2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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Line 11 1. Your investment interest expense is you paid to do volunteer work for the kinds not more than your investment income of organizations described earlier. If you If you did not receive a Form 1098 from the from interest and ordinary dividends minus drove to and from the volunteer work, you recipient, report your deductible mortgage any qualified dividends. can take 14 cents a mile or the actual cost of interest on line 11. 2. You have no other deductible investamount you claim under either method. But gas and oil. Add parking and tolls to the If you bought your home from the recip- ment expenses. ient, be sure to show that recipient’s name, do not deduct any amounts that were repaid 3. You have no disallowed investment identifying no., and address on the dotted to you. interest expense from 2003. lines next to line 11. If the recipient is an individual, the identifying no. is his or her Gifts from which you benefit. If you made social security number (SSN). Otherwise, it Alaska Permanent Fund divi- a gift and received a benefit in return, such is the employer identification number. You dends, including those reported as food, entertainment, or merchandise, must also let the recipient know your SSN. on Form 8814, are not invest- you can generally only deduct the amount If you do not show the required information ment income. that is more than the value of the benefit. about the recipient or let the recipient know For more details, see Pub. 550. But this rule does not apply to certain mem- your SSN, you may have to pay a $50 penannual payment of $75 or less. For details, bership benefits provided in return for an alty. see Pub. 526. If you and at least one other person (other than your spouse if filing jointly) Gifts to Charity Example. You paid $70 to a charitable were liable for and paid interest on the organization to attend a fund-raising dinner You can deduct contributions or gifts you mortgage, and the other person received the and the value of the dinner was $40. You gave to organizations that are religious, Form 1098, attach a statement to your re- can deduct only $30. charitable, educational, scientific, or literturn showing the name and address of that ary in purpose. You can also deduct what Gifts of $250 or more. You can deduct a person. To the right of line 11, enter “See you gave to organizations that work to pre- gift of $250 or more only if you have a attached.” vent cruelty to children or animals. Exam- statement from the charitable organization ples of these organizations are: showing the information in (1) and (2) below. • Churches, mosques, synagogues, temples, etc. Line 12 In figuring whether a gift is $250 or • Boy Scouts, Boys and Girls Clubs of more, do not combine separate donations. Points Not Reported on America, CARE, Girl Scouts, Goodwill In- For example, if you gave your church $25 Form 1098 dustries, Red Cross, Salvation Army, each week for a total of $1,300, treat each 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 dis- ease, hemophilia, mental illness or retarda- tion, multiple sclerosis, muscular dystrophy, tuberculosis, etc. • Federal, state, and local governments if the gifts are solely for public purposes. 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 im- prove 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. TIP 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 verifica- tion 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. If you paid off a mortgage early, deduct any remaining points in the year you paid off the mortgage. $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. 1. The amount of any money contrib- uted and a description (but not value) of any property donated. 2. 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 cere- mony), the organization must state this, but it does not have to describe or value the benefit. You must get the statement by TIP the date you file your return or the due date (including exten- sions) for filing your return, whichever is earlier. Do not attach the Line 13 • Call our Tax Exempt/Government En- statement to your return. Instead, keep it for Investment Interest tities Customer Account Services at 1-877-829-5500. Assistance is available your records. Monday through Friday from 8:00 a.m. to Limit on the amount you can deduct. See 6:30 p.m. EST. Pub. 526 to figure the amount of your deduction if any of the following apply. 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 ac- Contributions You Can tivities or to securities that generate tax- • Your cash contributions or contribu- Deduct exempt income. tions of ordinary income property are more Contributions can be in cash (keep can- than 30% of the amount on Form 1040, line Complete and attach Form 4952 to figceled checks, receipts, or other reliable 37. ure your deduction. written records showing the name of the • Your gifts of capital gain property are Exception. You do not have to file Form organization and the date and amount more than 20% of the amount on Form 4952 if all three of the following apply. given), property, or out-of-pocket expenses 1040, line 37. A-4
• You gave gifts of property that in- time you gave them. Fair market value is You may be able to deduct part or all of creased in value or gave gifts of the use of what a willing buyer would pay a willing each loss caused by theft, vandalism, fire, property. seller when neither has to buy or sell and storm, or similar causes, and car, boat, and both are aware of the conditions of the sale. other accidents. You may also be able to Contributions You Cannot For more details on determining the value deduct money you had in a financial instiof donated property, see Pub. 561. tution but lost because of the insolvency Deduct or bankruptcy of the institution. • Travel expenses (including meals and If the amount of your deduction is more lodging) while away from home, unless than $500, you must complete and attach You may deduct nonbusiness casualty there was no significant element of per- Form 8283. For this purpose, the “amount or theft losses only to the extent that— sonal pleasure, recreation, or vacation in of your deduction” means your deduction • The amount of each separate casualty the travel. before applying any income limits that or theft loss is more than $100, and • Political contributions. could result in a carryover of contributions. • The total amount of all losses during • Dues, fees, or bills paid to country If your total deduction is over $5,000, you the year is more than 10% of the amount on clubs, lodges, fraternal orders, or similar may also have to get appraisals of the val- Form 1040, line 37. groups. ues of the donated property. See Form 8283 and its instructions for details. • Cost of raffle, bingo, or lottery tickets. Special rules apply if you had both gains But you may be able to deduct these exand losses from nonbusiness casualties or Recordkeeping. penses on line 27. See page A-6 for details. If you gave property, you thefts. See Form 4684 and its instructions should keep a receipt or written statement for details. • Cost of tuition. But you may be able to from the organization you gave the propdeduct this expense on line 20 (see page erty to, or a reliable written record, that Use Schedule A, line 22, to deduct the A-6), or Form 1040, line 27, or take a credit shows the organization’s name and adfor this expense (see Form 8863). dress, the date and location of the gift, and a loss. Examples of these costs are appraisal costs of proving that you had a property • Value of your time or services. description of the property. For each gift of fees and photographs used to establish the • Value of blood given to a blood bank. property, you should also keep reliable amount of your loss. • The transfer of a future interest in tanwritten records that include: For information on federal disaster area gible personal property (generally, until the • How you figured the property’s value losses, see Pub. 547. entire interest has been transferred). at the time you gave it. If the value was • Gifts to individuals and groups that determined by an appraisal, keep a signed are run for personal profit. copy of the appraisal. • Gifts to foreign organizations. But • The cost or other basis of the property Job Expenses and you may be able to deduct gifts to certain if you must reduce it by any ordinary income or capital gain that would have re- Most Other U.S. organizations that transfer funds to foreign charities and certain Canadian, Isfair market value. sulted if the property had been sold at its Miscellaneous raeli, and Mexican charities. See Pub. 526 for details. • How you figured your deduction if Deductions • Gifts to organizations engaged in cergifts of capital gain property. penses that exceeds 2% of the amount on you chose to reduce your deduction for You can deduct only the part of these extain political activities that are of direct fi- • Any conditions attached to the gift. Form 1040, line 37. nancial interest to your trade or business. See Internal Revenue Code section Pub. 529 discusses the types of expenses that can and cannot be deducted. 170(f)(9). If your total deduction for gifts • Gifts to groups whose purpose is to of property is over $500, you lobby for changes in the laws. gave less than your entire inter- Examples of Expenses You est in the property, or you made • Gifts to civic leagues, social and Cannot Deduct a “qualified conservation contribution,” sports clubs, labor unions, and chambers of your records should contain additional incommerce. • Political contributions. formation. See Pub. 526 for details. • Personal legal expenses. • Value of benefits received in connec- • Lost or misplaced cash or property. tion with a contribution to a charitable or- • Expenses for meals during regular or ganization. See Pub. 526 for exceptions. extra work hours. Line 17 • The cost of entertaining friends. Carryover From Prior Year • Commuting expenses. See Pub. 529 for the definition of commuting. Line 15 Enter any carryover of contributions that • Travel expenses for employment Gifts by Cash or Check you could not deduct in an earlier year be- away from home if that period of employcause they exceeded your adjusted gross ment exceeds 1 year. See Pub. 529 for an Enter the total contributions you made in income limit. See Pub. 526 for details. exception for certain federal employees. cash or by check (including out-of-pocket • Travel as a form of education. expenses). • Expenses of attending a seminar, convention, or similar meeting unless it is related to your employment. Casualty and Theft Line 16 • Club dues. See Pub. 529 for excep- Losses tions. Other Than by Cash or • Expenses of adopting a child. But you may be able to take a credit for adoption Check expenses. See Form 8839 for details. Enter your contributions of property. If you Line 19 • Fines and penalties. gave used items, such as clothing or furni- Complete and attach Form 4684 to figure • Expenses of producing tax-exempt inture, deduct their fair market value at the the amount of your loss to enter on line 19. come. A-5
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Note. This booklet does not contain
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What is IRS e-file? It’s the fast
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Tax Return Page Reference Questions
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Quick and Easy Access to Tax Help a
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Topic TeleTax Topics No. Subject No
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Before You Fill In Form 1040 See Ho
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Chart B—For Children and Other De
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Form Item and Box in Which it Shoul
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Line 2 December 31, 2004, you were
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Form 1040—Lines 7 and 8a less tha
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gross income was over $139,500 ($69
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Form 1040—Lines 16a and 16b Age (
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Form 1040—Lines 20a and 20b Socia
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Form 1040—Line 25 IRA Deduction W
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Page 45 and 46: Worksheet A—Earned Income Credit
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Page 49 and 50: 2004 Earned Income Credit (EIC) Tab
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Page 127 and 128: Index to Instructions A Foreign Tax
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2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

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