Job Search Expenses Can be Tax Deductible

Summertime is the season that often leads to major life decisions, such as buying a home, moving or a job change. If you are looking for a new job that is in the same line of work, you may be able to deduct some of your job hunting expenses on your federal income tax return.

Here are seven things the IRS wants you to know about deducting costs related to your job search:

1. To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.

2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you received in your gross income, up to the amount of your tax benefit in the earlier year.

3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.

4. If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you travelled. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

5. You cannot deduct your job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.

6. You cannot deduct job search expenses if you are looking for a job for the first time.


7. The amount of job search expenses that you can claim is limited. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and the total of all miscellaneous deductions must be more than two percent of your adjusted gross income.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Renting Your Vacation Home

Income that you receive for the rental of your vacation home must generally be reported on your federal income tax return.

However, if you rent the property for only a short time each year, you may not be required to report the rental income.

The IRS offers these tips on reporting rental income from a vacation home such as a house, apartment, condominium, mobile home or boat:

•Rental Income and Expenses  Rental income, as well as certain rental expenses that can be deducted, are normally reported on Schedule E, Supplemental Income and Loss.

•Limitation on Vacation Home Rentals  When you use a vacation home as your residence and also rent it to others, you must divide the expenses between rental use and personal use, and you may not deduct the rental portion of the expenses in excess of the rental income.

You are considered to use the property as a residence if your personal use is more than 14 days, or more than 10% of the total days it is rented to others if that figure is greater. For example, if you live in your vacation home for 17 days and rent it 160 days during the year, the property is considered used as a residence and your deductible rental expenses would be limited to the amount of rental income.

•Special Rule for Limited Rental Use  If you use a vacation home as a residence and rent it for fewer than 15 days per year, you do not have to report any of the rental income. Schedule A, Itemized Deductions, may be used to report regularly deductible personal expenses, such as qualified mortgage interest, property taxes, and casualty losses.

IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes), is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). The booklet offers more information about rental property, including special rules about personal use and how to report rental income and expenses.

26 CFR 601.702: Publication and public inspection. (Also: Part I, Section 6110, 301.6110-1)

Rev. Proc. 2012-31

SECTION 1.  PURPOSE
The purpose of this revenue procedure is to update Rev. Proc. 95-15, 1995-1 C.B. 523, and to revise the fee prescribed under the authority of section 6110(k) of the Internal Revenue Code (Code) for processing requests for a background file document, including the costs for searching for the document, duplication and making redactions, relating to a written determination issued by the National Office of the Internal Revenue Service (National Office).

SECTION 2.  BACKGROUND
The National Office issues written determinations to taxpayers and other offices in the Internal Revenue Service (Service).  See I.R.C. § 6110(a), (i); Rev. Proc. 2012-1, 2012-1 I.R.B. 1; Rev. Proc. 2012-2, 2012-1 I.R.B. 92.  Written determinations include letter rulings, determination letters, technical advice memorandums, and Chief Counsel advice.  I.R.C. § 6110(b)(1).
A letter ruling interprets the tax laws and applies the laws to a taxpayer’s specific set of facts.  A letter ruling is issued to a taxpayer by an Associate Office in response to the taxpayer’s written inquiry about the taxpayer’s status for tax purposes or the tax effect of its acts or transactions.  The request must be filed with the Service prior to the taxpayer filing any returns or reports required by the Code.  See Rev. Proc. 2012-1.
A determination letter is a written determination issued by a Director, as that term is defined in Revenue Procedure 2012-1 or any successor revenue procedure, that applies principles and precedent previously announced by the Service to a specific set of facts when a determination can be made based on rules clearly established in a statute, tax treaty, regulations, revenue ruling, or opinion or court decision.  See Rev. Proc. 2012-1.
A technical advice memorandum is issued by an Associate Office responding to a request made for assistance on a technical or procedural question that develops during any proceeding before the Service.  See Rev. Proc. 2012-2. 
Chief Counsel advice is defined in section 6110(i)(1)(A) as written advice or instructions prepared by the National Office that is issued to a non-National Office function and conveys a legal interpretation of, a position or policy concerning, or a legal interpretation relating to the assessment or collection of a liability under a revenue provision.
A background file document includes the request for the written determination and any material submitted in support of the request.  It also includes any communication between the Service and persons outside the Service in connection with the written determination.  It does not include communications between the Service and the Department of Justice relating to a pending criminal or civil investigation.  I.R.C. § 6110(b)(2).
Section 6110(a) provides that, generally, the text of any written determination and background file document related to that written determination shall be open for public inspection, subject to the deletions required by sections 6110(c) and 6110(i)(3).  Upon receipt of a request for a background file document related to a written determination, section 6110(f)(1) provides that the Service must mail a notice of intent to disclose to the individual to whom the written determination pertains.  Pursuant to section 6110(g)(1), the Service must make the background file document available no earlier than 75 days, but no later than 90 days, after mailing the notice of intent to disclose.
Section 6110(k)(1) authorizes the Secretary to assess actual costs for duplication of any background file document, searching, and making deletions required under subsection 6110(c)(1) or (i)(3).

SECTION 3.  SCOPE
This revenue procedure applies to requests for background file documents pertaining to any written determination issued by the National Office.

SECTION 4.  PROCEDURE
.01 Requests.  Requests for a background file document must be in writing and must include the file number of the written determination for which the background file is being requested.  The request should specify whether it is for all the documents in the file or only a specific document.  For example, a requester may request only the trust agreement (or the will, partnership agreement, plan of reorganization, etc.) that was the subject of the written determination.  See Section 4.07 of this revenue procedure for a sample of a request letter for background file documents pursuant to section 6110.
.02 Release or File Numbers.  To request a background file document for a specific written determination, include the release number or file number of the written determination.  Section 6110 written determinations are indexed by Internal Revenue Code sections.  If requesting background file documents for written determinations under a specific Code section, obtain the release or file numbers for the written determinations from the list of published IRS Written Determinations in the Electronic Reading Room on irs.gov or at the National Office Reading Room, Room 1621, IRS Building, 11th Street and Pennsylvania Avenue, N.W., Washington, DC 20224.  The Reading Room is open from 9:00 a.m. to 4:00 p.m., Monday through Friday, and the telephone number is (202) 622-5164 (not a toll-free call).
.03 Fees.  Requests for background file documents should contain the requester’s agreement to pay the Service a fee for searching for the file, making deletions, and making copies.  The request should state the maximum amount of charges the Service may incur without further authorization from the person making the request.  If the request does not contain a stated maximum amount or the fees will exceed the stated maximum amount, the Service will forward to the requester a payment agreement with the estimated cost for processing the request.  The payment agreement must be signed and returned to the Service before the Service will begin processing the file.
The fee for processing a request for background file documents is $100 per hour.  This fee covers all costs associated with processing the request, including the costs to search for, make deletions to, and copies of the background file documents.
.04 Mailing Address.  Requests for background file documents should be mailed to:
Chief, Disclosure & Litigation Support Branch
Internal Revenue Service
Attn: CC:PA:LPD:DLS
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
.05 Payment of Fees.  The Service must receive payment of the background file processing fee before the documents will be released to the requester.  The person making the request will be notified by letter of the total cost of processing the documents.
.06 Release Date.  Generally, the requester will receive a background file document between 90 and 120 days after the Service receives the request for the document.  This provides the Service time to notify the person to whom the document pertains of its intention to disclose the document.  If the document has previously been requested and processed, however, the documents may be available within two weeks after the Service receives the request.
.07 Sample Request.  The following is a sample of a letter requesting background file documents pursuant to section 6110:
Internal Revenue Service
Attn: Chief, Disclosure & Litigation Support Branch
CC:PA:LPD:DLS
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
[Date]
Dear Sir or Madam:
This is a request under section 6110 of the Code for the background file documents relating to [type of written determination], [file number].
(Option)  I am requesting a copy of all of the documents in the file.
(Option)  I am requesting only a copy of [specific type of document(s) requesting].
I am willing to pay fees for this request up to a maximum of $[amount willing to pay].  If you estimate that the fees will exceed this limit, please inform me before processing the documents.  I understand that I will be notified of the final fee amount before the documents are scheduled for release and that payment must be made before the documents are released to me.
Sincerely,
[Name]
[Address]
[City, State Zip Code]
[Telephone Number]
SECTION 5.  EFFECT ON OTHER DOCUMENTS (when applicable)
Rev. Proc. 95-15, 1995-1 C.B. 523; Announcement 83-196, 1983-52 I.R.B. 24; Announcement 85-141, 1985-39 I.R.B. 118, are superseded.
SECTION 6.  INQUIRIES
Inquiries regarding this procedure should be directed to Chief, Disclosure & Litigation Support Branch, Internal Revenue Service, CC:PA:LPD:DLS, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.
SECTION 7.  EFFECTIVE DATE
This revenue procedure is effective for requests received after September 30, 2012.
SECTION 8.  DRAFTING INFORMATION
The principal author of this revenue procedure is Emily M. Lesniak of the Office of Associate Chief Counsel (Procedure and Administration).  For further information regarding this revenue procedure contact Emily M. Lesniak on 202-622-4940 (not a toll free call).

IRS Offers Tips on How to Fix Errors Made on Your Tax Return

If you discover an error after you file your tax return, you can correct it by amending your return. Here are 10 tips from the Internal Revenue Service about amending your federal tax return:

1. When to amend a return Generally, you should file an amended return if your filing status, number of dependents, total income, tax deductions or tax credits were reported incorrectly or omitted.  Additional reasons for amending a return are listed in the instructions.

2. When NOT to amend a return In some cases, you do not need to amend your tax return.  The IRS usually corrects math errors or requests missing forms – such as Forms W-2 or schedules – when processing an original return.  In these instances, do not amend your return.

3. Form to use Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ.  Make sure you check the box for the year of the return you are amending on the Form 1040X.  An amended tax return cannot be filed electronically.

4. Multiple amended returns If you are amending more than one year’s tax return, prepare a separate 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center (see "Where to File" in the instructions for Form 1040X).

5. Form 1040X The Form 1040X has three columns. Column A shows original figures from the original return. Column B shown the changes you are making.   Column C shows the corrected figures. There is an area on the back of the form to explain the specific changes and the reasons for the changes.

6. Other forms or schedules If the changes involve other schedules or forms, attach them to the Form 1040X.  Failure to do this will cause a delay in processing.

7. Additional refund If you are amending your return to get an additional refund, wait until you have received your original refund before filing Form 1040X.  You may cash that check while waiting for any additional refund.

8. Additional tax If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.

9. When to file Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original tax return or within two years from the date you paid the tax, whichever is later.

10. Processing time Normal processing time for amended returns is 8 to 12 weeks.

A Lesson from the IRS for Students Starting a Summer Job

School’s out, but the IRS has another lesson for students who will be starting summer jobs. Summer jobs represent an opportunity for students to learn about the tax system.

Not all of the money they earn will be included in their paychecks because their employer must withhold taxes.

Here are six things the IRS wants students to be aware of when they start a summer job.

1. When you first start a new job you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.

2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tips you receive are taxable income and are therefore subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment – including jobs like baby-sitting and lawn mowing – are subject to income tax.

4. Even if you do not earn enough money to owe income tax, you will probably have to pay employment taxes. Your employer will withhold these taxes from your paycheck. If you earn $400 or more from self-employment, you will have to pay self-employment tax. This pays for benefits under the Social Security system that are available for self-employed individuals the same as they are for employees that have taxes withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE, Self-Employment Tax.

5. Food and lodging allowances paid to ROTC students in advanced training are not taxable. However, active duty pay – such as pay received during summer camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are treated as self-employed for federal tax purposes regardless of your age if you meet the following conditions:

• You are in the business of delivering newspapers.
• All your pay for these services directly relates to sales rather than to the number of hours worked.
• You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.
  If you do not meet these conditions and you are under age 18, then you are generally exempt from Social Security and Medicare tax.

More information about income tax withholding and employment taxes can be found at IRS.gov, the official IRS website.