| Instructions for Form 1040 Schedule A & Schedule B |
2006 Tax Year |
Instructions for Schedule A, Itemized Deductions
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Use Schedule A (Form 1040) to figure your itemized deductions. In most cases, your federal income tax will be less if you
take the larger of your
itemized deductions or your standard deduction.
If you itemize, you can deduct a part of your medical and dental expenses and unreimbursed employee business expenses, and
amounts you paid for
certain taxes, interest, contributions, and miscellaneous expenses. You can also deduct certain casualty and theft losses.
If you and your spouse paid expenses jointly and are filing separate returns for 2006, see
Pub. 504 to figure the portion of joint expenses that you can claim as itemized deductions.
Do not include on Schedule A items deducted elsewhere, such as on Form 1040 or Schedule C, C-EZ, E, or F.
Section references are to the Internal Revenue Code unless otherwise noted.
Medicare Part D.
You can deduct the premiums you pay for the new Medicare Part D prescription drug insurance program.
Standard mileage rates.
The 2006 rate for use of your vehicle to get medical care is 18 cents a mile. The 2006 rate for charitable use of
your vehicle to provide relief
related to Hurricane Katrina is 32 cents a mile.
State and local general sales taxes
You can no longer deduct state and local general sales taxes instead of state and local income taxes.
At the time these instructions went to print, Congress was considering legislation that would extend the deduction for state
and local general
sales taxes that expired at the end of 2005. To find out if this legislation was enacted, and for more details, go to www.irs.gov,
click on
More Forms and Publications, and then on What's Hot in forms and publications, or see Pub. 553.
Phaseout of itemized deductions reduced.
Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for itemized deductions.
The amount by which this
deduction is reduced in 2006 is only ⅔ of the amount of the reduction that would otherwise have applied.
Gifts to charity.
The Pension Protection Act of 2006 provides new rules for deducting certain gifts to charity. The following list highlights
some of the new rules.
-
Tax-free distributions from your IRA to certain charitable organizations if you were at least age 70½ when the distribution
was made. You cannot, however, take a charitable deduction on Schedule A for the same contribution.
-
Stricter rules for contributions after August 17, 2006, of clothing and household items. See the instructions for line 16
on page
A-5.
-
Extension of the special rules for contributions of food inventory.
-
Higher limits on deductions for contributions of capital gain real property for conservation purposes.
-
New restrictions on deductions for contributions after July 25, 2006, of certain easements for buildings located in registered
historic
districts.
-
New rules limiting deductions for contributions after July 25, 2006, of taxidermy property.
-
Recapture of deductions for contributions after September 1, 2006, of appreciated tangible personal property if exempt use
not certified by
the recipient organization.
-
New rules for gifts of fractional interests in tangible personal property made after August 17, 2006.
For more information, see Pub. 526.
New recordkeeping requirements for contributions of money.
For charitable contributions of money, regardless of the amount, you must maintain as a record of the contribution
a bank record (such as a
cancelled check) or a written record from the charity. The written record must include the name of the charity, date, and
amount of the contribution.
Medical and Dental Expenses
You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount on
Form 1040, line 38.
Pub. 502 discusses the types of expenses that you can and cannot deduct. It also explains when you can deduct capital expenses
and special care
expenses for disabled persons.
If you received a distribution from a health savings account or a medical savings account in 2006, see
Pub. 969 to figure your deduction.
Examples of Medical and Dental Payments You Can Deduct
To the extent you were not reimbursed, you can deduct what you paid for:
-
Insurance premiums for medical and dental care, including premiums for qualified long-term care contracts as defined in
Pub. 502. But see
Limit on long-term care premiums you can deduct on page A-2. Reduce the insurance premiums by any self-employed health insurance deduction
you claimed on
Form 1040, line 29.
Note.
If, during 2006, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit
Guaranty
Corporation pension recipient, you must reduce your insurance premiums by any amounts used to figure the health coverage tax
credit. See the
instructions for line 1 on page A-2.
You cannot deduct insurance premiums paid with pretax dollars because the premiums are not included in box 1 of your Form(s)
W-2.
-
Prescription medicines or insulin.
-
Acupuncturists, chiropractors, dentists, eye doctors, medical doctors, occupational therapists, osteopathic doctors, physical
therapists,
podiatrists, psychiatrists, psychoanalysts (medical care only), and psychologists.
-
Medical examinations, X-ray and laboratory services, insulin treatment, and whirlpool baths your doctor ordered.
-
Nursing help (including your share of the employment taxes paid). If you paid someone to do both nursing and housework, you
can deduct only
the cost of the nursing help.
-
Hospital care (including meals and lodging), clinic costs, and lab fees.
-
Qualified long-term care services (see
Pub. 502).
-
The supplemental part of Medicare insurance (Medicare B).
-
The premiums you pay for Medicare Part D insurance.
-
A program to stop smoking and for prescription medicines to alleviate nicotine withdrawal.
-
A weight-loss program as treatment for a specific disease (including obesity) diagnosed by a doctor.
-
Medical treatment at a center for drug or alcohol addiction.
-
Medical aids such as eyeglasses, contact lenses, hearing aids, braces, crutches, wheelchairs, and guide dogs, including the
cost of
maintaining them.
-
Surgery to improve defective vision, such as laser eye surgery or radial keratotomy.
-
Lodging expenses (but not meals) while away from home to receive medical care in a hospital or a medical care facility related
to a
hospital, provided there was no significant element of personal pleasure, recreation, or vacation in the travel. Do not deduct
more than $50 a night
for each eligible person.
-
Ambulance service and other travel costs to get medical care. If you used your own car, you can claim what you spent for gas
and oil to go
to and from the place you received the care; or you can claim 18 cents a mile. Add parking and tolls to the amount you claim
under either
method.
Note.
Certain medical expenses paid out of a deceased taxpayer's estate can be claimed on the deceased taxpayer's final return.
See
Pub. 502 for details.
Limit on long-term care premiums you can deduct.
The amount you can deduct for qualified long-term care contracts (as defined in
Pub. 502) depends on the age, at the end of 2006, of the person for whom the premiums were paid. See the
chart below for details.
Examples of Medical and Dental Payments You Cannot Deduct
If you were age 65 or older but not entitled to social security benefits, you can deduct premiums you voluntarily paid for
Medicare A coverage.
-
The cost of diet food.
-
Cosmetic surgery unless it was necessary to improve a deformity related to a congenital abnormality, an injury from an accident
or trauma,
or a disfiguring disease.
-
Life insurance or income protection policies.
-
The Medicare tax on your wages and tips or the Medicare tax paid as part of the self-employment tax or household employment
taxes.
-
Nursing care for a healthy baby. But you may be able to take a credit for the amount you paid. See the instructions for Form
1040, line
48.
-
Illegal operations or drugs.
-
Imported drugs not approved by the U.S. Food and Drug Administration (FDA). This includes foreign-made versions of U.S.-approved
drugs
manufactured without FDA approval.
-
Nonprescription medicines (including nicotine gum and certain nicotine patches).
-
Travel your doctor told you to take for rest or a change.
-
Funeral, burial, or cremation costs.
Medical and Dental Expenses
Enter the total of your medical and dental expenses (see page A-1), after you reduce these expenses by any payments received
from insurance or
other sources. See Reimbursements on this page.
Do not forget to include insurance premiums you paid for medical and dental care. But if you claimed the self-employed health
insurance deduction
on Form 1040, line 29, reduce the premiums by the amount on line 29.
Note.
If, during 2006, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit
Guaranty
Corporation pension recipient, you must complete
Form 8885 before completing
Schedule A, line 1. When figuring the amount of insurance premiums you can deduct on Schedule A, do not include:
-
Any amounts you included on Form 8885, line 4,
-
Any qualified health insurance premiums you paid to “U.S. Treasury —HCTC,” or
-
Any health coverage tax credit advance payments shown in box 1 of Form 1099-H.
Whose medical and dental expenses can you include?
You can include medical and dental bills you paid for:
-
Yourself and your spouse.
-
All dependents you claim on your return.
-
Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents.
-
Any person you could have claimed as a dependent on your return except that person received $3,300 or more of gross income
or filed a joint
return.
Example.
You provided over half of your mother's support but cannot claim her as a dependent because she received wages of $3,300 in
2006. You can include
on line 1 any medical and dental expenses you paid in 2006 for your mother.
Reimbursements.
If your insurance company paid the provider directly for part of your expenses, and you paid only the amount that
remained, include on
line 1 only the amount you paid. If you received a reimbursement in 2006 for medical or dental expenses you paid in 2006,
reduce your 2006
expenses by this amount. If you received a reimbursement in 2006 for prior year medical or dental expenses, do not reduce
your 2006 expenses by this
amount. But if you deducted the expenses in the earlier year and the deduction reduced your tax, you must include the reimbursement
in income on
Form 1040, line 21. See
Pub. 502 for details on how to figure the amount to include.
Cafeteria plans.
Do not include on
line 1 insurance premiums paid by an employer-sponsored health insurance plan (cafeteria plan) unless the premiums are included
in
box 1 of your Form(s) W-2. Also, do not include any other medical and dental expenses paid by the plan unless the amount paid
is included in
box 1 of your Form(s) W-2.
-
Federal income and excise taxes.
-
Social security, Medicare, federal unemployment (FUTA), and railroad retirement (RRTA) taxes.
-
Customs duties.
-
Federal estate and gift taxes. But see the
instructions for line 27 on page A-7.
-
Certain state and local taxes, including: general sales tax (see Caution below), tax on gasoline, car inspection fees,
assessments for sidewalks or other improvements to your property, tax you paid for someone else, and license fees (marriage,
driver's, dog,
etc.).
At the time these instructions went to print, Congress was considering legislation that would extend the deduction for state
and local general
sales taxes that expired at the end of 2005. To find out if this legislation was enacted, and for more details, go to www.irs.gov,
click on
More Forms and Publications, and then on What's Hot in forms and publications, or see Pub. 553.
State and Local Income Taxes
Include on this line the state and local income taxes listed below.
-
State and local income taxes withheld from your salary during 2006. Your Form(s)
W-2 will show these amounts.
Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld.
-
State and local income taxes paid in 2006 for a prior year, such as taxes paid with your 2005 state or local income tax return.
Do not
include penalties or interest.
-
State and local estimated tax payments made during 2006, including any part of a prior year refund that you chose to have
credited to your
2006 state or local income taxes.
-
Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, Rhode
Island Temporary
Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.
Do not reduce your deduction by any:
-
State or local income tax refund or credit you expect to receive for 2006, or
-
Refund of, or credit for, prior year state and local income taxes you actually received in 2006. Instead, see the instructions
for
Form 1040, line 10.
Include taxes (state, local, or foreign) you paid on real estate you own that was not used for business, but only if the taxes
are based on the
assessed value of the property. Also, the assessment must be made uniformly on property throughout the community, and the
proceeds must be used for
general community or governmental purposes.
Pub. 530 explains the deductions homeowners can take.
Do not include the following amounts on line 6.
-
Itemized charges for services to specific property or persons (for example, a $20 monthly charge per house for trash collection,
a $5 charge
for every 1,000 gallons of water consumed, or a flat charge for mowing a lawn that had grown higher than permitted under a
local
ordinance).
-
Charges for improvements that tend to increase the value of your property (for example, an assessment to build a new sidewalk).
The cost of
a property improvement is added to the basis of the property. However, a charge is deductible if it is used only to maintain
an existing public
facility in service (for example, a charge to repair an existing sidewalk, and any interest included in that charge).
If your mortgage payments include your real estate taxes, you can deduct only the amount the mortgage company actually paid
to the taxing authority
in 2006.
If you sold your home in 2006, any real estate tax charged to the buyer should be shown on your settlement statement and in
box 5 of any Form 1099-S you received. This amount is considered a refund of real estate taxes.
See Refunds and rebates below. Any real estate taxes you paid at closing should be shown on your settlement statement.
Refunds and rebates.
If you received a refund or rebate in 2006 of real estate taxes you paid in 2006, reduce your deduction by the amount
of the refund or rebate. If
you received a refund or rebate in 2006 of real estate taxes you paid in an earlier year, do not reduce your deduction by
this amount. Instead, you
must include the refund or rebate in income on
Form 1040, line 21, if you deducted the real estate taxes in the earlier year and the deduction reduced your tax. See Recoveries in
Pub. 525 for details on how to figure the amount to include in income.
Enter the state and local personal property taxes you paid, but only if the taxes were based on value alone and were imposed
on a yearly basis.
Example.
You paid a yearly fee for the registration of your car. Part of the fee was based on the car's value and part was based on
its weight. You can
deduct only the part of the fee that was based on the car's value.
If you had any deductible tax not listed on line 5, 6, or 7, list the type and amount of tax. Enter only one total on line
8. Include on this line
income tax you paid to a foreign country or U.S. possession.
You may want to take a credit for the foreign tax instead of a deduction. See the instructions for
Form 1040, line 47, for
details.
Whether your interest expense is treated as investment interest, personal interest, or business interest depends on how and
when you used the loan
proceeds. See
Pub. 535 for details.
In general, if you paid interest in 2006 that applies to any period after 2006, you can deduct only amounts that apply for
2006.
A home mortgage is any loan that is secured by your main home or second home. It includes first and second mortgages, home
equity loans, and
refinanced mortgages.
A home can be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations
including
sleeping space, toilet, and cooking facilities.
Limit on home mortgage interest.
If you took out any mortgages after October 13, 1987, your deduction may be limited. Any additional amounts borrowed
after October 13, 1987, on a
line-of-credit mortgage you had on that date are treated as a mortgage taken out after October 13, 1987. If you refinanced
a mortgage you had on
October 13, 1987, treat the new mortgage as taken out on or before October 13, 1987. But if you refinanced for more than the
balance of the old
mortgage, treat the excess as a mortgage taken out after October 13, 1987.
See
Pub. 936 to figure your deduction if either (1) or (2) below applies. If you had more than one home at the same time, the
dollar amounts in (1)
and (2) apply to the total mortgages on both homes.
-
You took out any mortgages after October 13, 1987, and used the proceeds for purposes other than to buy, build, or improve
your home, and
all of these mortgages totaled over $100,000 at any time during 2006. The limit is $50,000 if married filing separately. An
example of this type of
mortgage is a home equity loan used to pay off credit card bills, buy a car, or pay tuition.
-
You took out any mortgages after October 13, 1987, and used the proceeds to buy, build, or improve your home, and these mortgages
plus any
mortgages you took out on or before October 13, 1987, totaled over $1 million at any time during 2006. The limit is $500,000
if married filing
separately.
If the total amount of all mortgages is more than the fair market value of the home, additional limits apply. See
Pub. 936.
Enter on line 10 mortgage interest and points reported to you on
Form 1098 under your social security number (SSN). If this form shows any refund of overpaid interest, do not reduce your
deduction by the
refund. Instead, see the instructions for
Form 1040, line 21. If you and at least one other person (other than your spouse if filing jointly) were liable for and paid
interest on the
mortgage, and the interest was reported on Form 1098 under the other person's SSN, report your share of the interest on line
11 (as explained in the
line 11 instructions below).
If you paid more interest to the recipient than is shown on Form 1098, see
Pub. 936 to find out if you can deduct the additional interest. If you can, attach a statement explaining the difference and
enter “See
attached” to the right of line 10.
If you are claiming the mortgage interest credit (for holders of qualified mortgage credit certificates issued by state or
local governmental units
or agencies), subtract the amount shown on
Form 8396, line 3, from the total deductible interest you paid on your home mortgage. Enter the result on line 10.
If you did not receive a Form 1098 from the recipient, report your deductible mortgage interest on line 11.
If you bought your home from the recipient, be sure to show that recipient's name, identifying no., and address on the dotted
lines next to line
11. If the recipient is an individual, the identifying no. is his or her social security number (SSN). Otherwise, it is the
employer identification
number. You must also let the recipient know your SSN. If you do not show the required information about the recipient or
let the recipient know your
SSN, you may have to pay a $50 penalty.
If you and at least one other person (other than your spouse if filing jointly) were liable for and paid interest on the mortgage,
and the other
person received the Form 1098, attach a statement to your return showing the name and address of that person. To the right
of line 11, enter “See
attached.”
Points Not Reported on Form 1098
Points are shown on your settlement statement. Points you paid only to borrow money are generally deductible over the life
of the loan. See
Pub. 936 to figure the amount you can deduct. Points paid for other purposes, such as for a lender's services, are not deductible.
Refinancing.
Generally, you must deduct points you paid to refinance a mortgage over the life of the loan. This is true even if
the new mortgage is secured by
your main home.
If you used part of the proceeds to improve your main home, you may be able to deduct the part of the points related
to the improvement in the year
paid. See
Pub. 936 for details.
If you paid off a mortgage early, deduct any remaining points in the year you paid off the mortgage.
Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It does not
include any interest
allocable to passive activities or to securities that generate tax-exempt income.
Complete and attach
Form 4952 to figure your deduction.
Exception.
You do not have to file
Form 4952 if all three of the following apply.
-
Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified
dividends.
-
You have no other deductible investment expenses.
-
You have no disallowed investment interest expense from 2005.
Alaska Permanent Fund dividends, including those reported on
Form 8814, are not investment income.
For more details, see
Pub. 550.
You can deduct contributions or gifts you gave to organizations that are religious, charitable, educational, scientific, or
literary in purpose.
You can also deduct what you gave to organizations that work to prevent cruelty to children or animals. Certain whaling captains
may be able to deduct
expenses paid in 2006 for Native Alaskan subsistence bowhead whale hunting activities. See
Pub. 526 for details.
To verify an organization's charitable status, you can:
-
Check with the organization to which you made the donation. The organization should be able to provide you with verification
of its
charitable status.
-
See
Pub. 78 for a list of most qualified organizations. You can access
Pub. 78 on the IRS website at www.irs.gov under Charities and Non-Profits.
-
Call our Tax Exempt/Government Entities Customer Account Services at
1-877-829-5500. Assistance is available
Monday through Friday from 8:30 a.m. to 4:30 p.m. Eastern Time. These hours are subject to change.
Examples of Qualified Charitable Organizations
-
Churches, mosques, synagogues, temples, etc.
-
Boy Scouts, Boys and Girls Clubs of America, CARE, Girl Scouts, Goodwill Industries, Red Cross, Salvation Army, United Way,
etc.
-
Fraternal orders, if the gifts will be used for the purposes listed above.
-
Veterans' and certain cultural groups.
-
Nonprofit schools, hospitals, and organizations whose purpose is to find a cure for, or help people who have, arthritis, asthma,
birth
defects, cancer, cerebral palsy, cystic fibrosis, diabetes, heart disease, hemophilia, mental illness or retardation, multiple
sclerosis, muscular
dystrophy, tuberculosis, etc.
-
Federal, state, and local governments if the gifts are solely for public purposes.
Contributions You Can Deduct
Contributions can be in cash (keep canceled checks, receipts, or other reliable written records showing the name of the organization
and the date
and amount given), property, or out-of-pocket expenses you paid to do volunteer work for the kinds of organizations described
earlier. If you drove to
and from the volunteer work, you can take the actual cost of gas and oil or 14 cents a mile. But, if the volunteer work was
to provide relief related
to Hurricane Katrina, the amount is 32 cents a mile. Add parking and tolls to the amount you claim under either method. But
do not deduct any amounts
that were repaid to you.
Gifts from which you benefit.
If you made a gift and received a benefit in return, such as food, entertainment, or merchandise, you can generally
only deduct the amount that is
more than the value of the benefit. But this rule does not apply to certain membership benefits provided in return for an
annual payment of $75 or
less. For details, see
Pub. 526.
Example.
You paid $70 to a charitable organization to attend a fund-raising dinner and the value of the dinner was $40. You can deduct
only $30.
Gifts of $250 or more.
You can deduct a gift of $250 or more only if you have a statement from the charitable organization showing the information
in (1) and (2) below.
-
The amount of any money contributed and a description (but not value) of any property donated.
-
Whether the organization did or did not give you any goods or services in return for your contribution. If you did receive
any goods or
services, a description and estimate of the value must be included. If you received only intangible religious benefits (such
as admission to a
religious ceremony), the organization must state this, but it does not have to describe or value the benefit.
In figuring whether a gift is $250 or more, do not combine separate donations. For example, if you gave your church
$25 each week for a total of
$1,300, treat each $25 payment as a separate gift. If you made donations through payroll deductions, treat each deduction
from each paycheck as a
separate gift. See
Pub. 526 if you made a separate gift of $250 or more through payroll deduction.
You must get the statement by the date you file your return or the due date (including extensions) for filing your return,
whichever is earlier. Do
not attach the statement to your return. Instead, keep it for your records.
Limit on the amount you can deduct.
See
Pub. 526 to figure the amount of your deduction if any of the following applies.
-
Your cash contributions or contributions of ordinary income property are more than 30% of the amount on
Form 1040, line 38.
-
Your gifts of capital gain property are more than 20% of the amount on
Form 1040, line 38.
-
You gave gifts of property that increased in value or gave gifts of the use of property.
Contributions You Cannot Deduct
At the time these instructions went to print, Congress was considering legislation that would extend the tuition and fees
deduction that expired at
the end of 2005. To find out if this legislation was enacted, and for more details, go to www.irs.gov, click on More Forms
and
Publications, and then on What's Hot in forms and publications, or see Pub. 553.
-
Travel expenses (including meals and lodging) while away from home, unless there was no significant element of personal pleasure,
recreation, or vacation in the travel.
-
Political contributions.
-
Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups.
-
Cost of raffle, bingo, or lottery tickets. But you may be able to deduct these expenses on line 27. See page A-7 for details.
-
Cost of tuition. But you may be able to deduct this expense on line 20 (see page A-6), or take a credit for this expense (see
Form 8863).
-
Value of your time or services.
-
Value of blood given to a blood bank.
-
The transfer of a future interest in tangible personal property (generally, until the entire interest has been transferred).
-
Gifts to individuals and groups that are run for personal profit.
-
Gifts to foreign organizations. But you may be able to deduct gifts to certain U.S. organizations that transfer funds to foreign
charities
and certain Canadian, Israeli, and Mexican charities. See
Pub. 526 for details.
-
Gifts to organizations engaged in certain political activities that are of direct financial interest to your trade or business.
See
section 170(f)(9).
-
Gifts to groups whose purpose is to lobby for changes in the laws.
-
Gifts to civic leagues, social and sports clubs, labor unions, and chambers of commerce.
-
Value of benefits received in connection with a contribution to a charitable organization. See
Pub. 526 for exceptions.
Enter on line 15 the total gifts you made in cash or by check (including out-of-pocket expenses).
Other Than by Cash or Check
Enter your contributions of property. If you gave used items, such as clothing or furniture, deduct their fair market value
at the time you gave
them. Fair market value is what a willing buyer would pay a willing seller when neither has to buy or sell and both are aware
of the conditions of the
sale. For more details on determining the value of donated property, see
Pub. 561.
If the amount of your deduction is more than $500, you must complete and attach
Form 8283. For this purpose, the “amount of your deduction” means your deduction before applying any income limits that could result in a
carryover of contributions. If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must
also attach a statement
from the charitable organization to your return. If your total deduction is over $5,000, you may also have to get appraisals
of the values of the
donated property. This amount is $500 for certain contributions after August 17, 2006, of clothing and household items (see
below). See
Form 8283 and its instructions for details.
Contributions of clothing and household items after August 17, 2006.
A deduction for these contributions will be allowed only if the items are in good used condition or better. However,
this rule does not apply to a
contribution of any single item for which a deduction of more than $500 is claimed and for which you include a qualified appraisal
and Form 8283 with
your tax return.
Recordkeeping.
If you gave property, you should keep a receipt or written statement from the organization you gave the property to,
or a reliable written record,
that shows the organization's name and address, the date and location of the gift, and a description of the property. For
each gift of property, you
should also keep reliable written records that include:
-
How you figured the property's value at the time you gave it. If the value was determined by an appraisal, keep a signed copy
of the
appraisal.
-
The cost or other basis of the property if you must reduce it by any ordinary income or capital gain that would have resulted
if the
property had been sold at its fair market value.
-
How you figured your deduction if you chose to reduce your deduction for gifts of capital gain property.
-
Any conditions attached to the gift.
If your total deduction for gifts of property is over $500, you gave less than your entire interest in the property, or you
made a “ qualified
conservation contribution,” your records should contain additional information. See
Pub. 526 for details.
Carryover From Prior Year
Enter any carryover of contributions that you could not deduct in an earlier year because they exceeded your adjusted gross
income limit. See
Pub. 526 for details.
Casualty and Theft Losses
Complete and attach
Form 4684 to figure the amount of your loss to enter on line 19.
You may be able to deduct part or all of each loss caused by theft, vandalism, fire, storm, or similar causes, and car, boat,
and other accidents.
You may also be able to deduct money you had in a financial institution but lost because of the insolvency or bankruptcy of
the institution.
You can deduct nonbusiness casualty or theft losses only to the extent that:
-
The amount of each separate casualty or theft loss is more than $100, and
-
The total amount of all losses during the year (reduced by the $100 limit discussed in (1) above) is more than 10% of the
amount on
Form 1040, line 38.
The limits in items (1) and (2) above do not apply to casualty and theft losses that occurred in the Hurricane Katrina, Rita,
or Wilma disaster
areas if the loss was caused by Hurricane Katrina, Rita, or Wilma. See
Form 4684 and its instructions for details.
Special rules apply if you had both gains and losses from nonbusiness casualties or thefts. See
Form 4684 and its instructions for details.
Use
Schedule A, line 22, to deduct the costs of proving that you had a property loss. Examples of these costs are appraisal fees
and photographs
used to establish the amount of your loss.
For information on federal disaster area losses, see
Pub. 547. For information on tax benefits related to Hurricanes Katrina, Rita, or Wilma, see
Pub. 4492.
Job Expenses and Certain Miscellaneous Deductions
You can deduct only the part of these expenses that exceeds 2% of the amount on
Form 1040, line 38.
Pub. 529 discusses the types of expenses that can and cannot be deducted.
Examples of Expenses You Cannot Deduct
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Political contributions.
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Legal expenses for personal matters that do not produce taxable income.
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Lost or misplaced cash or property.
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Expenses for meals during regular or extra work hours.
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The cost of entertaining friends.
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Commuting expenses. See
Pub. 529 for the definition of commuting.
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Travel expenses for employment away from home if that period of employment exceeds 1 year. See
Pub. 529 for an exception for certain federal employees.
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Travel as a form of education.
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Expenses of attending a seminar, convention, or similar meeting unless it is related to your employment.
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Club dues. See
Pub. 529 for exceptions.
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Expenses of adopting a child. But you may be able to take a credit for adoption expenses. See
Form 8839 for details.
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Fines and penalties.
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Expenses of producing tax-exempt income.
Unreimbursed Employee Expenses
Enter the total ordinary and necessary job expenses you paid for which you were not reimbursed. (Amounts your employer included
in
box 1 of your Form W-2 are not considered reimbursements.)
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense
is one that is helpful
and appropriate for your business. An expense does not have to be required to be considered necessary.
But you must fill in and attach
Form 2106 if either (1) or (2) below applies.
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You claim any travel, transportation, meal, or entertainment expenses for your job.
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Your employer paid you for any of your job expenses that you would otherwise report on line 20.
If you used your own vehicle and (2) above does not apply, you may be able to file
Form 2106-EZ instead.
If you do not have to file
Form 2106 or
2106-EZ, list the type and amount of each expense on the dotted line next to line 20. If you need more space, attach a statement
showing the
type and amount of each expense. Enter one total on line 20.
At the time these instructions went to print, Congress was considering legislation that would extend the deduction for educator
expenses that
expired at the end of 2005. To find out if this legislation was enacted, and for more details, go to www.irs.gov, click on
More Forms
and Publications, and then on What's Hot in forms and publications, or see Pub. 553. If this deduction was extended, do
not include
on line 20 any educator expenses you deduct.
Examples of other expenses to include on line 20 are:
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Safety equipment, small tools, and supplies needed for your job.
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Uniforms required by your employer that are not suitable for ordinary wear.
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Protective clothing required in your work, such as hard hats, safety shoes, and glasses.
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Physical examinations required by your employer.
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Dues to professional organizations and chambers of commerce.
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Subscriptions to professional journals.
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Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new
job.
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Certain business use of part of your home. For details, including limits that apply, use
TeleTax topic 509 (
see page 8 of the Form 1040 instructions) or see
Pub. 587.
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Certain educational expenses. For details, use
TeleTax topic 513 (
see page 8 of the Form 1040 instructions) or see
Pub. 970.
At the time these instructions went to print, Congress was considering legislation that would extend the tuition and fees
deduction that expired at
the end of 2005. To find out if this legislation was enacted, and for more details, go to www.irs.gov, click on More Forms
and
Publications, and then on What's Hot in forms and publications, or see Pub. 553. If this deduction was extended, reduce
your
educational expenses by any tuition and fees deduction you claim.
You may be able to take a credit for your educational expenses instead of a deduction. See
Form 8863 for details.
Enter the fees you paid for preparation of your tax return, including fees paid for filing your return electronically. If
you paid your tax by
credit card, do not include the convenience fee you were charged.
Enter the total amount you paid to produce or collect taxable income and manage or protect property held for earning income.
But do not include any
personal expenses. List the type and amount of each expense on the dotted lines next to line 22. If you need more space, attach
a statement showing
the type and amount of each expense. Enter one total on line 22.
Examples of expenses to include on line 22 are:
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Certain legal and accounting fees.
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Clerical help and office rent.
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Custodial (for example, trust account) fees.
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Your share of the investment expenses of a regulated investment company.
-
Certain losses on nonfederally insured deposits in an insolvent or bankrupt financial institution. For details, including
limits that apply,
see
Pub. 529.
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Casualty and theft losses of property used in performing services as an employee from
Form 4684, lines 35 and 41b, or
Form 4797, line 18a.
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Deduction for repayment of amounts under a claim of right if $3,000 or less.
Other Miscellaneous Deductions
Only the expenses listed next can be deducted on this line. List the type and amount of each expense on the dotted lines next
to line 27. If you
need more space, attach a statement showing the type and amount of each expense. Enter one total on line 27.
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Gambling losses, but only to the extent of gambling winnings reported on
Form 1040, line 21.
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Casualty and theft losses of income-producing property from
Form 4684, lines 35 and 41b, or
Form 4797, line 18a.
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Loss from other activities from
Schedule K-1 (Form 1065-B), box 2.
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Federal estate tax on income in respect of a decedent.
-
Amortizable bond premium on bonds acquired before October 23, 1986.
-
Deduction for repayment of amounts under a claim of right if over $3,000. See
Pub. 525 for details.
-
Certain unrecovered investment in a pension.
-
Impairment-related work expenses of a disabled person.
For more details, see
Pub. 529.
Total Itemized Deductions
Use the worksheet below to figure the amount to enter on line 28 if the amount on
Form 1040, line 38, is over $150,500 ($75,250 if married filing separately).
If you elect to itemize for state tax or other purposes even though your itemized deductions are less than your standard deduction,
check the box
on line 29.
Itemized Deductions Worksheet—Line 28
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1.
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Enter the total of the amounts from Schedule A, lines 4, 9, 14, 18, 19, 26, and 27
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1.
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2.
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Enter the total of the amounts from Schedule A, lines 4, 13, and 19, plus any gambling and
casualty or theft losses included on line 27.
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2.
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Be sure your total gambling and casualty or theft losses are clearly identified on the
dotted lines next to line 27.
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3.
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Is the amount on line 2 less than the amount on line 1?
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No.
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Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line 28.
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Yes.
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Subtract line 2 from line 1
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3.
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4.
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Multiply line 3 by 80% (.80)
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4.
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5.
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Enter the amount from Form 1040, line 38
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5.
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6.
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Enter $150,500 ($75,250 if married filing separately)
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6.
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7.
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Is the amount on line 6 less than the amount on line 5?
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No.
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Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line 28.
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Yes.
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Subtract line 6 from line 5
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7.
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8.
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Multiply line 7 by 3% (.03)
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8.
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9.
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Enter the smaller of line 4 or line 8
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9.
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10.
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Divide line 9 by 3
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10.
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11.
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Subtract line 10 from line 9
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11.
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12.
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Total itemized deductions. Subtract line 11 from line 1. Enter the result here and on Schedule
A, line 28
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12.
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