 ez 2014   This exception will not apply to an item that is attributable to a tax shelter. 1040 ez 2014 In addition, it will not apply if you fail to keep adequate books and records, or substantiate items properly. 1040 ez 2014 Substantial understatement of income tax. 1040 ez 2014   You understate your tax if the tax shown on your return is less than the correct tax. 1040 ez 2014 The understatement is substantial if it is more than the larger of 10% of the correct tax or $5,000. 1040 ez 2014 However, the amount of the understatement is reduced to the extent the understatement is due to: Substantial authority, or Adequate disclosure and a reasonable basis. 1040 ez 2014   If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. 1040 ez 2014 However, there is a reduction for a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not the proper treatment. 1040 ez 2014 Substantial authority. 1040 ez 2014   Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstances. 1040 ez 2014 Consideration will be given to court opinions, Treasury regulations, revenue rulings, revenue procedures, and notices and announcements issued by the IRS and published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours. 1040 ez 2014 Disclosure statement. 1040 ez 2014   To adequately disclose the relevant facts about your tax treatment of an item, use Form 8275, Disclosure Statement. 1040 ez 2014 You must also have a reasonable basis for treating the item the way you did. 1040 ez 2014   In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2012-51, 2012-51 IRB 719 (or later update) are considered adequately disclosed on your return without filing Form 8275. 1040 ez 2014   Use Form 8275-R, Regulation Disclosure Statement, to disclose items or positions contrary to regulations. 1040 ez 2014 Transaction lacking economic substance. 1040 ez 2014   For more information on economic substance, see section 7701(o). 1040 ez 2014 Foreign financial asset. 1040 ez 2014   For more information on undisclosed foreign financial assets, see section 6662(j) or the Instructions for Form 8938. 1040 ez 2014 Reasonable cause. 1040 ez 2014   You will not have to pay a penalty if you show a good reason (reasonable cause) for the way you treated an item. 1040 ez 2014 You must also show that you acted in good faith. 1040 ez 2014 This does not apply to a transaction that lacks economic substance. 1040 ez 2014 Filing erroneous claim for refund or credit. 1040 ez 2014   You may have to pay a penalty if you file an erroneous claim for refund or credit. 1040 ez 2014 The penalty is equal to 20% of the disallowed amount of the claim, unless you can show a reasonable basis for the way you treated an item. 1040 ez 2014 However, any disallowed amount due to a transaction that lacks economic substance will not be treated as having a reasonable basis. 1040 ez 2014 The penalty will not be figured on any part of the disallowed amount of the claim that relates to the earned income credit or on which the accuracy-related or fraud penalties are charged. 1040 ez 2014 Frivolous tax submission. 1040 ez 2014   You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. 1040 ez 2014 A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect. 1040 ez 2014 For more information on frivolous returns, frivolous submissions, and a list of positions that are identified as frivolous, see Notice 2010-33, 2010-17 IRB 609 available at www. 1040 ez 2014 irs. 1040 ez 2014 gov/irb/2010-17_irb/ar13. 1040 ez 2014 html. 1040 ez 2014   You will have to pay the penalty if you filed this kind of return or submission based on a frivolous position or a desire to delay or interfere with the administration of federal tax laws. 1040 ez 2014 This includes altering or striking out the preprinted language above the space provided for your signature. 1040 ez 2014   This penalty is added to any other penalty provided by law. 1040 ez 2014 Fraud. 1040 ez 2014   If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud will be added to your tax. 1040 ez 2014 Failure to supply taxpayer identification number. 1040 ez 2014   If you do not include your social security number (SSN) or individual taxpayer identification number (ITIN) or the SSN or ITIN of another person where required on a return, statement, or other document, you will be subject to a penalty of $50 for each failure. 1040 ez 2014 You will also be subject to a penalty of $50 if you do not give your SSN or ITIN to another person when it is required on a return, statement, or other document. 1040 ez 2014   For example, if you have a bank account that earns interest, you must give your SSN or ITIN to the bank. 1040 ez 2014 The number must be shown on the Form 1099-INT or other statement the bank sends you. 1040 ez 2014 If you do not give the bank your SSN or ITIN, you will be subject to the $50 penalty. 1040 ez 2014 (You also may be subject to “backup” withholding of income tax. 1040 ez 2014 )   You will not have to pay the penalty if you are able to show that the failure was due to reasonable cause and not willful neglect. 1040 ez 2014 Criminal Penalties You may be subject to criminal prosecution (brought to trial) for actions such as: Tax evasion, Willful failure to file a return, supply information, or pay any tax due, Fraud and false statements, or Preparing and filing a fraudulent return. 1040 ez 2014 Prev  Up  Next   Home   More Online Publications
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Choosing a Credit Counseling Agency

Counseling services are available to help people budget money and pay bills. Credit unions, Cooperative Extension offices, military family service centers and religious organizations are among those that may offer free or low-cost credit counseling.

Local, nonprofit agencies that provide educational programs on money management and help in developing debt payment plans operate under the name Consumer Credit Counseling Service (CCCS). Make certain that the agency is accredited by the Council on Accreditation, (COA), or the International Organization for Standardization (ISO). The counselor should also be certified by the National Foundation for Credit Counseling (NFCC), an organization that supports a national network of credit counselors.

Typically, a counseling service will negotiate lower payments with your creditors, then make the payments using money you send to it each month. The cost of setting up this debt-management plan is paid by the creditor, not you. Ask these questions to find the best counselor for you:

  • What services do you offer? Look for an organization that offers budget counseling and money management classes as well as a debt-management plan.
  • Do you offer free information? Avoid organizations that charge for information or make you provide a lot of details about your problem first.
  • What are your fees? Are there set-up and/or monthly fees? A typical set-up fee is $10. Beware of agencies that charge large up-front fees.
  • How will the debt management plan work? What debts can be included in the plan and will you get regular reports on your accounts?
  • Ask whether the counselor can get creditors to lower or eliminate interest and fees. If the answer is yes, contact your creditors to verify this.
  • Ask what happens if you can't afford to pay. If an organization won't help you because you can't afford to pay, go somewhere else for help.
  • Will your counselor help you avoid future problems? Getting a plan for avoiding future debt is as important as solving the immediate debt problem.
  • Ask for a contract. All verbal promises should be in writing before you pay any money.
  • Are your counselors accredited or certified? Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Check with your local consumer protection agency and the Better Business Bureau to see if any complaints have been filed about the counseling service you're considering.

If you have concerns about approved credit counseling agencies or credit counseling providers, please contact the U.S. Trustee Program .

The 1040 Ez 2014

1040 ez 2014 2. 1040 ez 2014   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. 1040 ez 2014 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. 1040 ez 2014 Deduction may depend on your type of business. 1040 ez 2014 Exception for events that benefit charitable organizations. 1040 ez 2014 Food and beverages in skybox seats. 1040 ez 2014 What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. 1040 ez 2014 You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. 1040 ez 2014 The rules and definitions are summarized in Table 2-1 . 1040 ez 2014 You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. 1040 ez 2014 Directly-related test. 1040 ez 2014 Associated test. 1040 ez 2014 Both of these tests are explained later. 1040 ez 2014 An ordinary expense is one that is common and accepted in your trade or business. 1040 ez 2014 A necessary expense is one that is helpful and appropriate for your business. 1040 ez 2014 An expense does not have to be required to be considered necessary. 1040 ez 2014 The amount you can deduct for entertainment expenses may be limited. 1040 ez 2014 Generally, you can deduct only 50% of your unreimbursed entertainment expenses. 1040 ez 2014 This limit is discussed later under 50% Limit. 1040 ez 2014 Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. 1040 ez 2014 Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. 1040 ez 2014 Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. 1040 ez 2014 See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. 1040 ez 2014 You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. 1040 ez 2014 It is not necessary to devote more time to business than to entertainment. 1040 ez 2014 However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. 1040 ez 2014 Table 2-1. 1040 ez 2014 When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. 1040 ez 2014 Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. 1040 ez 2014 An ordinary expense is one that is common and accepted in your trade or business. 1040 ez 2014 A necessary expense is one that is helpful and appropriate. 1040 ez 2014 Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. 1040 ez 2014   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. 1040 ez 2014 Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. 1040 ez 2014 You cannot deduct expenses that are lavish or extravagant under the circumstances. 1040 ez 2014 You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). 1040 ez 2014 You do not have to show that business income or other business benefit actually resulted from each entertainment expense. 1040 ez 2014 Clear business setting. 1040 ez 2014   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. 1040 ez 2014 The following situations are examples of entertainment in a clear business setting. 1040 ez 2014 Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. 1040 ez 2014 Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). 1040 ez 2014 Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. 1040 ez 2014 An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. 1040 ez 2014 Expenses not considered directly related. 1040 ez 2014   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. 1040 ez 2014 The following are examples of situations where there are substantial distractions. 1040 ez 2014 A meeting or discussion at a nightclub, theater, or sporting event. 1040 ez 2014 A meeting or discussion during what is essentially a social gathering, such as a cocktail party. 1040 ez 2014 A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. 1040 ez 2014 Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. 1040 ez 2014 To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). 1040 ez 2014 Associated with trade or business. 1040 ez 2014   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. 1040 ez 2014 The purpose may be to get new business or to encourage the continuation of an existing business relationship. 1040 ez 2014 Substantial business discussion. 1040 ez 2014   Whether a business discussion is substantial depends on the facts of each case. 1040 ez 2014 A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. 1040 ez 2014   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. 1040 ez 2014 It is not necessary that you devote more time to business than to entertainment. 1040 ez 2014 You do not have to discuss business during the meal or entertainment. 1040 ez 2014 Meetings at conventions. 1040 ez 2014   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. 1040 ez 2014 However, your reason for attending the convention or meeting must be to further your trade or business. 1040 ez 2014 The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. 1040 ez 2014 Directly before or after business discussion. 1040 ez 2014   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. 1040 ez 2014   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. 1040 ez 2014 Among the facts to consider are the place, date, and duration of the business discussion. 1040 ez 2014 If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. 1040 ez 2014 Example. 1040 ez 2014 A group of business associates comes from out of town to your place of business to hold a substantial business discussion. 1040 ez 2014 If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. 1040 ez 2014 The expense meets the associated test. 1040 ez 2014 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. 1040 ez 2014 (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. 1040 ez 2014 See Individuals subject to “hours of service” limits , later. 1040 ez 2014 ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. 1040 ez 2014 Figure A summarizes the general rules explained in this section. 1040 ez 2014 The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. 1040 ez 2014 Included expenses. 1040 ez 2014   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. 1040 ez 2014 However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. 1040 ez 2014 Figure A. 1040 ez 2014 Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. 1040 ez 2014 See Exceptions to the 50% Limit . 1040 ez 2014 Please click here for the text description of the image. 1040 ez 2014 Figure A. 1040 ez 2014 Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. 1040 ez 2014   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. 1040 ez 2014   The 50% limit also applies to certain meal and entertainment expenses that are not business related. 1040 ez 2014 It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. 1040 ez 2014 It also applies to the cost of meals included in deductible educational expenses. 1040 ez 2014 When to apply the 50% limit. 1040 ez 2014   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. 1040 ez 2014 You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. 1040 ez 2014 Example 1. 1040 ez 2014 You spend $200 for a business-related meal. 1040 ez 2014 If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. 1040 ez 2014 Your deduction cannot be more than $45 (50% × $90). 1040 ez 2014 Example 2. 1040 ez 2014 You purchase two tickets to a concert and give them to a client. 1040 ez 2014 You purchased the tickets through a ticket agent. 1040 ez 2014 You paid $200 for the two tickets, which had a face value of $80 each ($160 total). 1040 ez 2014 Your deduction cannot be more than $80 (50% × $160). 1040 ez 2014 Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. 1040 ez 2014 Figure A can help you determine if the 50% limit applies to you. 1040 ez 2014 Expenses not subject to 50% limit. 1040 ez 2014   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. 1040 ez 2014 1 - Employee's reimbursed expenses. 1040 ez 2014   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. 1040 ez 2014 Accountable plans are discussed in chapter 6. 1040 ez 2014 2 - Self-employed. 1040 ez 2014   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. 1040 ez 2014 You have these expenses as an independent contractor. 1040 ez 2014 Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. 1040 ez 2014 You provide adequate records of these expenses to your customer or client. 1040 ez 2014 (See chapter 5 . 1040 ez 2014 )   In this case, your client or customer is subject to the 50% limit on the expenses. 1040 ez 2014 Example. 1040 ez 2014 You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. 1040 ez 2014 You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. 1040 ez 2014 If the client can deduct the expenses, the client is subject to the 50% limit. 1040 ez 2014 If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. 1040 ez 2014 3 - Advertising expenses. 1040 ez 2014   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. 1040 ez 2014 For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. 1040 ez 2014 4 - Sale of meals or entertainment. 1040 ez 2014   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. 1040 ez 2014 For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. 1040 ez 2014 5 - Charitable sports event. 1040 ez 2014   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. 1040 ez 2014 For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. 1040 ez 2014 Individuals subject to “hours of service” limits. 1040 ez 2014   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. 1040 ez 2014 The percentage is 80%. 1040 ez 2014   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. 1040 ez 2014 Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. 1040 ez 2014 Interstate truck operators and bus drivers who are under Department of Transportation regulations. 1040 ez 2014 Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. 1040 ez 2014 Certain merchant mariners who are under Coast Guard regulations. 1040 ez 2014 What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. 1040 ez 2014 Entertainment. 1040 ez 2014   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. 1040 ez 2014 Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. 1040 ez 2014   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. 1040 ez 2014 A meal as a form of entertainment. 1040 ez 2014   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. 1040 ez 2014 A meal expense includes the cost of food, beverages, taxes, and tips for the meal. 1040 ez 2014 To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. 1040 ez 2014    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. 1040 ez 2014    Meals sold in the normal course of your business are not considered entertainment. 1040 ez 2014 Deduction may depend on your type of business. 1040 ez 2014   Your kind of business may determine if a particular activity is considered entertainment. 1040 ez 2014 For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. 1040 ez 2014 This is because fashion shows are typical in your business. 1040 ez 2014 But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. 1040 ez 2014 Separating costs. 1040 ez 2014   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. 1040 ez 2014 You must have a reasonable basis for making this allocation. 1040 ez 2014 For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. 1040 ez 2014 Taking turns paying for meals or entertainment. 1040 ez 2014   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. 1040 ez 2014 Lavish or extravagant expenses. 1040 ez 2014   You cannot deduct expenses for entertainment that are lavish or extravagant. 1040 ez 2014 An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. 1040 ez 2014 Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. 1040 ez 2014 Allocating between business and nonbusiness. 1040 ez 2014   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. 1040 ez 2014 You can deduct only the business part. 1040 ez 2014 If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. 1040 ez 2014 Example. 1040 ez 2014 You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. 1040 ez 2014 Only 4/11 of the expense qualifies as a business entertainment expense. 1040 ez 2014 You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. 1040 ez 2014 Trade association meetings. 1040 ez 2014   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. 1040 ez 2014 These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. 1040 ez 2014 Entertainment tickets. 1040 ez 2014   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. 1040 ez 2014 For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. 1040 ez 2014 Exception for events that benefit charitable organizations. 1040 ez 2014   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. 1040 ez 2014 You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. 1040 ez 2014 The event's main purpose is to benefit a qualified charitable organization. 1040 ez 2014 The entire net proceeds go to the charity. 1040 ez 2014 The event uses volunteers to perform substantially all the event's work. 1040 ez 2014    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. 1040 ez 2014 Example 1. 1040 ez 2014 You purchase tickets to a golf tournament organized by the local volunteer fire company. 1040 ez 2014 All net proceeds will be used to buy new fire equipment. 1040 ez 2014 The volunteers will run the tournament. 1040 ez 2014 You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. 1040 ez 2014 Example 2. 1040 ez 2014 You purchase tickets to a college football game through a ticket broker. 1040 ez 2014 After having a business discussion, you take a client to the game. 1040 ez 2014 Net proceeds from the game go to colleges that qualify as charitable organizations. 1040 ez 2014 However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. 1040 ez 2014 Skyboxes and other private luxury boxes. 1040 ez 2014   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. 1040 ez 2014   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. 1040 ez 2014 For example, renting a skybox for a series of playoff games is considered renting it for more than one event. 1040 ez 2014 All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. 1040 ez 2014   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. 1040 ez 2014 Example. 1040 ez 2014 You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. 1040 ez 2014 The cost of regular nonluxury box seats at each event is $30 a seat. 1040 ez 2014 You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). 1040 ez 2014 Food and beverages in skybox seats. 1040 ez 2014   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. 1040 ez 2014 The amounts separately stated for food and beverages must be reasonable. 1040 ez 2014 You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. 1040 ez 2014 What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. 1040 ez 2014 Club dues and membership fees. 1040 ez 2014   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. 1040 ez 2014 This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. 1040 ez 2014   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. 1040 ez 2014 You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. 1040 ez 2014 Entertainment facilities. 1040 ez 2014   Generally, you cannot deduct any expense for the use of an entertainment facility. 1040 ez 2014 This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. 1040 ez 2014   An entertainment facility is any property you own, rent, or use for entertainment. 1040 ez 2014 Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. 1040 ez 2014 Out-of-pocket expenses. 1040 ez 2014   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. 1040 ez 2014 These are not expenses for the use of an entertainment facility. 1040 ez 2014 However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. 1040 ez 2014 Expenses for spouses. 1040 ez 2014   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. 1040 ez 2014 However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. 1040 ez 2014 Example. 1040 ez 2014 You entertain a customer. 1040 ez 2014 The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. 1040 ez 2014 The customer's spouse joins you because it is impractical to entertain the customer without the spouse. 1040 ez 2014 You can deduct the cost of entertaining the customer's spouse. 1040 ez 2014 If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. 1040 ez 2014 Gift or entertainment. 1040 ez 2014   Any item that might be considered either a gift or entertainment generally will be considered entertainment. 1040 ez 2014 However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. 1040 ez 2014   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. 1040 ez 2014 You can treat the tickets as either a gift or entertainment, whichever is to your advantage. 1040 ez 2014   You can change your treatment of the tickets at a later date by filing an amended return. 1040 ez 2014 Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. 1040 ez 2014   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. 1040 ez 2014 You cannot choose, in this case, to treat the tickets as a gift. 1040 ez 2014 Prev  Up  Next   Home   More Online Publications