Topic 431 – Canceled Debt – Is It Taxable or Not?
If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that’s subject to a debt.

If your debt is forgiven or discharged for less than the full amount you owe, the debt i…[Read more]

Topic 432 – Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt)
If you borrow money from a lender to purchase property, the lender may require the loan to be secured by the purchased property. If you transfer the ownership of the secured property to the lender (such as in a foreclosure) or abandon…[Read more]

Topic 451 – Individual Retirement Arrangements (IRAs)
An individual retirement arrangement (IRA) is a tax-favored personal savings arrangement, which allows you to set aside money for retirement. There are several different types of IRAs, including traditional IRAs and Roth IRAs. You can set up an IRA with a bank, insurance company, or other…[Read more]

Topic 452 – Alimony
Tax Treatment of Alimony

Amounts paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payer spouse, and the recipient spouse must include…[Read more]

Topic 453 – Bad Debt Deduction
If someone owes you money that you can’t collect, you may have a bad debt. For a discussion of what constitutes a valid debt, refer to Publication 550, Investment Income and Expenses, and Publication 535, Business Expenses. Generally, to deduct a bad debt, you must have previously included the amount in your income…[Read more]

Topic 455 – Moving Expenses
If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. You can deduct your moving expenses if you meet all three of the following requirements:

Your move closely relates to the…[Read more]

Topic 456 – Student Loan Interest Deduction
Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntarily pre-paid interest payments. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually…[Read more]

Topic 457 – Tuition and Fees Deduction
You may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent, as a tuition and fees deduction. You don’t have to itemize, instead, you claim the deduction as an adjustment to income on Form 1040 (PDF) or Form 1040A (PDF), U.S. Individual Income Tax…[Read more]

Topic 458 – Educator Expense Deduction
If you’re an eligible educator, you can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed trade or business expenses. Qualified expenses are amounts you paid or incurred for participation in professional development courses,…[Read more]

Topic 501 – Should I Itemize?
There are two ways you can take deductions on your federal income tax return: you can itemize deductions or use the standard deduction. Deductions reduce the amount of your taxable income.

The standard deduction amount varies depending on your income, age, and filing status and changes each year; see How Much Is My…[Read more]

Topic 502 – Medical and Dental Expenses
If you itemize your deductions for a taxable year on Form 1040, Schedule A (PDF), Itemized Deductions, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed…[Read more]

Topic 503 – Deductible Taxes
There are four types of deductible nonbusiness taxes:

State, local, and foreign income taxes
State and local general sales taxes
State, local, and foreign real estate taxes, and
State and local personal property taxes
To be deductible, the tax must be imposed on you and you must have paid it during your tax year.…[Read more]

Topic 504 – Home Mortgage Points
The term points are used to describe certain charges paid to obtain a home mortgage. Points are prepaid interest and may be deductible as home mortgage interest if you itemize deductions on Form 1040, Schedule A (PDF), Itemized Deductions. If you can deduct all of the interest on your mortgage, you may be able to…[Read more]

Topic 505 – Interest Expense
Interest is an amount you pay for the use of borrowed money. Some interest can be claimed as a deduction or as a credit. To deduct interest you paid on a debt, review each interest expense to determine how it qualifies and where to take the deduction. For more information, see Publication 17, Your Federal Income Tax…[Read more]

Topic 506 – Charitable Contributions
You can only deduct charitable contributions if you itemize deductions on Form 1040, Schedule A (PDF), Itemized Deductions.

To be deductible, you must make charitable contributions to qualified organizations. Contributions to individuals are never deductible. To determine if the organization that you…[Read more]

Topic 508 – Miscellaneous Expenses
If you have deductible expenses that qualify as miscellaneous itemized deductions, you can deduct certain of those expenses only to the extent that they exceed 2% of your adjusted gross income. For an explanation of deductible and nondeductible expenses, refer to Publication 529, Miscellaneous Deductions.

There…[Read more]

Topic 509 – Business Use of Home
Whether you’re self-employed, an employee, or a partner, you may be able to deduct certain expenses for the part of your home that you use for business.

To deduct expenses for business use of the home, you must use part of your home as one of the following:

Exclusively and regularly as your principal place of…[Read more]

Topic 510 – Business Use of Car
If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.

You can generally figure the…[Read more]

Topic 511 – Business Travel Expenses
Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses by using Form 2106 (PDF), Employee Business Expenses, or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses, and Form 1040, Schedule A…[Read more]

Topic 512 – Business Entertainment Expenses
You may deduct entertainment expenses that are both ordinary and necessary in carrying on your trade or business if they meet one of these two tests:

The directly-related test, or
The associated test
See Publication 463, Travel, Entertainment, Gift, and Car Expenses, for more detailed information about…[Read more]