Fill and Sign the Form W 2 Wage and Tax Statement 1992 Rev 4 92 Irs

Department of the Treasury Internal Revenue Service Publication 529 Contents What's New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Cat. No. 15056o Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Miscellaneous Deductions Deductions Subject to the 2% Limit . . . . . . . . . . . . 2 Unreimbursed Employee Expenses . . . . . . . . . . . 2 Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 8 For use in preparing 2013 Returns Deductions Not Subject to the 2% Limit . . . . . . . . 12 List of Deductions . . . . . . . . . . . . . . . . . . . . . . . 12 Nondeductible Expenses . . . . . . . . . . . . . . . . . . . 14 List of Nondeductible Expenses . . . . . . . . . . . . . 14 How To Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . 18 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 What's New Standard mileage rate. The 2013 rate for business use of a vehicle is 561 2 cents per mile. Reminders Future developments. For the latest information about developments related to Publication 529, such as legislation enacted after it was published, go to www.irs.gov/ pub529. Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Introduction This publication explains which expenses you can claim as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). You must reduce the total of most miscellaneous itemized deductions by 2% of your adjusted gross income. This publication covers the following topics. Deductions subject to the 2% limit. Get forms and other Information faster and easier by Internet at IRS.gov Nov 13, 2013 Deductions not subject to the 2% limit. Expenses you cannot deduct. How to report your deductions. Some of the deductions previously discussed in this publication are adjustments to income rather than miscellaneous deductions. These include certain employee business expenses that must be listed on Form 2106 or Form 2106-EZ and some that are entered directly on Form 1040. Those deductions, which are discussed in Publication 463, Travel, Entertainment, Gift, and Car Expenses, include employee business expenses of officials paid on a fee basis and performing artists. Note. Generally, nonresident aliens are allowed miscellaneous itemized deductions to the extent they are directly related to income which is effectively connected with the conduct of a trade or business within the United States. You must keep records to verify your deductions. You should keep receipts, canceled checks, subRECORDS stitute checks, financial account statements, and other documentary evidence. For more information on recordkeeping, see Publication 552, Recordkeeping for Individuals. Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions. You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. You can send your comments from www.irs.gov/ formspubs. Click on “More Information” and then on “Comment on Tax Forms and Publications.” Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Ordering forms and publications. Visit www.irs.gov/ formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Internal Revenue Service 1201 N. Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses. Useful Items You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) 946 How To Depreciate Property Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Deductions Subject to the 2% Limit You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37. Generally, you apply the 2% limit after you apply any other deduction limit. For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, En­ tertainment, Gifts, and Local Lodging) before you apply the 2% limit. Deductions subject to the 2% limit are discussed in the following three categories. Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7). Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 8). Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 9). Unreimbursed Employee Expenses Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Page 2 Publication 529 (2013) You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary. You may be able to deduct the following items as unreimbursed employee expenses. Business bad debt of an employee. Business liability insurance premiums. Damages paid to a former employer for breach of an employment contract. Depreciation on a computer your employer requires you to use in your work. Dues to a chamber of commerce if membership helps you do your job. Dues to professional societies. Educator expenses. Home office or part of your home used regularly and exclusively in your work. Job search expenses in your present occupation. Laboratory breakage fees. Legal fees related to your job. Licenses and regulatory fees. Malpractice insurance premiums. Medical examinations required by an employer. Work clothes and uniforms if required and not suitable for everyday use. Work-related education. Business Bad Debt A business bad debt is a loss from a debt created or acquired in your trade or business. Any other worthless debt is a business bad debt only if there is a very close relationship between the debt and your trade or business when the debt becomes worthless. A debt has a very close relationship to your trade or business of being an employee if your main motive for incurring the debt is a business reason. Example. You make a bona fide loan to the corporation you work for. It fails to pay you back. You had to make the loan in order to keep your job. You have a business bad debt as an employee. More information. For more information on business bad debts, see chapter 10 in Publication 535. For information on nonbusiness bad debts, see chapter 4 in Publication 550, Investment Income and Expenses. Business Liability Insurance You can deduct insurance premiums you paid for protection against personal liability for wrongful acts on the job. Damages for Breach of Employment Contract If you break an employment contract, you can deduct damages you pay your former employer if the damages are attributable to the pay you received from that employer. Depreciation on Computers You can claim a depreciation deduction for a computer that you use in your work as an employee if its use is: Occupational taxes. For the convenience of your employer, and Passport for a business trip. Required as a condition of your employment. Repayment of an income aid payment received under an employer's plan. Research expenses of a college professor. Rural mail carriers' vehicle expenses. Subscriptions to professional journals and trade magazines related to your work. Tools and supplies used in your work. Travel, transportation, meals, entertainment, gifts, and local lodging related to your work. Union dues and expenses. Publication 529 (2013) For the convenience of your employer. This means that your use of the computer is for a substantial business reason of your employer. You must consider all facts in making this determination. Use of your computer during your regular working hours to carry on your employer's business is generally for the convenience of your employer. Required as a condition of your employment. This means that you cannot properly perform your duties without the computer. Whether you can properly perform your duties without it depends on all the facts and circumstances. It is not necessary that your employer explicitly requires you to use your computer. But neither is it enough Page 3 that your employer merely states that your use of the item is a condition of your employment. Dues to Chambers of Commerce and Professional Societies Example. You are an engineer with an engineering firm. You occasionally take work home at night rather than work late at the office. You own and use a computer that is similar to the one you use at the office to complete your work at home. Since your use of the computer is not for the convenience of your employer and is not required as a condition of your employment, you cannot claim a depreciation deduction for it. You may be able to deduct dues paid to professional organizations (such as bar associations and medical associations) and to chambers of commerce and similar organizations, if membership helps you carry out the duties of your job. Similar organizations include: Boards of trade, Business leagues, Which depreciation method to use. The depreciation method you use depends on whether you meet the more-than-50%-use test. Civic or public service organizations, More-than-50%-use test met. You meet this test if you use the computer more than 50% in your work. If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). In addition, you may be able to take the section 179 deduction for the year you place the item in service. Trade associations. More-than-50%-use test not met. If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System (ADS). You also cannot claim the section 179 deduction. (But if you use your computer in a home office, see the exception below.) Investment use. Your use of a computer in connection with investments (described later under Other Expen­ ses) does not count as use in your work. However, you can combine your investment use with your work use in figuring your depreciation deduction. Exception for computer used in a home office. The more-than-50%-use test does not apply to a computer used only in a part of your home that meets the requirements described later under Home Office. You can claim accelerated depreciation using GDS for a computer used in a qualifying home office, even if you do not use it more than 50% in your work. You also may be able to take a section 179 deduction for the year you place the computer in service. See Computer used in a home office under How To Report, later. More information. For more information on depreciation and the section 179 deduction for computers and other items used in a home office, see Business Furniture and Equipment in Publication 587. Publication 946 has detailed information about the section 179 deduction and depreciation deductions using GDS and ADS. Reporting your depreciation deduction. See How To Report, later, for information about reporting a deduction for depreciation. You must keep records to prove your percentage of business and investment use. RECORDS Page 4 Real estate boards, and Lobbying and political activities. You may not be able to deduct that part of your dues that is for certain lobbying and political activities. See Lobbying Expenses under Nondeductible Expenses, later. Educator Expenses If you were an eligible educator in 2013, you can deduct up to $250 of qualified expenses you paid in 2013 as an adjustment to gross income on Form 1040, line 23, rather than as a miscellaneous itemized deduction. If you file Form 1040A, you can deduct these expenses on line 16. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses. Eligible educator. An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in school for at least 900 hours during a school year. Qualified expenses. Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted in your educational field. A necessary expense is one that is helpful and appropriate for your profession as an educator. An expense does not have to be required to be considered necessary. Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. You must reduce your qualified expenses by the following amounts. Excludable U.S. series EE and I savings bond interest from Form 8815. Nontaxable qualified state tuition program earnings. Nontaxable earnings from Coverdell education savings accounts. Publication 529 (2013) Any reimbursements you received for those expenses that were not reported to you on your Form W-2, box 1. Educator expenses over limit. If you were an educator in 2013 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 2% limit. Home Office If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively: As your principal place of business for any trade or business, As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business, or In the case of a separate structure not attached to your home, in connection with your trade or business. The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. Principal place of business. If you have more than one place of business, the business part of your home is your principal place of business if: You use it regularly and exclusively for administrative or management activities of your trade or business, and You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Otherwise, the location of your principal place of business generally depends on the relative importance of the activities performed at each location and the time spent at each location. You should keep records that will give the information needed to figure the deduction according RECORDS to these rules. Also keep canceled checks, substitute checks, or account statements and receipts of the expenses paid to prove the deductions you claim. More information. See Publication 587 for more detailed information and a worksheet for figuring the deduction. Job Search Expenses You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if: There was a substantial break between the ending of your last job and your looking for a new one, or You are looking for a job for the first time. Employment and outplacement agency fees. You can deduct employment and outplacement agency fees you pay in looking for a new job in your present occupation. Employer pays you back. If, in a later year, your employer pays you back for employment agency fees, you must include the amount you receive in your gross income up to the amount of your tax benefit in the earlier year. See Recoveries in Publication 525. Employer pays the employment agency. If your employer pays the fees directly to the employment agency and you are not responsible for them, you do not include them in your gross income. Résumé. You can deduct amounts you spend for preparing and mailing copies of a résumé to prospective employers if you are looking for a new job in your present occupation. Travel and transportation expenses. If you travel to an area and, while there, you look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend in looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. Even if you cannot deduct the travel expenses to and from an area, you can deduct the expenses of looking for a new job in your present occupation while in the area. You can choose to use the standard mileage rate to figure your car expenses. The 2013 rate for business use of a vehicle is 561 2 cents per mile. See Publication 463 for more information on travel and car expenses. Legal Fees You can deduct legal fees related to doing or keeping your job. Licenses and Regulatory Fees You can deduct the amount you pay each year to state or local governments for licenses and regulatory fees for your trade, business, or profession. Occupational Taxes You can deduct an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. If you are an employee, you can claim occupational taxes only as a miscellaneous deduction subject to the 2% limit; you cannot claim them as a deduction for taxes elsewhere on your return. You are looking for a job in a new occupation, Publication 529 (2013) Page 5 Repayment of Income Aid Payment An “income aid payment” is one that is received under an employer's plan to aid employees who lose their jobs because of lack of work. If you repay a lump-sum income aid payment that you received and included in income in an earlier year, you can deduct the repayment. Research Expenses of a College Professor If you are a college professor, you can deduct your research expenses, including travel expenses, for teaching, lecturing, or writing and publishing on subjects that relate directly to your teaching duties. You must have undertaken the research as a means of carrying out the duties expected of a professor and without expectation of profit apart from salary. However, you cannot deduct the cost of travel as a form of education. Rural Mail Carriers' Vehicle Expenses If your expenses to use a vehicle in performing services as a rural mail carrier are more than the amount of your reimbursements, you can deduct the unreimbursed expenses. See chapter 4 of Publication 463 for more information. Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. You can depreciate the cost of tools that have a useful life substantially beyond the tax year. For more information about depreciation, see Publication 946. Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging If you are an employee and have ordinary and necessary business-related expenses for travel away from home, local transportation, entertainment, and gifts, you may be able to deduct these expenses. Generally, you must file Form 2106 or Form 2106-EZ to claim these expenses. Travel expenses. Travel expenses are those incurred while traveling away from home for your employer. You can deduct travel expenses paid or incurred in connection with a temporary work assignment. Generally, you cannot deduct travel expenses paid or incurred in connection with an indefinite work assignment. Travel expenses may include: The cost of getting to and from your business destination (air, rail, bus, car, etc.), Meals and lodging while away from home, Taxi fares, Baggage charges, and Cleaning and laundry expenses. Page 6 Travel expenses are discussed more fully in chapter 1 of Publication 463. Temporary work assignment. If your assignment or job away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, it is temporary, unless there are facts and circumstances that indicate it is not. Indefinite work assignment. If your assignment or job away from home in a single location is realistically expected to last for more than 1 year, it is indefinite, whether or not it actually lasts for more than 1 year. If your assignment or job away from home in a single location is realistically expected to last for 1 year or less, but at some later date it is realistically expected to exceed 1 year, it will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that your realistic expectation changes, and it will be treated as indefinite after that date. Federal crime investigation and prosecution. If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. This means that you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year. To qualify, the Attorney General must certify that you are traveling: For the Federal Government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. Armed Forces reservists traveling more than 100 miles from home. If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct some of your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. The balance, if any, is reported on Schedule A. You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Naval, Marine Corps, Air Force, Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. For more information on travel expenses, see Publication 463. Local transportation expenses. Local transportation expenses are the expenses of getting from one workplace to another when you are not traveling away from home. Publication 529 (2013) They include the cost of transportation by air, rail, bus, taxi, and the cost of using your car. You can choose to use the standard mileage rate to figure your car expenses. The 2013 rate for business use of a vehicle is 561 2 cents per mile. ! CAUTION In general, the costs of commuting between your residence and your place of business are nonde­ ductible. Work at two places in a day. If you work at two places in a day, whether or not for the same employer, you can generally deduct the expenses of getting from one workplace to the other. Temporary work location. You can deduct expenses incurred in going between your home and a temporary work location if at least one of the following applies. The work location is outside the metropolitan area where you live and normally work. You have at least one regular work location (other than your home) for the same trade or business. (If this applies, the distance between your home and the temporary work location does not matter.) For this purpose, a work location is generally considered temporary if your work there is realistically expected to last (and does in fact last) for 1 year or less. It is not temporary if your work there is realistically expected to last for more than 1 year, even if it actually lasts for 1 year or less. If your work there initially is realistically expected to last for 1 year or less, but later is realistically expected to last for more than 1 year, the work location is generally considered temporary until the date your realistic expectation changes and not temporary after that date. For more information, see chapter 1 of Publication 463. Gift expenses. You can generally deduct up to $25 of business gifts you give to any one individual during the year. The following items do not count toward the $25 limit. Identical, widely distributed items costing $4 or less that have your name clearly and permanently imprinted. Signs, racks, and promotional materials to be displayed on the business premises of the recipient. Local lodging. If your employer provides or requires you to obtain lodging while you are not traveling away from home, you can deduct the cost of the lodging if it is: on a temporary basis, necessary for you to participate in or be available for a business meeting or employer function, and the costs are ordinary and necessary, but not lavish or extravagant. If your employer provides the lodging or reimburses you for the cost of the lodging, you can deduct the cost only if the value or the reimbursement is included in your gross income because it is reported as wages on your Form W-2. Additional information. See Publication 463 for more information on travel, transportation, meal, entertainment, and gift expenses, and reimbursements for these expenses. Union Dues and Expenses You can deduct dues and initiation fees you pay for union membership. Home office. You can deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business. (In this situation, whether the other workplace is temporary or regular and its distance from your home do not matter.) See Home Office, earlier, for a discussion on the use of your home as your principal place of business. You can also deduct assessments for benefit payments to unemployed union members. However, you cannot deduct the part of the assessments or contributions that provides funds for the payment of sick, accident, or death benefits. Also, you cannot deduct contributions to a pension fund even if the union requires you to make the contributions. Meals and entertainment. Generally, you can deduct entertainment expenses (including entertainment-related meals) only if they are directly related to the active conduct of your trade or business. However, the expense only needs to be associated with the active conduct of your trade or business if it directly precedes or follows a substantial and bona fide business-related discussion. You can deduct only 50% of your business-related meal and entertainment expenses unless the expenses meet certain exceptions. You apply this 50% limit before you apply the 2%-of-adjusted-gross-income limit. You may not be able to deduct amounts you pay to the union that are related to certain lobbying and political activities. See Lobbying Expenses under Nondeductible Ex­ penses, later. Meals when subject to “hours of service” limits. You can deduct 80% of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's “hours of service” limits. You apply this 80% limit before you apply the 2%-of-adjusted-gross-income limit. Publication 529 (2013) Work Clothes and Uniforms You can deduct the cost and upkeep of work clothes if the following two requirements are met. You must wear them as a condition of your employment. The clothes are not suitable for everyday wear. Page 7 It is not enough that you wear distinctive clothing. The clothing must be specifically required by your CAUTION employer. Nor is it enough that you do not, in fact, wear your work clothes away from work. The clothing must not be suitable for taking the place of your regular clothing. ! Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.). Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear. However, work clothing consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, which a painter is required by his union to wear on the job, is not distinctive in character or in the nature of a uniform. Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman are not deductible. Protective clothing. You can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. Examples of workers who may be required to wear safety items are: carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters, and truck drivers. Military uniforms. You generally cannot deduct the cost of your uniforms if you are on full-time active duty in the armed forces. However, if you are an armed forces reservist, you can deduct the unreimbursed cost of your uniform if military regulations restrict you from wearing it except while on duty as a reservist. In figuring the deduction, you must reduce the cost by any nontaxable allowance you receive for these expenses. If local military rules do not allow you to wear fatigue uniforms when you are off duty, you can deduct the amount by which the cost of buying and keeping up these uniforms is more than the uniform allowance you receive. If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms if they replace regular clothing. However, you can deduct the cost of insignia, shoulder boards, and related items. You can deduct the cost of your uniforms if you are a civilian faculty or staff member of a military school. Work-Related Education You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests. It maintains or improves skills required in your present work. Page 8 It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer. You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education: Is needed to meet the minimum educational requirements to qualify you in your trade or business, or Is part of a program of study that will lead to qualifying you in a new trade or business. If your education qualifies, you can deduct expenses for tuition, books, supplies, laboratory fees, and similar items, and certain transportation costs. If the education qualifies you for a new trade or business, you cannot deduct the educational expenses even if you do not intend to enter that trade or business. Travel as education. You cannot deduct the cost of travel that in itself constitutes a form of education. For example, a French teacher who travels to France to maintain general familiarity with the French language and culture cannot deduct the cost of the trip as an educational expense. More information. See Publication 970, Tax Benefits for Education, for a complete discussion of the deduction for work-related education expenses. Education Expenses During Unemployment If you stop working for a year or less in order to get education in order to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Tax Preparation Fees You can usually deduct tax preparation fees on the return for the year in which you pay them. Thus, on your 2013 return, you can deduct fees paid in 2013 for preparing your 2012 return. These fees include the cost of tax preparation software programs and tax publications. They also include any fee you paid for electronic filing of your return. See Tax preparation fees under How To Report, later. Other Expenses You can deduct certain other expenses as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit. On Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9, you can deduct the ordinary and necessary expenses that you pay: 1. To produce or collect income that must be included in your gross income, Publication 529 (2013) 2. To manage, conserve, or maintain property held for producing such income, or 3. To determine, contest, pay, or claim a refund of any tax. You can deduct expenses you pay for the purposes in (1) and (2) above only if they are reasonable and closely related to these purposes. These other expenses include the following items. Appraisal fees for a casualty loss or charitable contribution. Casualty and theft losses from property used in performing services as an employee. Casualty and Theft Losses You can deduct a casualty or theft loss as a miscellaneous itemized deduction subject to the 2% limit if you used the damaged or stolen property in performing services as an employee. First report the loss in Section B of Form 4684, Casualties and Thefts. You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. For more information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts. Clerical help and office rent in caring for investments. Clerical Help and Office Rent Depreciation on home computers used for investments. You can deduct office expenses, such as rent and clerical help, that you have in connection with your investments and collecting the taxable income on them. Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust. Fees to collect interest and dividends. Hobby expenses, but generally not more than hobby income. Indirect miscellaneous deductions from pass-through entities. Investment fees and expenses. Legal fees related to producing or collecting taxable income or getting tax advice. Loss on deposits in an insolvent or bankrupt financial institution. Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you. Repayments of income. Repayments of social security benefits. Safe deposit box rental, except for storing jewelry and other personal effects. Service charges on dividend reinvestment plans. Tax advice fees. Trustee's fees for your IRA, if separately billed and paid. If the expenses you pay produce income that is only partially taxable, see Tax­Exempt Income Expenses, later, under Nondeductible Expenses. Appraisal Fees You can deduct appraisal fees if you pay them to figure a casualty loss or the fair market value of donated property. Publication 529 (2013) Credit or Debit Card Convenience Fees You can deduct the convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card. The fees are deductible on the return for the year in which you paid them. For example, fees charged to payments made in 2013 can be claimed on the 2013 tax return. Depreciation on Home Computer You can deduct depreciation on your home computer if you use it to produce income (for example, to manage your investments that produce taxable income). You generally must depreciate the computer using the straight line method over the Alternative Depreciation System (ADS) recovery period. But if you work as an employee and also use the computer in that work, see Depreciation on Com­ puters under Unreimbursed Employee Expenses, earlier. For more information on depreciation, see Publication 946. Excess Deductions of an Estate If an estate's total deductions in its last tax year are more than its gross income for that year, the beneficiaries succeeding to the estate's property can deduct the excess. Do not include deductions for the estate's personal exemption and charitable contributions when figuring the estate's total deductions. The beneficiaries can claim the deduction only for the tax year in which, or with which, the estate terminates, whether the year of termination is a normal year or a short tax year. For more information, see Termination of Estate in Publication 559, Survivors, Executors, and Administrators. Page 9 Fees To Collect Interest and Dividends You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock. But you cannot deduct a fee you pay to a broker to buy investment property, such as stocks or bonds. You must add the fee to the cost of the property. You cannot deduct the fee you pay to a broker to sell securities. You can use the fee only to figure gain or loss from the sale. See the instructions for Schedule D (Form 1040) for information on how to report the fee. Hobby Expenses You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit. See Not­for­Profit Activities in chapter 1 of Publication 535. Indirect Deductions of Pass-Through Entities Pass-through entities include partnerships, S corporations, and mutual funds that are not publicly offered. Deductions of pass-through entities are passed through to the partners or shareholders. The partners or shareholders can deduct their share of passed-through deductions for investment expenses as miscellaneous itemized deductions subject to the 2% limit. Example. You are a member of an investment club that is formed solely to invest in securities. The club is treated as a partnership. The partnership's income is solely from taxable dividends, interest, and gains from sales of securities. In this case, you can deduct your share of the partnership's operating expenses as miscellaneous itemized deductions subject to the 2% limit. However, if the investment club partnership has investments that also produce nontaxable income, you cannot deduct your share of the partnership's expenses that produce the nontaxable income. Publicly offered mutual funds. Publicly offered mutual funds do not pass deductions for investment expenses through to shareholders. A mutual fund is “publicly offered” if it is: Continuously offered pursuant to a public offering, Regularly traded on an established securities market, or Held by or for at least 500 persons at all times during the tax year. A publicly offered mutual fund will send you a Form 1099-DIV, Dividends and Distributions, or a substitute form, showing the net amount of dividend income (gross dividends minus investment expenses). This net figure is the amount you report on your return as income. You cannot further deduct investment expenses related to publicly Page 10 offered mutual funds because they are already included as part of the net income amount. Information returns. You should receive information returns from pass-through entities. Partnerships and S corporations. These entities issue Schedule K-1, which lists the items and amounts you must report, and identifies the tax return schedules and lines to use. Nonpublicly offered mutual funds. These funds will send you a Form 1099-DIV, or a substitute form, showing your share of gross income and investment expenses. You can claim the expenses only as a miscellaneous itemized deduction subject to the 2% limit. Investment Fees and Expenses You can deduct investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income. Legal Expenses You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. You can also deduct legal expenses that are: Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business, For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or To collect taxable alimony. You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C-EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F) on the appropriate schedule. You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040 or Form 1040NR). See Tax Prep­ aration Fees, earlier. Unlawful discrimination claims. You may be able to deduct, as an adjustment to income on Form 1040, line 36, or Form 1040NR, line 35, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U.S. Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. See Publication 525 for more information. Publication 529 (2013) Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. If you can reasonably estimate the amount of your loss on money you have on deposit in a financial institution that becomes insolvent or bankrupt, you can generally choose to deduct it in the current year even though its exact amount has not been finally determined. If elected, the casualty loss is subject to certain deduction limitations. The election is made on Form 4684. Once you make this choice, you cannot change it without IRS approval. If none of the deposit is federally insured, you can deduct the loss in either of the following ways. As an ordinary loss (as a miscellaneous itemized deduction subject to the 2% limit). Write the name of the financial institution and “Insolvent Financial Institution” beside the amount on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. This deduction is limited to $20,000 ($10,000 if you are married filing separately) for each financial institution, reduced by any expected state insurance proceeds. As a casualty loss. Report it on Form 4684 first and then on Schedule A (Form 1040). See Publication 547 for details. As a nonbusiness bad debt. Report it on Schedule D (Form 1040). If any part of the deposit is federally insured, you can deduct the loss only as a casualty loss. Exception. You cannot make this choice if you are a 1%-or-more-owner or an officer of the financial institution, or are related to such owner or officer. For a definition of “related,” see Deposit in Insolvent or Bankrupt Financial Institution in chapter 4 of Publication 550. Actual loss different from estimated loss. If you make this choice and your actual loss is less than your estimated loss, you must include the excess in income. See Re­ coveries in Publication 525. If your actual loss is more than your estimated loss, treat the excess loss as explained under Choice not made, next. Choice not made. If you do not make this choice (or if you have an excess actual loss after choosing to deduct your estimated loss), treat your loss (or excess loss) as a nonbusiness bad debt (deductible as a short-term capital loss) in the year its amount is finally determined. See Non­ business Bad Debts in chapter 4 of Publication 550. Loss on IRA If you have a loss on your traditional IRA (or Roth IRA) investment, you can deduct the loss as a miscellaneous itemized deduction subject to the 2% limit, but only when all the amounts in all your traditional IRA (or Roth IRA) accounts have been distributed to you and the total distributions are less than your unrecovered basis. For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Repayments of Income If you had to repay an amount that you included in income in an earlier year, you may be able to deduct the amount you repaid. If the amount you had to repay was ordinary income of $3,000 or less, the deduction is subject to the 2% limit. If it was more than $3,000, see Repayments Un­ der Claim of Right under Deductions Not Subject to the 2% Limit, later. Repayments of Social Security Benefits If the total of the amounts in box 5 (net benefits for 2013) of all your Forms SSA-1099, Social Security Benefit Statement, and Forms RRB-1099, Payments By the Railroad Retirement Board, is a negative figure (a figure in parentheses), you may be able to take a miscellaneous itemized deduction subject to the 2% limit. The amount you can deduct is the part of the negative figure that represents an amount you included in gross income in an earlier year. The amount in box 5 of Form SSA-1099 or RRB-1099 is the net amount of your benefits for the year. It will be a negative figure if the amount of benefits you repaid in 2013 (box 4) is more than the gross amount of benefits paid to you in 2013 (box 3). If the deduction is more than $3,000, you will have to use a special computation to figure your CAUTION tax. See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for additional in­ formation. ! Safe Deposit Box Rent You can deduct safe deposit box rent if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents. You cannot deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities. Service Charges on Dividend Reinvestment Plans You can deduct service charges you pay as a subscriber in a dividend reinvestment plan. These service charges include payments for: Holding shares acquired through a plan, Collecting and reinvesting cash dividends, and Keeping individual records and providing detailed statements of accounts. Publication 529 (2013) Page 11 Trustee's Administrative Fees for IRA Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are deductible (if they are ordinary and necessary) as a miscellaneous itemized deduction subject to the 2% limit. Deductions Not Subject to the 2% Limit You can deduct the items listed below as miscellaneous itemized deductions. They are not subject to the 2% limit. Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. List of Deductions Amortizable premium on taxable bonds. Casualty and theft losses from income-producing property. Federal estate tax on income in respect of a decedent. Gambling losses up to the amount of gambling winnings. Impairment-related work expenses of persons with disabilities. Loss from other activities from Schedule K-1 (Form 1065-B), box 2. Losses from Ponzi-type investment schemes. Repayments of more than $3,000 under a claim of right. Unrecovered investment in an annuity. Amortizable Premium on Taxable Bonds In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. You can elect to amortize the premium on taxable bonds. The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Pre-1998 election to amortize bond premium. Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Bonds acquired after October 22, 1986, and before 1988. The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you chose to treat it as an offset to interest income on the bond. Bonds acquired before October 23, 1986. The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2% limit. Page 12 Deduction for excess premium. On certain bonds (such as bonds that pay a variable rate of interest or that provide for an interest-free period), the amount of bond premium allocable to a period may exceed the amount of stated interest allocable to the period. If this occurs, treat the excess as a miscellaneous itemized deduction that is not subject to the 2% limit. However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods. If any of the excess bond premium cannot be deducted because of the limit, this amount is carried forward to the next period and is treated as bond premium allocable to that period. Pre-1998 choice to amortize bond premium. If you made the choice to amortize the premium CAUTION on taxable bonds before 1998, you can deduct the bond premium amortization that is more than your in­ terest income only for bonds acquired during 1998 and later years. ! More information. For more information on bond premium, see Bond Premium Amortization in chapter 3 of Publication 550. Casualty and Theft Losses of Income-Producing Property You can deduct a casualty or theft loss as a miscellaneous itemized deduction not subject to the 2% limit if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). First report the loss in Section B of Form 4684. You may also have to include the loss on Form 4797, Sales of Business Property, if you are otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. For more information on casualty and theft losses, see Publication 547. Federal Estate Tax on Income in Respect of a Decedent You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent's final income tax return. See Publication 559 for information about figuring the amount of this deduction. Gambling Losses Up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Form 1040, line 21. You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. You cannot deduct gambling losses that are more Publication 529 (2013) than your winnings. Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR). You cannot reduce your gambling winnings by your gambling losses and report the difference. CAUTION You must report the full amount of your winnings as income and claim your losses (up to the amount of win­ nings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses. ! RECORDS Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information. The date and type of your specific wager or wagering activity. The name and address or location of the gambling establishment. The names of other persons present with you at the gambling establishment. The amount(s) you won or lost. Proof of winnings and losses. In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. For specific wagering transactions, you can use the following items to support your winnings and losses. These recordkeeping suggestions are intended as general guidelines to help you establish your CAUTION winnings and losses. They are not all­inclusive. Your tax liability depends on your particular facts and cir­ cumstances. ! Keno. Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records. Slot machines. A record of the machine number and all winnings by date and time the machine was played. Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc.). The number of the table at which you were playing. Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage. Bingo. A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc. Racing (horse, harness, dog, etc.). A record of the races, amounts of wagers, amounts collected on winning Publication 529 (2013) tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and payment records from the racetrack. Lotteries. A record of ticket purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements. Impairment-Related Work Expenses If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work. Example. You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your expenses for the reader as impairment-related work expenses. Self-employed. If you are self-employed, enter your impairment-related work expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. See Impairment­related work expenses., later under How To Report. Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 If the amount reported in Schedule K-1 (Form 1065-B), box 2, is a loss, report it on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14 (only if effectively connected with a U.S. trade or business). It is not subject to the passive activity limitations. Officials Paid on a Fee Basis If you are a fee-basis official, you can claim your expenses in performing services in that job as an adjustment to income rather than as a miscellaneous itemized deduction. See Publication 463 for more information. Performing Artists If you are a qualified performing artist, you can deduct your employee business expenses as an adjustment to income rather than as a miscellaneous itemized deduction. If you are an employee, complete Form 2106 or Form 2106-EZ. See Publication 463 for more information. Page 13 Losses From Ponzi-type Investment Schemes Health spa expenses. These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. You figure the deductible loss in Section B of Form 4684. However, if you qualify to use Revenue Procedure 2009-20 (as modified by Revenue Procedure 2011-58) and you choose to follow the procedures in the guidance, complete Section C of Form 4684 before completing Section B. Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. You do not need to complete Appendix A. See the Form 4684 instructions and Publication 547, Casualties, Disasters, and Thefts, for more information. Home repairs, insurance, and rent. Repayments Under Claim of Right If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid, or take a credit against your tax. See Repayments in Publication 525 for more information. Unrecovered Investment in Annuity A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. See Publication 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities. Nondeductible Expenses You cannot deduct the following expenses. List of Nondeductible Expenses Hobby losses—but see Hobby Expenses, earlier. Home security system. Illegal bribes and kickbacks—see Bribes and kick­ backs in chapter 11 of Publication 535. Investment-related seminars. Life insurance premiums paid by the insured. Lobbying expenses. Losses from the sale of your home, furniture, personal car, etc. Lost or misplaced cash or property. Lunches with co-workers. Meals while working late. Medical expenses as business expenses other than medical examinations required by your employer. Personal disability insurance premiums. Personal legal expenses. Personal, living, or family expenses. Political contributions. Professional accreditation fees. Professional reputation, expenses to improve. Relief fund contributions. Residential telephone line. Stockholders' meeting, expenses of attending. Tax-exempt income, expenses of earning or collecting. Adoption expenses. The value of wages never received or lost vacation time. Broker's commissions. Travel expenses for another individual. Burial or funeral expenses, including the cost of a cemetery lot. Voluntary unemployment benefit fund contributions. Campaign expenses. Wristwatches. Capital expenses. Adoption Expenses Check-writing fees. You cannot deduct the expenses of adopting a child but you may be able to take a credit for those expenses. For details, see Form 8839, Qualified Adoption Expenses. Club dues. Commuting expenses. Fees and licenses, such as car licenses, marriage licenses, and dog tags. Fines and penalties, such as parking tickets. Page 14 Commissions Commissions paid on the purchase of securities are not deductible, either as business or nonbusiness expenses. Instead, these fees must be added to the taxpayer's cost Publication 529 (2013) of the securities. Commissions paid on the sale are deductible as business expenses only by dealers. Campaign Expenses You cannot deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. These include qualification and registration fees for primary elections. Legal fees. You cannot deduct legal fees paid to defend charges that arise from participation in a political campaign. Capital Expenses Fines or Penalties You cannot deduct fines or penalties you pay to a governmental unit for violating a law. This includes an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Fines or penalties include parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. Health Spa Expenses You cannot deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer. Home Security System You cannot currently deduct amounts paid to buy property that has a useful life substantially beyond the tax year or amounts paid to increase the value or prolong the life of property. If you use such property in your work, you may be able to take a depreciation deduction. See Publication 946. If the property is a car used in your work, also see Publication 463. You cannot deduct the cost of a home security system as a miscellaneous deduction. However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. See Home Office under Unreimbursed Employee Expenses, earlier, and Publication 587. Check-Writing Fees on Personal Account Investment-Related Seminars If you have a personal checking account, you cannot deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest. You cannot deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes. Club Dues Generally, you cannot deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. You cannot deduct dues paid to an organization if one of its main purposes is to: Conduct entertainment activities for members or their guests, or Provide members or their guests with access to entertainment facilities. Dues paid to airline, hotel, and luncheon clubs are not deductible. Commuting Expenses You cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items, such as the rent on a trailer to carry the items. Life Insurance Premiums You cannot deduct premiums you pay on your life insurance. You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. See Publication 504, Divorced or Separated Individuals, for information on alimony. Lobbying Expenses You generally cannot deduct amounts paid or incurred for lobbying expenses. These include expenses to: 1. Influence legislation, 2. Participate, or intervene, in any political campaign for, or against, any candidate for public office, 3. Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums, or 4. Communicate directly with covered executive branch officials in any attempt to influence the official actions or positions of those officials. Lobbying expenses also include any amounts paid or incurred for research, preparation, planning, or coordination of any of these activities. Covered executive branch official. A covered executive branch official, for the purpose of (4) above, is any of the following officials. The President. Publication 529 (2013) Page 15 The Vice President. Any officer or employee of the White House Office of the Executive Office of the President, and the two most senior level officers of each of the other agencies in the Executive Office. Any individual serving in a position in Level I of t