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Past years taxes Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Past years taxes Text message. Past years taxes Credit card. Past years taxes Pay-by-phone account. Past years taxes Stock certificate. Past years taxes Promissory note. Past years taxes Option. Past years taxes Borrowed funds. Past years taxes Conditional gift. Past years taxes Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Past years taxes Total deduction over $500. Past years taxes Deduction over $5,000 for one item. Past years taxes Vehicle donations. Past years taxes Clothing and household items not in good used condition. Past years taxes Easement on building in historic district. Past years taxes Deduction over $500,000. Past years taxes How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Past years taxes Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Past years taxes How to check whether an organization can receive deductible charitable contributions. Past years taxes   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Past years taxes Or go to IRS. Past years taxes gov. Past years taxes Click on “Tools” and then on “Exempt Organizations Select Check” (www. Past years taxes irs. Past years taxes gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Past years taxes This online tool will enable you to search for qualified organizations. Past years taxes You can also call the IRS to find out if an organization is qualified. Past years taxes Call 1-877-829-5500. Past years taxes People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Past years taxes Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Past years taxes gsa. Past years taxes gov/fedrelay. Past years taxes Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Past years taxes A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Past years taxes It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Past years taxes Certain organizations that foster national or international amateur sports competition also qualify. Past years taxes War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Past years taxes Domestic fraternal societies, orders, and associations operating under the lodge system. Past years taxes (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Past years taxes ) Certain nonprofit cemetery companies or corporations. Past years taxes (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Past years taxes ) The United States or any state, the District of Columbia, a U. Past years taxes S. Past years taxes possession (including Puerto Rico), a political subdivision of a state or U. Past years taxes S. Past years taxes possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Past years taxes (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Past years taxes ) Example 1. Past years taxes You contribute cash to your city's police department to be used as a reward for information about a crime. Past years taxes The city police department is a qualified organization, and your contribution is for a public purpose. Past years taxes You can deduct your contribution. Past years taxes Example 2. Past years taxes You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Past years taxes Because the trust fund is part of the U. Past years taxes S. Past years taxes Government, you contributed to a qualified organization. Past years taxes You can deduct your contribution. Past years taxes Examples. Past years taxes   The following list gives some examples of qualified organizations. Past years taxes Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Past years taxes Most nonprofit charitable organizations such as the American Red Cross and the United Way. Past years taxes Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Past years taxes This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Past years taxes However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Past years taxes Nonprofit hospitals and medical research organizations. Past years taxes Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Past years taxes Nonprofit volunteer fire companies. Past years taxes Nonprofit organizations that develop and maintain public parks and recreation facilities. Past years taxes Civil defense organizations. Past years taxes Canadian charities. Past years taxes   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Past years taxes To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Past years taxes See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Past years taxes Mexican charities. Past years taxes   Under the U. Past years taxes S. Past years taxes -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Past years taxes S. Past years taxes law. Past years taxes To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Past years taxes The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Past years taxes Israeli charities. Past years taxes   Under the U. Past years taxes S. Past years taxes -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Past years taxes S. Past years taxes law. Past years taxes To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Past years taxes The limits described in Limits on Deductions , later, apply. Past years taxes The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Past years taxes Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Past years taxes A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Past years taxes The contributions must be made to a qualified organization and not set aside for use by a specific person. Past years taxes If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Past years taxes See Contributions of Property , later. Past years taxes Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Past years taxes In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Past years taxes See Limits on Deductions , later. Past years taxes Table 1 in this publication gives examples of contributions you can and cannot deduct. Past years taxes Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Past years taxes Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Past years taxes If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Past years taxes For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Past years taxes Example 1. Past years taxes You pay $65 for a ticket to a dinner-dance at a church. Past years taxes Your entire $65 payment goes to the church. Past years taxes The ticket to the dinner-dance has a fair market value of $25. Past years taxes When you buy your ticket, you know its value is less than your payment. Past years taxes To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Past years taxes You can deduct $40 as a charitable contribution to the church. Past years taxes Example 2. Past years taxes At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Past years taxes The amount you pay is no more than the fair rental value. Past years taxes You have not made a deductible charitable contribution. Past years taxes Athletic events. Past years taxes   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Past years taxes   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Past years taxes Subtract the price of the tickets from your payment. Past years taxes You can deduct 80% of the remaining amount as a charitable contribution. Past years taxes Example 1. Past years taxes You pay $300 a year for membership in a university's athletic scholarship program. Past years taxes The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Past years taxes You can deduct $240 (80% of $300) as a charitable contribution. Past years taxes Example 2. Past years taxes The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Past years taxes You must subtract the usual price of a ticket ($120) from your $300 payment. Past years taxes The result is $180. Past years taxes Your deductible charitable contribution is $144 (80% of $180). Past years taxes Charity benefit events. Past years taxes   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Past years taxes   If there is an established charge for the event, that charge is the value of your benefit. Past years taxes If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Past years taxes Whether you use the tickets or other privileges has no effect on the amount you can deduct. Past years taxes However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Past years taxes    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Past years taxes If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Past years taxes Example. Past years taxes You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Past years taxes Printed on the ticket is “Contribution–$40. Past years taxes ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Past years taxes Membership fees or dues. Past years taxes   You may be able to deduct membership fees or dues you pay to a qualified organization. Past years taxes However, you can deduct only the amount that is more than the value of the benefits you receive. Past years taxes   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Past years taxes They are not qualified organizations. Past years taxes Certain membership benefits can be disregarded. Past years taxes   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Past years taxes Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Past years taxes Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Past years taxes 20. Past years taxes Token items. Past years taxes   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Past years taxes You receive only a small item or other benefit of token value. Past years taxes The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Past years taxes The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Past years taxes Written statement. Past years taxes   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Past years taxes The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Past years taxes It must also give you a good faith estimate of the value of those goods or services. Past years taxes   The organization can give you the statement either when it solicits or when it receives the payment from you. Past years taxes Exception. Past years taxes   An organization will not have to give you this statement if one of the following is true. Past years taxes The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Past years taxes You receive only items whose value is not substantial as described under Token items , earlier. Past years taxes You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Past years taxes Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Past years taxes You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Past years taxes You can deduct up to $50 a month for each full calendar month the student lives with you. Past years taxes Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Past years taxes Qualified organization. Past years taxes   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Past years taxes For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Past years taxes But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Past years taxes Relative. Past years taxes   The term “relative” means any of the following persons. Past years taxes Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Past years taxes A legally adopted child is considered your child. Past years taxes Your brother, sister, half brother, half sister, stepbrother, or stepsister. Past years taxes Your father, mother, grandparent, or other direct ancestor. Past years taxes Your stepfather or stepmother. Past years taxes A son or daughter of your brother or sister. Past years taxes A brother or sister of your father or mother. Past years taxes Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Past years taxes Dependent. Past years taxes   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Past years taxes    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Past years taxes S. Past years taxes residents and cannot be claimed as dependents. Past years taxes Qualifying expenses. Past years taxes   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Past years taxes Expenses that do not qualify. Past years taxes   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Past years taxes Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Past years taxes Reimbursed expenses. Past years taxes   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Past years taxes However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Past years taxes Mutual exchange program. Past years taxes   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Past years taxes Reporting expenses. Past years taxes   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Past years taxes Out-of-Pocket Expenses in Giving Services Table 2. Past years taxes Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Past years taxes All of the rules explained in this publication also apply. Past years taxes See, in particular, Out-of-Pocket Expenses in Giving Services . Past years taxes Question Answer I volunteer 6 hours a week in the office of a qualified organization. Past years taxes The receptionist is paid $10 an hour for the same work. Past years taxes Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Past years taxes  The office is 30 miles from my home. Past years taxes Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Past years taxes If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Past years taxes I volunteer as a Red Cross nurse's aide at a hospital. Past years taxes Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Past years taxes I pay a babysitter to watch my children while I volunteer for a qualified organization. Past years taxes Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Past years taxes (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Past years taxes ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Past years taxes The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Past years taxes Table 2 contains questions and answers that apply to some individuals who volunteer their services. Past years taxes Underprivileged youths selected by charity. Past years taxes   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Past years taxes The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Past years taxes Your own similar expenses in accompanying the youths are not deductible. Past years taxes Conventions. Past years taxes   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Past years taxes However, see Travel , later. Past years taxes   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Past years taxes You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Past years taxes   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Past years taxes You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Past years taxes Uniforms. Past years taxes   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Past years taxes Foster parents. Past years taxes   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Past years taxes A qualified organization must select the individuals you take into your home for foster care. Past years taxes   You can deduct expenses that meet both of the following requirements. Past years taxes They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Past years taxes They are incurred primarily to benefit the qualified organization. Past years taxes   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Past years taxes For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Past years taxes Example. Past years taxes You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Past years taxes Your unreimbursed expenses are not deductible as charitable contributions. Past years taxes Church deacon. Past years taxes   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Past years taxes These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Past years taxes Car expenses. Past years taxes   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Past years taxes You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Past years taxes   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Past years taxes   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Past years taxes   You must keep reliable written records of your car expenses. Past years taxes For more information, see Car expenses under Records To Keep, later. Past years taxes Travel. Past years taxes   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Past years taxes This applies whether you pay the expenses directly or indirectly. Past years taxes You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Past years taxes   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Past years taxes Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Past years taxes However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Past years taxes Example 1. Past years taxes You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Past years taxes You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Past years taxes You participate in the activities of the group and enjoy your time with them. Past years taxes You oversee the breaking of camp and you transport the group home. Past years taxes You can deduct your travel expenses. Past years taxes Example 2. Past years taxes You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Past years taxes The project is sponsored by a charitable organization. Past years taxes In most circumstances, you cannot deduct your expenses. Past years taxes Example 3. Past years taxes You work for several hours each morning on an archeological dig sponsored by a charitable organization. Past years taxes The rest of the day is free for recreation and sightseeing. Past years taxes You cannot take a charitable contribution deduction even though you work very hard during those few hours. Past years taxes Example 4. Past years taxes You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Past years taxes In the evening you go to the theater. Past years taxes You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Past years taxes Daily allowance (per diem). Past years taxes   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Past years taxes You may be able to deduct any necessary travel expenses that are more than the allowance. Past years taxes Deductible travel expenses. Past years taxes   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Past years taxes Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Past years taxes For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Past years taxes Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Past years taxes The deduction is limited to $10,000 a year. Past years taxes To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Past years taxes Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Past years taxes Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Past years taxes You must keep records showing the time, place, date, amount, and nature of the expenses. Past years taxes For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Past years taxes irs. Past years taxes gov/pub/irs-irbs/irb06-47. Past years taxes pdf. Past years taxes Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Past years taxes You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Past years taxes Detailed discussions of these items follow. Past years taxes Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Past years taxes Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Past years taxes Contributions to individuals who are needy or worthy. Past years taxes You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Past years taxes But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Past years taxes Example. Past years taxes You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Past years taxes However, you cannot deduct contributions earmarked for relief of a particular individual or family. Past years taxes Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Past years taxes Expenses you paid for another person who provided services to a qualified organization. Past years taxes Example. Past years taxes Your son does missionary work. Past years taxes You pay his expenses. Past years taxes You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Past years taxes Payments to a hospital that are for a specific patient's care or for services for a specific patient. Past years taxes You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Past years taxes Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Past years taxes Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Past years taxes Chambers of commerce and other business leagues or organizations. Past years taxes Civic leagues and associations. Past years taxes Communist organizations. Past years taxes Country clubs and other social clubs. Past years taxes Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Past years taxes (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Past years taxes ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Past years taxes However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Past years taxes For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Past years taxes The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Past years taxes Homeowners' associations. Past years taxes Labor unions. Past years taxes But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Past years taxes See Publication 529, Miscellaneous Deductions. Past years taxes Political organizations and candidates. Past years taxes Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Past years taxes See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Past years taxes These contributions include the following. Past years taxes Contributions for lobbying. Past years taxes This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Past years taxes Contributions to a retirement home for room, board, maintenance, or admittance. Past years taxes Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Past years taxes Costs of raffles, bingo, lottery, etc. Past years taxes You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Past years taxes For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Past years taxes Dues to fraternal orders and similar groups. Past years taxes However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Past years taxes Tuition, or amounts you pay instead of tuition. Past years taxes You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Past years taxes You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Past years taxes ” Contributions connected with split-dollar insurance arrangements. Past years taxes You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Past years taxes Example. Past years taxes You donate money to a charitable organization. Past years taxes The charity uses the money to purchase a cash value life insurance policy. Past years taxes The beneficiaries under the insurance policy include members of your family. Past years taxes Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Past years taxes Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Past years taxes You must have been at least age 70½ when the distribution was made. Past years taxes Your total QCDs for the year cannot be more than $100,000. Past years taxes If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Past years taxes See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Past years taxes Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Past years taxes Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Past years taxes The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Past years taxes Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Past years taxes However, you may be able to claim a tax credit for these expenses. Past years taxes Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Past years taxes See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Past years taxes You also may be able to claim an exemption for the child. Past years taxes See Exemptions for Dependents in Publication 501 for more information. Past years taxes Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Past years taxes But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Past years taxes See Deductions Subject to the 2% Limit in Publication 529 for more information. Past years taxes Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Past years taxes There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Past years taxes Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Past years taxes For details, see Internal Revenue Code section 170(f)(18). Past years taxes Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Past years taxes For details, see Partial Interest in Property under Contributions of Property, later. Past years taxes Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Past years taxes However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Past years taxes See Giving Property That Has Increased in Value , later. Past years taxes For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Past years taxes Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Past years taxes These special rules are described next. Past years taxes Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Past years taxes Exception. Past years taxes   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Past years taxes Household items. Past years taxes   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Past years taxes   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Past years taxes Fair market value. Past years taxes   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Past years taxes Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Past years taxes A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Past years taxes Deduction more than $500. Past years taxes   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Past years taxes If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Past years taxes Form 1098-C. Past years taxes   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Past years taxes The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Past years taxes   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Past years taxes S. Past years taxes Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Past years taxes   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Past years taxes    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Past years taxes But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Past years taxes Filing deadline approaching and still no Form 1098-C. Past years taxes   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Past years taxes Request an automatic 6-month extension of time to file your return. Past years taxes You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Past years taxes S. Past years taxes Individual Income Tax Return. Past years taxes For more information, see the instructions for Form 4868. Past years taxes File the return on time without claiming the deduction for the qualified vehicle. Past years taxes After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Past years taxes S. Past years taxes Individual Income Tax Return, claiming the deduction. Past years taxes Attach Copy B of Form 1098-C (or other statement) to the amended return. Past years taxes Exceptions. Past years taxes   There are two exceptions to the rules just described for deductions of more than $500. Past years taxes Exception 1—vehicle used or improved by organization. Past years taxes   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Past years taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Past years taxes The Form 1098-C (or other statement) will show whether this exception applies. Past years taxes    Exception 2—vehicle given or sold to needy individual. Past years taxes   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Past years taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Past years taxes The Form 1098-C (or other statement) will show whether this exception applies. Past years taxes   This exception does not apply if the organization sells the vehicle at auction. Past years taxes In that case, you cannot deduct the vehicle's fair market value. Past years taxes Example. Past years taxes Anita donates a used car to a qualified organization. Past years taxes She bought it 3 years ago for $9,000. Past years taxes A used car guide shows the fair market value for this type of car is $6,000. Past years taxes However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Past years taxes Neither exception 1 nor exception 2 applies. Past years taxes If Anita itemizes her deductions, she can deduct $2,900 for her donation. Past years taxes She must attach Form 1098-C and Form 8283 to her return. Past years taxes Deduction $500 or less. Past years taxes   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Past years taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Past years taxes   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Past years taxes The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Past years taxes Fair market value. Past years taxes   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Past years taxes Donations of inventory. Past years taxes   The vehicle donation rules just described do not apply to donations of inventory. Past years taxes For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Past years taxes See Inventory , later. Past years taxes Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Past years taxes This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Past years taxes Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Past years taxes Your basis does not include transportation or travel costs. Past years taxes It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Past years taxes In addition, it does not include the value of your time. Past years taxes Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Past years taxes Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Past years taxes This prevents you from deducting the same amount as both investment interest and a charitable contribution. Past years taxes If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Past years taxes The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Past years taxes For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Past years taxes Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Past years taxes Right to use property. Past years taxes   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Past years taxes Example 1. Past years taxes You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Past years taxes Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Past years taxes Example 2. Past years taxes Mandy White owns a vacation home at the beach that she sometimes rents to others. Past years taxes For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Past years taxes At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Past years taxes Mandy cannot claim a deduction because of the partial interest rule. Past years taxes Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Past years taxes See Contributions From Which You Benefit , earlier. Past years taxes Exceptions. Past years taxes   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Past years taxes A remainder interest in your personal home or farm. Past years taxes A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Past years taxes Example. Past years taxes You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Past years taxes You can deduct the value of the remainder interest. Past years taxes An undivided part of your entire interest. Past years taxes This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Past years taxes But see Fractional Interest in Tangible Personal Property , later. Past years taxes Example. Past years taxes You contribute voting stock to a qualified organization but keep the right to vote the stock. Past years taxes The right to vote is a substantial right in the stock. Past years taxes You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Past years taxes A partial interest that would be deductible if transferred to certain types of trusts. Past years taxes A qualified conservation contribution (defined later). Past years taxes For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Past years taxes Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Past years taxes If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Past years taxes Tangible personal property is defined later under Future Interest in Tangible Personal Property . Past years taxes A fractional interest in property is an undivided portion of your entire interest in the property. Past years taxes Example. Past years taxes An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Past years taxes Recapture of deduction. Past years taxes   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Past years taxes You contributed a fractional interest in tangible personal property after August 17, 2006. Past years taxes You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Past years taxes   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Past years taxes Additional tax. Past years taxes   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Past years taxes Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Past years taxes Qualified organization. Past years taxes   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Past years taxes The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Past years taxes   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Past years taxes Qualified real property interest. Past years taxes   This is any of the following interests in real property. Past years taxes Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Past years taxes A remainder interest. Past years taxes A restriction (granted in perpetuity) on the use that may be made of the real property. Past years taxes Conservation purposes. Past years taxes   Your contribution must be made only for one of the following conservation purposes. Past years taxes Preserving land areas for outdoor recreation by, or for the education of, the general public. Past years taxes Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Past years taxes Preserving open space, including farmland and forest land, if it yields a significant public benefit. Past years taxes The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Past years taxes Preserving a historically important land area or a certified historic structure. Past years taxes Building in registered historic district. Past years taxes   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Past years taxes The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Past years taxes You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Past years taxes You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Past years taxes   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Past years taxes For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Past years taxes   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Past years taxes See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Past years taxes You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Past years taxes See Deductions Subject to the 2% Limit in Publication 529 for more information. Past years taxes More information. Past years taxes   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Past years taxes For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Past years taxes For more information about qualified conservation contributions, see Regulations section 1. Past years taxes 170A-14. Past years taxes Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Past years taxes But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Past years taxes Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Past years taxes Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Past years taxes Tangible personal property. Past years taxes   This is any property, other than land or buildings, that can be seen or touched. Past years taxes It includes furniture, books, jewelry, paintings, and cars. Past years taxes Future interest. Past years taxes   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Past years taxes Example. Past years taxes You own an antique car that you contribute to a museum. Past years taxes You give up ownership, but retain the right to keep the car in your garage with your personal collection. Past years taxes Because you keep an interest in the property, you cannot deduct the contribution. Past years taxes If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Past years taxes Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Past years taxes The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Past years taxes You must remove the amount of your charitable contribution deduction from your opening inventory. Past years taxes It is not part of the cost of goods sold. Past years taxes If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Past years taxes Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Past years taxes For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Past years taxes A special rule applies to certain donations of food inventory. Past years taxes See Food Inventory, later. Past years taxes Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Past years taxes Intellectual property means any of the following: Patents. Past years taxes Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Past years taxes Trademarks. Past years taxes Trade names. Past years taxes Trade secrets. Past years taxes Know-how. Past years taxes Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Past years taxes Other similar property or applications or registrations of such property. Past years taxes Additional deduction based on income. Past years taxes   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Past years taxes   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Past years taxes In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Past years taxes However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Past years taxes   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Past years taxes The additional deductions cannot be taken for intellectual property donated to certain private foundations. Past years taxes Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Past years taxes   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Past years taxes   The organization is required to file an information return showing the income from the property, with a copy to you. Past years taxes This is done on Form 8899, Notice of Income From Donated Intellectual Property. Past years taxes Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Past years taxes Publication 561 contains a more complete discussion. Past years taxes Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Past years taxes Used clothing. Past years taxes   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Past years taxes There are no fixed formulas or methods for finding the value of items of clothing. Past years taxes   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Past years taxes      Also see Clothing and Household Items , earlier. Past years taxes Example. Past years taxes    Kristin donated a coat to a thrift store operated by her church. Past years taxes She paid $300 for the coat 3 years ago. Past years taxes Similar coats in the thrift store sell for $50. Past years taxes The fair market value of the coat is $50. Past years taxes Kristin's donation is limited to $50. Past years taxes Household items. Past years taxes   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Past years taxes These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Past years taxes For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Past years taxes   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Past years taxes Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Past years taxes Do not include any of this evidence with your tax return. Past years taxes   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Past years taxes   Also see Clothing and Household Items , earlier. Past years taxes Cars, boats, and airplanes. Past years taxes   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Past years taxes Boats. Past years taxes   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Past years taxes Cars. Past years taxes   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Past years taxes The guides may be published monthly or seasonally, and for different regions of the country. Past years taxes These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Past years taxes The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Past years taxes But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Past years taxes   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Past years taxes You can also find used car pricing information on the Internet. Past years taxes   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Past years taxes However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Past years taxes The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. Past years taxes Example. Past years taxes You donate a used car in poor condition to a local high school for use by students studying car repair. Past years taxes A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Past years taxes However, the guide shows the price for a private party sale of the car is only $750. Past years taxes The fair market value of the car is considered to be $750. Past years taxes Large quantities. Past years taxes   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Past years taxes Example. Past years taxes You purchase 500 bibles for $1,000. Past years taxes The person who sells them to you says the retail value of these bibles is $3,000. Past years taxes If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Past years taxes Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
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Past years taxes 9. Past years taxes   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Past years taxes Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Past years taxes Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Past years taxes Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Past years taxes It also covers the following topics. Past years taxes Personal use of dwelling unit (including vacation home). Past years taxes Depreciation. Past years taxes Limits on rental losses. Past years taxes How to report your rental income and expenses. Past years taxes If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Past years taxes If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Past years taxes If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Past years taxes See Publication 527, Residential Rental Property, for more information. Past years taxes Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Past years taxes Rental income is any payment you receive for the use or occupation of property. Past years taxes In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Past years taxes When to report. Past years taxes   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Past years taxes You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Past years taxes You constructively receive income when it is made available to you, for example, by being credited to your bank account. Past years taxes   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Past years taxes Advance rent. Past years taxes   Advance rent is any amount you receive before the period that it covers. Past years taxes Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Past years taxes Example. Past years taxes You sign a 10-year lease to rent your property. Past years taxes In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Past years taxes You must include $10,000 in your income in the first year. Past years taxes Canceling a lease. Past years taxes   If your tenant pays you to cancel a lease, the amount you receive is rent. Past years taxes Include the payment in your income in the year you receive it regardless of your method of accounting. Past years taxes Expenses paid by tenant. Past years taxes   If your tenant pays any of your expenses, the payments are rental income. Past years taxes Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Past years taxes See Rental Expenses , later, for more information. Past years taxes Property or services. Past years taxes   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Past years taxes   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Past years taxes Security deposits. Past years taxes   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Past years taxes But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Past years taxes   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Past years taxes Include it in your income when you receive it. Past years taxes Part interest. Past years taxes   If you own a part interest in rental property, you must report your part of the rental income from the property. Past years taxes Rental of property also used as your home. Past years taxes   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Past years taxes However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Past years taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Past years taxes Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Past years taxes It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Past years taxes Depreciation , which you can also deduct from your rental income, is discussed later. Past years taxes Personal use of rental property. Past years taxes   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Past years taxes Also, your rental expense deductions may be limited. Past years taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Past years taxes Part interest. Past years taxes   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Past years taxes When to deduct. Past years taxes   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Past years taxes Depreciation. Past years taxes   You can begin to depreciate rental property when it is ready and available for rent. Past years taxes See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Past years taxes Pre-rental expenses. Past years taxes   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Past years taxes Uncollected rent. Past years taxes   If you are a cash-basis taxpayer, do not deduct uncollected rent. Past years taxes Because you have not included it in your income, it is not deductible. Past years taxes Vacant rental property. Past years taxes   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Past years taxes However, you cannot deduct any loss of rental income for the period the property is vacant. Past years taxes Vacant while listed for sale. Past years taxes   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Past years taxes If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Past years taxes Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Past years taxes Improvements. Past years taxes   You must capitalize any expense you pay to improve your rental property. Past years taxes An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Past years taxes Betterments. Past years taxes   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Past years taxes Restoration. Past years taxes   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Past years taxes Adaptation. Past years taxes   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Past years taxes Separate the costs of repairs and improvements, and keep accurate records. Past years taxes You will need to know the cost of improvements when you sell or depreciate your property. Past years taxes The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Past years taxes Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Past years taxes Insurance premiums paid in advance. Past years taxes   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Past years taxes You cannot deduct the total premium in the year you pay it. Past years taxes Legal and other professional fees. Past years taxes   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Past years taxes For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Past years taxes You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Past years taxes Local benefit taxes. Past years taxes   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Past years taxes These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Past years taxes However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Past years taxes Local transportation expenses. Past years taxes    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Past years taxes However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Past years taxes See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Past years taxes   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Past years taxes For 2013, the standard mileage rate for business use is 56. Past years taxes 5 cents per mile. Past years taxes For more information, see chapter 26. Past years taxes    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Past years taxes In addition, you must complete Form 4562, Part V, and attach it to your tax return. Past years taxes Rental of equipment. Past years taxes   You can deduct the rent you pay for equipment that you use for rental purposes. Past years taxes However, in some cases, lease contracts are actually purchase contracts. Past years taxes If so, you cannot deduct these payments. Past years taxes You can recover the cost of purchased equipment through depreciation. Past years taxes Rental of property. Past years taxes   You can deduct the rent you pay for property that you use for rental purposes. Past years taxes If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Past years taxes Travel expenses. Past years taxes   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Past years taxes You must properly allocate your expenses between rental and nonrental activities. Past years taxes You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Past years taxes You recover the cost of improvements by taking depreciation. Past years taxes For information on travel expenses, see chapter 26. Past years taxes    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Past years taxes   See Rental Expenses in Publication 527 for more information. Past years taxes Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Past years taxes You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Past years taxes You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Past years taxes However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Past years taxes Example. Past years taxes Your tax year is the calendar year. Past years taxes You moved from your home in May and started renting it out on June 1. Past years taxes You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Past years taxes Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Past years taxes Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Past years taxes You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Past years taxes You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Past years taxes There is no change in the types of expenses deductible for the personal-use part of your property. Past years taxes Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Past years taxes You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Past years taxes You do not have to divide the expenses that belong only to the rental part of your property. Past years taxes For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Past years taxes If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Past years taxes You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Past years taxes How to divide expenses. Past years taxes   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Past years taxes You can use any reasonable method for dividing the expense. Past years taxes It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Past years taxes The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Past years taxes Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Past years taxes You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Past years taxes For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Past years taxes Where to report. Past years taxes   Report your not-for-profit rental income on Form 1040, line 21. Past years taxes For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Past years taxes   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Past years taxes You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Past years taxes Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Past years taxes In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Past years taxes Only your rental expenses may be deducted on Schedule E (Form 1040). Past years taxes Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Past years taxes You must also determine if the dwelling unit is considered a home. Past years taxes The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Past years taxes Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Past years taxes There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Past years taxes Dwelling unit. Past years taxes   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Past years taxes It also includes all structures or other property belonging to the dwelling unit. Past years taxes A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Past years taxes   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Past years taxes Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Past years taxes Example. Past years taxes   You rent a room in your home that is always available for short-term occupancy by paying customers. Past years taxes You do not use the room yourself, and you allow only paying customers to use the room. Past years taxes The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Past years taxes Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Past years taxes When dividing your expenses, follow these rules. Past years taxes Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Past years taxes This rule does not apply when determining whether you used the unit as a home. Past years taxes Any day that the unit is available for rent but not actually rented is not a day of rental use. Past years taxes Example. Past years taxes Your beach cottage was available for rent from June 1 through August 31 (92 days). Past years taxes During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. Past years taxes The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Past years taxes Your family also used the cottage during the last 2 weeks of May (14 days). Past years taxes The cottage was not used at all before May 17 or after August 31. Past years taxes You figure the part of the cottage expenses to treat as rental expenses as follows. Past years taxes The cottage was used for rental a total of 85 days (92 − 7). Past years taxes The days it was available for rent but not rented (7 days) are not days of rental use. Past years taxes The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Past years taxes You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Past years taxes The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Past years taxes Your rental expenses are 85/99 (86%) of the cottage expenses. Past years taxes Note. Past years taxes When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Past years taxes Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Past years taxes Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Past years taxes If you have a net loss, you may not be able to deduct all of the rental expenses. Past years taxes See Dwelling Unit Used as a Home, next. Past years taxes Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Past years taxes You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Past years taxes See What is a day of personal use , later. Past years taxes Fair rental price. Past years taxes   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Past years taxes The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Past years taxes   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Past years taxes Instead, count it as a day of personal use in applying both (1) and (2) above. Past years taxes What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Past years taxes You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Past years taxes However, see Days used as a main home before or after renting , later. Past years taxes A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Past years taxes Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Past years taxes ), and lineal descendants (children, grandchildren, etc. Past years taxes ). Past years taxes Anyone under an arrangement that lets you use some other dwelling unit. Past years taxes Anyone at less than a fair rental price. Past years taxes Main home. Past years taxes   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Past years taxes Shared equity financing agreement. Past years taxes   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Past years taxes Donation of use of property. Past years taxes   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Past years taxes Examples. Past years taxes   The following examples show how to determine days of personal use. Past years taxes Example 1. Past years taxes You and your neighbor are co-owners of a condominium at the beach. Past years taxes Last year, you rented the unit to vacationers whenever possible. Past years taxes The unit was not used as a main home by anyone. Past years taxes Your neighbor used the unit for 2 weeks last year; you did not use it at all. Past years taxes Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Past years taxes Example 2. Past years taxes You and your neighbors are co-owners of a house under a shared equity financing agreement. Past years taxes Your neighbors live in the house and pay you a fair rental price. Past years taxes Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Past years taxes This is because your neighbors rent the house as their main home under a shared equity financing agreement. Past years taxes Example 3. Past years taxes You own a rental property that you rent to your son. Past years taxes Your son does not own any interest in this property. Past years taxes He uses it as his main home and pays you a fair rental price. Past years taxes Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Past years taxes Example 4. Past years taxes You rent your beach house to Joshua. Past years taxes Joshua rents his cabin in the mountains to you. Past years taxes You each pay a fair rental price. Past years taxes You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Past years taxes Days used for repairs and maintenance. Past years taxes   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Past years taxes Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Past years taxes Days used as a main home before or after renting. Past years taxes   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Past years taxes Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Past years taxes You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Past years taxes However, this special rule does not apply when dividing expenses between rental and personal use. Past years taxes Examples. Past years taxes   The following examples show how to determine whether you used your rental property as a home. Past years taxes Example 1. Past years taxes You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Past years taxes You rented the basement apartment at a fair rental price to college students during the regular school year. Past years taxes You rented to them on a 9-month lease (273 days). Past years taxes You figured 10% of the total days rented to others at a fair rental price is 27 days. Past years taxes During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Past years taxes Your basement apartment was used as a home because you used it for personal purposes for 30 days. Past years taxes Rent-free use by your brothers is considered personal use. Past years taxes Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Past years taxes Example 2. Past years taxes You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Past years taxes Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Past years taxes You figured 10% of the total days rented to others at a fair rental price is 3 days. Past years taxes The room was used as a home because you used it for personal purposes for 21 days. Past years taxes That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Past years taxes Example 3. Past years taxes You own a condominium apartment in a resort area. Past years taxes You rented it at a fair rental price for a total of 170 days during the year. Past years taxes For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Past years taxes Your family actually used the apartment for 10 of those days. Past years taxes Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Past years taxes You figured 10% of the total days rented to others at a fair rental price is 16 days. Past years taxes Your family also used the apartment for 7 other days during the year. Past years taxes You used the apartment as a home because you used it for personal purposes for 17 days. Past years taxes That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Past years taxes Minimal rental use. Past years taxes   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Past years taxes See Used as a home but rented less than 15 days , later, for more information. Past years taxes Limit on deductions. Past years taxes   Renting a dwelling unit that is considered a home is not a passive activity. Past years taxes Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Past years taxes The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Past years taxes Any expenses carried forward to the next year will be subject to any limits that apply for that year. Past years taxes This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Past years taxes   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Past years taxes Reporting Income and Deductions Property not used for personal purposes. Past years taxes   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Past years taxes Property used for personal purposes. Past years taxes   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Past years taxes Not used as a home. Past years taxes   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Past years taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Past years taxes The expenses for personal use are not deductible as rental expenses. Past years taxes   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Past years taxes Used as a home but rented less than 15 days. Past years taxes   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Past years taxes You are not required to report the rental income and rental expenses from this activity. Past years taxes The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Past years taxes See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Past years taxes Used as a home and rented 15 days or more. Past years taxes   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Past years taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Past years taxes The expenses for personal use are not deductible as rental expenses. Past years taxes   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Past years taxes You do not need to use Worksheet 9-1. Past years taxes   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Past years taxes To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Past years taxes Depreciation You recover the cost of income-producing property through yearly tax deductions. Past years taxes You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Past years taxes Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Past years taxes You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Past years taxes You can deduct depreciation only on the part of your property used for rental purposes. Past years taxes Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Past years taxes You may have to use Form 4562 to figure and report your depreciation. Past years taxes See How To Report Rental Income and Expenses , later. Past years taxes Alternative minimum tax (AMT). Past years taxes    If you use accelerated depreciation, you may be subject to the AMT. Past years taxes Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Past years taxes Claiming the correct amount of depreciation. Past years taxes   You should claim the correct amount of depreciation each tax year. Past years taxes If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Past years taxes   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Past years taxes S Individual Income Tax Return. Past years taxes If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Past years taxes See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Past years taxes Changing your accounting method to deduct unclaimed depreciation. Past years taxes   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Past years taxes In some instances, that consent is automatic. Past years taxes For more information, see chapter 1 of Publication 946. Past years taxes Land. Past years taxes   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Past years taxes The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Past years taxes More information. Past years taxes   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Past years taxes Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Past years taxes You must consider these rules in the order shown below. Past years taxes At-risk rules. Past years taxes These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Past years taxes This applies only if the real property was placed in service after 1986. Past years taxes Passive activity limits. Past years taxes Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Past years taxes However, there are exceptions. Past years taxes At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Past years taxes Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Past years taxes In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Past years taxes You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Past years taxes See Publication 925 for more information. Past years taxes Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Past years taxes For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Past years taxes Limits on passive activity deductions and credits. Past years taxes    Deductions or losses from passive activities are limited. Past years taxes You generally cannot offset income, other than passive income, with losses from passive activities. Past years taxes Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Past years taxes Any excess loss or credit is carried forward to the next tax year. Past years taxes   For a detailed discussion of these rules, see Publication 925. Past years taxes    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Past years taxes Real estate professionals. Past years taxes   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Past years taxes For a detailed discussion of the requirements, see Publication 527. Past years taxes For a detailed discussion of material participation, see Publication 925. Past years taxes Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Past years taxes Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Past years taxes Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Past years taxes This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Past years taxes Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Past years taxes Active participation. Past years taxes   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Past years taxes Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Past years taxes Maximum special allowance. Past years taxes   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Past years taxes   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Past years taxes If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Past years taxes   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Past years taxes More information. Past years taxes   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Past years taxes How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Past years taxes However, do not use that schedule to report a not-for-profit activity. Past years taxes See Not Rented for Profit, earlier. Past years taxes Providing substantial services. Past years taxes   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Past years taxes Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Past years taxes For information, see Publication 334, Tax Guide for Small Business. Past years taxes You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Past years taxes   Use Form 1065, U. Past years taxes S. Past years taxes Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Past years taxes Qualified joint venture. Past years taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Past years taxes This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Past years taxes For more information, see Publication 527. Past years taxes Form 1098, Mortgage Interest Statement. Past years taxes    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. Past years taxes If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Past years taxes Attach a statement to your return showing the name and address of the other person. Past years taxes In the left margin of Schedule E, next to line 13, enter “See attached. Past years taxes ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Past years taxes , you normally report your rental income and expenses on Schedule E, Part I. Past years taxes List your total income, expenses, and depreciation for each rental property. Past years taxes Be sure to enter the number of fair rental and personal use days on line 2. Past years taxes If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Past years taxes Complete lines 1 and 2 for each property. Past years taxes However, fill in lines 23a through 26 on only one Schedule E. Past years taxes On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Past years taxes To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Past years taxes If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Past years taxes Form 6198, At-Risk Limitations. Past years taxes See At-Risk Rules , earlier. Past years taxes Also see Publication 925. Past years taxes Form 8582, Passive Activity Loss Limitations. Past years taxes See Passive Activity Limits , earlier. Past years taxes Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Past years taxes If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Past years taxes Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Past years taxes Worksheet 9-1. Past years taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Past years taxes Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Past years taxes ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Past years taxes Rental Use Percentage A. Past years taxes Total days available for rent at fair rental price A. Past years taxes       B. Past years taxes Total days available for rent (line A) but not rented B. Past years taxes       C. Past years taxes Total days of rental use. Past years taxes Subtract line B from line A C. Past years taxes       D. Past years taxes Total days of personal use (including days rented at less than fair rental price) D. Past years taxes       E. Past years taxes Total days of rental and personal use. Past years taxes Add lines C and D E. Past years taxes       F. Past years taxes Percentage of expenses allowed for rental. Past years taxes Divide line C by line E     F. Past years taxes   PART II. Past years taxes Allowable Rental Expenses 1. Past years taxes Enter rents received 1. Past years taxes   2a. Past years taxes Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Past years taxes       b. Past years taxes Enter the rental portion of real estate taxes b. Past years taxes       c. Past years taxes Enter the rental portion of deductible casualty and theft losses (see instructions) c. Past years taxes       d. Past years taxes Enter direct rental expenses (see instructions) d. Past years taxes       e. Past years taxes Fully deductible rental expenses. Past years taxes Add lines 2a–2d. Past years taxes Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Past years taxes   3. Past years taxes Subtract line 2e from line 1. Past years taxes If zero or less, enter -0- 3. Past years taxes   4a. Past years taxes Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Past years taxes       b. Past years taxes Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Past years taxes       c. Past years taxes Carryover of operating expenses from 2012 worksheet c. Past years taxes       d. Past years taxes Add lines 4a–4c d. Past years taxes       e. Past years taxes Allowable expenses. Past years taxes Enter the smaller of line 3 or line 4d (see instructions) 4e. Past years taxes   5. Past years taxes Subtract line 4e from line 3. Past years taxes If zero or less, enter -0- 5. Past years taxes   6a. Past years taxes Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Past years taxes       b. Past years taxes Enter the rental portion of depreciation of the dwelling unit b. Past years taxes       c. Past years taxes Carryover of excess casualty losses and depreciation from 2012 worksheet c. Past years taxes       d. Past years taxes Add lines 6a–6c d. Past years taxes       e. Past years taxes Allowable excess casualty and theft losses and depreciation. Past years taxes Enter the smaller of  line 5 or line 6d (see instructions) 6e. Past years taxes   PART III. Past years taxes Carryover of Unallowed Expenses to Next Year 7a. Past years taxes Operating expenses to be carried over to next year. Past years taxes Subtract line 4e from line 4d 7a. Past years taxes   b. Past years taxes Excess casualty and theft losses and depreciation to be carried over to next year. Past years taxes  Subtract line 6e from line 6d b. Past years taxes   Worksheet 9-1 Instructions. Past years taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Past years taxes Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Past years taxes Line 2a. Past years taxes Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Past years taxes Do not include interest on a loan that did not benefit the dwelling unit. Past years taxes For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Past years taxes Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Past years taxes Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Past years taxes   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Past years taxes See the Schedule A instructions. Past years taxes However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Past years taxes See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Past years taxes Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Past years taxes   Note. Past years taxes Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Past years taxes Instead, figure the personal portion on a separate Schedule A. Past years taxes If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Past years taxes           Line 2c. Past years taxes Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Past years taxes To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Past years taxes If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Past years taxes On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Past years taxes Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Past years taxes   Note. Past years taxes Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Past years taxes Instead, figure the personal portion on a separate Form 4684. Past years taxes           Line 2d. Past years taxes Enter the total of your rental expenses that are directly related only to the rental activity. Past years taxes These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Past years taxes Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Past years taxes           Line 2e. Past years taxes You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Past years taxes Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Past years taxes           Line 4b. Past years taxes On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Past years taxes If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Past years taxes Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Past years taxes           Line 4e. Past years taxes You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Past years taxes *           Line 6a. Past years taxes To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Past years taxes   A. Past years taxes Enter the amount from Form 4684, line 10       B. Past years taxes Enter the rental portion of line A       C. Past years taxes Enter the amount from line 2c of this worksheet       D. Past years taxes Subtract line C from line B. Past years taxes Enter the result here and on line 6a of this worksheet               Line 6e. Past years taxes You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Past years taxes * *Allocating the limited deduction. Past years taxes If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Past years taxes Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Past years taxes Prev  Up  Next   Home   More Online Publications