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2011 Tax Act

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2011 Tax Act

2011 tax act 1. 2011 tax act   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. 2011 tax act Business associate. 2011 tax act Bona fide business purpose. 2011 tax act Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. 2011 tax act This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. 2011 tax act It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. 2011 tax act Travel expenses defined. 2011 tax act   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. 2011 tax act   An ordinary expense is one that is common and accepted in your trade or business. 2011 tax act A necessary expense is one that is helpful and appropriate for your business. 2011 tax act An expense does not have to be required to be considered necessary. 2011 tax act   You will find examples of deductible travel expenses in Table 1-1 , later. 2011 tax act Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. 2011 tax act This rest requirement is not satisfied by merely napping in your car. 2011 tax act You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. 2011 tax act Example 1. 2011 tax act You are a railroad conductor. 2011 tax act You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. 2011 tax act During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. 2011 tax act You are considered to be away from home. 2011 tax act Example 2. 2011 tax act You are a truck driver. 2011 tax act You leave your terminal and return to it later the same day. 2011 tax act You get an hour off at your turnaround point to eat. 2011 tax act Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. 2011 tax act Members of the Armed Forces. 2011 tax act   If you are a member of the U. 2011 tax act S. 2011 tax act Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. 2011 tax act You cannot deduct your expenses for meals and lodging. 2011 tax act You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. 2011 tax act If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. 2011 tax act   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. 2011 tax act Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. 2011 tax act Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. 2011 tax act It includes the entire city or general area in which your business or work is located. 2011 tax act If you have more than one regular place of business, your tax home is your main place of business. 2011 tax act See Main place of business or work , later. 2011 tax act If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. 2011 tax act See No main place of business or work , later. 2011 tax act If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. 2011 tax act As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. 2011 tax act Main place of business or work. 2011 tax act   If you have more than one place of work, consider the following when determining which one is your main place of business or work. 2011 tax act The total time you ordinarily spend in each place. 2011 tax act The level of your business activity in each place. 2011 tax act Whether your income from each place is significant or insignificant. 2011 tax act Example. 2011 tax act You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. 2011 tax act You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. 2011 tax act Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. 2011 tax act No main place of business or work. 2011 tax act   You may have a tax home even if you do not have a regular or main place of work. 2011 tax act Your tax home may be the home where you regularly live. 2011 tax act Factors used to determine tax home. 2011 tax act   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. 2011 tax act You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. 2011 tax act You have living expenses at your main home that you duplicate because your business requires you to be away from that home. 2011 tax act You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. 2011 tax act   If you satisfy all three factors, your tax home is the home where you regularly live. 2011 tax act If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. 2011 tax act If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. 2011 tax act Example 1. 2011 tax act You are single and live in Boston in an apartment you rent. 2011 tax act You have worked for your employer in Boston for a number of years. 2011 tax act Your employer enrolls you in a 12-month executive training program. 2011 tax act You do not expect to return to work in Boston after you complete your training. 2011 tax act During your training, you do not do any work in Boston. 2011 tax act Instead, you receive classroom and on-the-job training throughout the United States. 2011 tax act You keep your apartment in Boston and return to it frequently. 2011 tax act You use your apartment to conduct your personal business. 2011 tax act You also keep up your community contacts in Boston. 2011 tax act When you complete your training, you are transferred to Los Angeles. 2011 tax act You do not satisfy factor (1) because you did not work in Boston. 2011 tax act You satisfy factor (2) because you had duplicate living expenses. 2011 tax act You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. 2011 tax act Therefore, you have a tax home in Boston. 2011 tax act Example 2. 2011 tax act You are an outside salesperson with a sales territory covering several states. 2011 tax act Your employer's main office is in Newark, but you do not conduct any business there. 2011 tax act Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. 2011 tax act You have a room in your married sister's house in Dayton. 2011 tax act You stay there for one or two weekends a year, but you do no work in the area. 2011 tax act You do not pay your sister for the use of the room. 2011 tax act You do not satisfy any of the three factors listed earlier. 2011 tax act You are an itinerant and have no tax home. 2011 tax act Tax Home Different From Family Home If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. 2011 tax act You also cannot deduct the cost of meals and lodging while at your tax home. 2011 tax act See Example 1 , later. 2011 tax act If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. 2011 tax act See Example 2 , later. 2011 tax act Example 1. 2011 tax act You are a truck driver and you and your family live in Tucson. 2011 tax act You are employed by a trucking firm that has its terminal in Phoenix. 2011 tax act At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. 2011 tax act You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. 2011 tax act This is because Phoenix is your tax home. 2011 tax act Example 2. 2011 tax act Your family home is in Pittsburgh, where you work 12 weeks a year. 2011 tax act The rest of the year you work for the same employer in Baltimore. 2011 tax act In Baltimore, you eat in restaurants and sleep in a rooming house. 2011 tax act Your salary is the same whether you are in Pittsburgh or Baltimore. 2011 tax act Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. 2011 tax act You cannot deduct any expenses you have for meals and lodging there. 2011 tax act However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. 2011 tax act You can deduct the cost of your round trip between Baltimore and Pittsburgh. 2011 tax act You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. 2011 tax act Temporary Assignment or Job You may regularly work at your tax home and also work at another location. 2011 tax act It may not be practical to return to your tax home from this other location at the end of each work day. 2011 tax act Temporary assignment vs. 2011 tax act indefinite assignment. 2011 tax act   If your assignment or job away from your main place of work is temporary, your tax home does not change. 2011 tax act You are considered to be away from home for the whole period you are away from your main place of work. 2011 tax act You can deduct your travel expenses if they otherwise qualify for deduction. 2011 tax act Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. 2011 tax act    However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. 2011 tax act An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. 2011 tax act   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. 2011 tax act You may be able to deduct the cost of relocating to your new tax home as a moving expense. 2011 tax act See Publication 521 for more information. 2011 tax act Exception for federal crime investigations or prosecutions. 2011 tax act   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. 2011 tax act This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility. 2011 tax act   For you to qualify, the Attorney General (or his or her designee) 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. 2011 tax act Determining temporary or indefinite. 2011 tax act   You must determine whether your assignment is temporary or indefinite when you start work. 2011 tax act If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. 2011 tax act An assignment or job that is initially temporary may become indefinite due to changed circumstances. 2011 tax act A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. 2011 tax act   The following examples illustrate whether an assignment or job is temporary or indefinite. 2011 tax act Example 1. 2011 tax act You are a construction worker. 2011 tax act You live and regularly work in Los Angeles. 2011 tax act You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. 2011 tax act Your tax home is Los Angeles. 2011 tax act Because of a shortage of work, you took a job on a construction project in Fresno. 2011 tax act Your job was scheduled to end in 8 months. 2011 tax act The job actually lasted 10 months. 2011 tax act You realistically expected the job in Fresno to last 8 months. 2011 tax act The job actually did last less than 1 year. 2011 tax act The job is temporary and your tax home is still in Los Angeles. 2011 tax act Example 2. 2011 tax act The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. 2011 tax act The job actually was completed in 10 months. 2011 tax act Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. 2011 tax act You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. 2011 tax act Example 3. 2011 tax act The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. 2011 tax act After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). 2011 tax act Initially, you realistically expected the job in Fresno to last for only 9 months. 2011 tax act However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. 2011 tax act You can only deduct your travel expenses for the first 8 months. 2011 tax act You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. 2011 tax act Going home on days off. 2011 tax act   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. 2011 tax act You cannot deduct the cost of your meals and lodging there. 2011 tax act However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. 2011 tax act You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. 2011 tax act   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. 2011 tax act In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. 2011 tax act Probationary work period. 2011 tax act   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. 2011 tax act You cannot deduct any of your expenses for meals and lodging during the probationary period. 2011 tax act What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. 2011 tax act You can deduct ordinary and necessary expenses you have when you travel away from home on business. 2011 tax act The type of expense you can deduct depends on the facts and your circumstances. 2011 tax act Table 1-1 summarizes travel expenses you may be able to deduct. 2011 tax act You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. 2011 tax act When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. 2011 tax act You can use a log, diary, notebook, or any other written record to keep track of your expenses. 2011 tax act The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). 2011 tax act Separating costs. 2011 tax act   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. 2011 tax act You must have a reasonable basis for making this allocation. 2011 tax act For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. 2011 tax act Travel expenses for another individual. 2011 tax act    If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. 2011 tax act Employee. 2011 tax act   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. 2011 tax act Business associate. 2011 tax act   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. 2011 tax act A business associate is someone with whom you could reasonably expect to actively conduct business. 2011 tax act A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. 2011 tax act Bona fide business purpose. 2011 tax act   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. 2011 tax act Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. 2011 tax act Table 1-1. 2011 tax act Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. 2011 tax act IF you have expenses for. 2011 tax act . 2011 tax act . 2011 tax act THEN you can deduct the cost of. 2011 tax act . 2011 tax act . 2011 tax act transportation travel by airplane, train, bus, or car between your home and your business destination. 2011 tax act If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. 2011 tax act If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. 2011 tax act taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. 2011 tax act baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. 2011 tax act car operating and maintaining your car when traveling away from home on business. 2011 tax act You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. 2011 tax act If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. 2011 tax act lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. 2011 tax act Meals include amounts spent for food, beverages, taxes, and related tips. 2011 tax act See Meals for additional rules and limits. 2011 tax act cleaning dry cleaning and laundry. 2011 tax act telephone business calls while on your business trip. 2011 tax act This includes business communication by fax machine or other communication devices. 2011 tax act tips tips you pay for any expenses in this chart. 2011 tax act other other similar ordinary and necessary expenses related to your business travel. 2011 tax act These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. 2011 tax act Example. 2011 tax act Jerry drives to Chicago on business and takes his wife, Linda, with him. 2011 tax act Linda is not Jerry's employee. 2011 tax act Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. 2011 tax act The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. 2011 tax act Her expenses are not deductible. 2011 tax act Jerry pays $199 a day for a double room. 2011 tax act A single room costs $149 a day. 2011 tax act He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. 2011 tax act If he uses public transportation, he can deduct only his fare. 2011 tax act Meals You can deduct the cost of meals in either of the following situations. 2011 tax act It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. 2011 tax act The meal is business-related entertainment. 2011 tax act Business-related entertainment is discussed in chapter 2 . 2011 tax act The following discussion deals only with meals that are not business-related entertainment. 2011 tax act Lavish or extravagant. 2011 tax act   You cannot deduct expenses for meals that are lavish or extravagant. 2011 tax act An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. 2011 tax act Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. 2011 tax act 50% limit on meals. 2011 tax act   You can figure your meals expense using either of the following methods. 2011 tax act Actual cost. 2011 tax act The standard meal allowance. 2011 tax act Both of these methods are explained below. 2011 tax act But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. 2011 tax act   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. 2011 tax act If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. 2011 tax act Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. 2011 tax act Actual Cost You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. 2011 tax act If you use this method, you must keep records of your actual cost. 2011 tax act Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. 2011 tax act It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. 2011 tax act The set amount varies depending on where and when you travel. 2011 tax act In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . 2011 tax act If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. 2011 tax act See the recordkeeping rules for travel in chapter 5 . 2011 tax act Incidental expenses. 2011 tax act   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. 2011 tax act   Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. 2011 tax act Incidental-expenses-only method. 2011 tax act   You can use an optional method (instead of actual cost) for deducting incidental expenses only. 2011 tax act The amount of the deduction is $5 a day. 2011 tax act You can use this method only if you did not pay or incur any meal expenses. 2011 tax act You cannot use this method on any day that you use the standard meal allowance. 2011 tax act This method is subject to the proration rules for partial days. 2011 tax act See Travel for days you depart and return , later in this chapter. 2011 tax act Note. 2011 tax act The incidental-expenses-only method is not subject to the 50% limit discussed below. 2011 tax act Federal employees should refer to the Federal Travel Regulations at www. 2011 tax act gsa. 2011 tax act gov. 2011 tax act Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. 2011 tax act 50% limit may apply. 2011 tax act   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. 2011 tax act If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. 2011 tax act The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. 2011 tax act There is no optional standard lodging amount similar to the standard meal allowance. 2011 tax act Your allowable lodging expense deduction is your actual cost. 2011 tax act Who can use the standard meal allowance. 2011 tax act   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. 2011 tax act Use of the standard meal allowance for other travel. 2011 tax act   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. 2011 tax act You can also use it to figure your meal expenses when you travel for qualifying educational purposes. 2011 tax act You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. 2011 tax act Amount of standard meal allowance. 2011 tax act   The standard meal allowance is the federal M&IE rate. 2011 tax act For travel in 2013, the rate for most small localities in the United States is $46 a day. 2011 tax act    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. 2011 tax act    You can find this information (organized by state) on the Internet at www. 2011 tax act gsa. 2011 tax act gov/perdiem. 2011 tax act Enter a zip code or select a city and state for the per diem rates for the current fiscal year. 2011 tax act Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. 2011 tax act ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. 2011 tax act You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. 2011 tax act   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. 2011 tax act If you work in the transportation industry, however, see Special rate for transportation workers , later. 2011 tax act Standard meal allowance for areas outside the continental United States. 2011 tax act   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. 2011 tax act The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. 2011 tax act S. 2011 tax act Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. 2011 tax act The Department of State establishes per diem rates for all other foreign areas. 2011 tax act    You can access per diem rates for non-foreign areas outside the continental United States at: www. 2011 tax act defensetravel. 2011 tax act dod. 2011 tax act mil/site/perdiemCalc. 2011 tax act cfm. 2011 tax act You can access all other foreign per diem rates at: www. 2011 tax act state. 2011 tax act gov/travel/. 2011 tax act Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. 2011 tax act Special rate for transportation workers. 2011 tax act   You can use a special standard meal allowance if you work in the transportation industry. 2011 tax act You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. 2011 tax act If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). 2011 tax act   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. 2011 tax act If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. 2011 tax act Travel for days you depart and return. 2011 tax act   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). 2011 tax act You can do so by one of two methods. 2011 tax act Method 1: You can claim 3/4 of the standard meal allowance. 2011 tax act Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. 2011 tax act Example. 2011 tax act Jen is employed in New Orleans as a convention planner. 2011 tax act In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. 2011 tax act She left her home in New Orleans at 10 a. 2011 tax act m. 2011 tax act on Wednesday and arrived in Washington, DC, at 5:30 p. 2011 tax act m. 2011 tax act After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. 2011 tax act m. 2011 tax act Jen's employer gave her a flat amount to cover her expenses and included it with her wages. 2011 tax act Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. 2011 tax act Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. 2011 tax act For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. 2011 tax act Travel in the United States The following discussion applies to travel in the United States. 2011 tax act For this purpose, the United States includes the 50 states and the District of Columbia. 2011 tax act The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. 2011 tax act See Part of Trip Outside the United States , later. 2011 tax act Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. 2011 tax act If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. 2011 tax act These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. 2011 tax act Example. 2011 tax act You work in Atlanta and take a business trip to New Orleans in May. 2011 tax act Your business travel totals 850 miles round trip. 2011 tax act On your way, you stop in Mobile to visit your parents. 2011 tax act You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. 2011 tax act If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. 2011 tax act You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. 2011 tax act The deduction for your meals is subject to the 50% limit on meals mentioned earlier. 2011 tax act Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. 2011 tax act However, you can deduct any expenses you have while at your destination that are directly related to your business. 2011 tax act A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. 2011 tax act The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. 2011 tax act Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. 2011 tax act For the part of your trip that is inside the United States, use the rules for travel in the United States. 2011 tax act Travel outside the United States does not include travel from one point in the United States to another point in the United States. 2011 tax act The following discussion can help you determine whether your trip was entirely within the United States. 2011 tax act Public transportation. 2011 tax act   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. 2011 tax act Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . 2011 tax act Example. 2011 tax act You fly from New York to Puerto Rico with a scheduled stop in Miami. 2011 tax act You return to New York nonstop. 2011 tax act The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. 2011 tax act Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. 2011 tax act Private car. 2011 tax act   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. 2011 tax act Example. 2011 tax act You travel by car from Denver to Mexico City and return. 2011 tax act Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. 2011 tax act The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. 2011 tax act Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. 2011 tax act For this purpose, the United States includes the 50 states and the District of Columbia. 2011 tax act How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. 2011 tax act Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. 2011 tax act Travel entirely for business. 2011 tax act   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. 2011 tax act Travel considered entirely for business. 2011 tax act   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. 2011 tax act Exception 1 - No substantial control. 2011 tax act   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. 2011 tax act The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. 2011 tax act   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. 2011 tax act    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . 2011 tax act   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. 2011 tax act   A self-employed person generally has substantial control over arranging business trips. 2011 tax act Exception 2 - Outside United States no more than a week. 2011 tax act   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. 2011 tax act One week means 7 consecutive days. 2011 tax act In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. 2011 tax act Example. 2011 tax act You traveled to Brussels primarily for business. 2011 tax act You left Denver on Tuesday and flew to New York. 2011 tax act On Wednesday, you flew from New York to Brussels, arriving the next morning. 2011 tax act On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. 2011 tax act You flew back to New York, arriving Wednesday afternoon. 2011 tax act On Thursday, you flew back to Denver. 2011 tax act Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. 2011 tax act This is because the day you depart does not count as a day outside the United States. 2011 tax act You can deduct your cost of the round-trip flight between Denver and Brussels. 2011 tax act You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. 2011 tax act However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. 2011 tax act Exception 3 - Less than 25% of time on personal activities. 2011 tax act   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. 2011 tax act For this purpose, count both the day your trip began and the day it ended. 2011 tax act Example. 2011 tax act You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. 2011 tax act You then flew back to Seattle. 2011 tax act You spent 1 day flying in each direction. 2011 tax act Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. 2011 tax act The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. 2011 tax act Exception 4 - Vacation not a major consideration. 2011 tax act   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. 2011 tax act Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. 2011 tax act You can only deduct the business portion of your cost of getting to and from your destination. 2011 tax act You must allocate the costs between your business and other activities to determine your deductible amount. 2011 tax act See Travel allocation rules , later. 2011 tax act You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . 2011 tax act In those cases, you can deduct the total cost of getting to and from your destination. 2011 tax act Travel allocation rules. 2011 tax act   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. 2011 tax act The days you depart from and return to the United States are both counted as days outside the United States. 2011 tax act   To figure the deductible amount of your round-trip travel expenses, use the following fraction. 2011 tax act The numerator (top number) is the total number of business days outside the United States. 2011 tax act The denominator (bottom number) is the total number of business and nonbusiness days of travel. 2011 tax act Counting business days. 2011 tax act   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. 2011 tax act Transportation day. 2011 tax act   Count as a business day any day you spend traveling to or from a business destination. 2011 tax act However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. 2011 tax act Extra days for side trips or nonbusiness activities cannot be counted as business days. 2011 tax act Presence required. 2011 tax act   Count as a business day any day your presence is required at a particular place for a specific business purpose. 2011 tax act Count it as a business day even if you spend most of the day on nonbusiness activities. 2011 tax act Day spent on business. 2011 tax act   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. 2011 tax act Also, count as a business day any day you are prevented from working because of circumstances beyond your control. 2011 tax act Certain weekends and holidays. 2011 tax act   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. 2011 tax act But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. 2011 tax act Example 1. 2011 tax act Your tax home is New York City. 2011 tax act You travel to Quebec, where you have a business appointment on Friday. 2011 tax act You have another appointment on the following Monday. 2011 tax act Because your presence was required on both Friday and Monday, they are business days. 2011 tax act Because the weekend is between business days, Saturday and Sunday are counted as business days. 2011 tax act This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. 2011 tax act Example 2. 2011 tax act If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. 2011 tax act Nonbusiness activity on the way to or from your business destination. 2011 tax act   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. 2011 tax act   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. 2011 tax act   You determine the nonbusiness portion of that expense by multiplying it by a fraction. 2011 tax act The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. 2011 tax act Example. 2011 tax act You live in New York. 2011 tax act On May 4 you flew to Paris to attend a business conference that began on May 5. 2011 tax act The conference ended at noon on May 14. 2011 tax act That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. 2011 tax act The primary purpose for the trip was to attend the conference. 2011 tax act If you had not stopped in Dublin, you would have arrived home the evening of May 14. 2011 tax act You do not meet any of the exceptions that would allow you to consider your travel entirely for business. 2011 tax act May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. 2011 tax act You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. 2011 tax act You cannot deduct your expenses while in Dublin. 2011 tax act You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. 2011 tax act You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. 2011 tax act Round-trip airfare from New York to Dublin would have been $1,250. 2011 tax act You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). 2011 tax act Your deductible air travel expense is $1,364 ($1,850 − $486). 2011 tax act Nonbusiness activity at, near, or beyond business destination. 2011 tax act   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. 2011 tax act   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. 2011 tax act   You determine the nonbusiness portion of that expense by multiplying it by a fraction. 2011 tax act The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. 2011 tax act   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. 2011 tax act Example. 2011 tax act Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. 2011 tax act You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. 2011 tax act In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. 2011 tax act You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. 2011 tax act (Assume these expenses total $4,939. 2011 tax act ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. 2011 tax act Other methods. 2011 tax act   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. 2011 tax act Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. 2011 tax act However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. 2011 tax act Example. 2011 tax act The university from which you graduated has a continuing education program for members of its alumni association. 2011 tax act This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. 2011 tax act However, none of the conferences are directed toward specific occupations or professions. 2011 tax act It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. 2011 tax act Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. 2011 tax act These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. 2011 tax act Professional conference directors schedule and conduct the sessions. 2011 tax act Participants can choose those sessions they wish to attend. 2011 tax act You can participate in this program since you are a member of the alumni association. 2011 tax act You and your family take one of the trips. 2011 tax act You spend about 2 hours at each of the planned sessions. 2011 tax act The rest of the time you go touring and sightseeing with your family. 2011 tax act The trip lasts less than 1 week. 2011 tax act Your travel expenses for the trip are not deductible since the trip was primarily a vacation. 2011 tax act However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. 2011 tax act These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. 2011 tax act Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. 2011 tax act The limit is twice the highest federal per diem rate allowable at the time of your travel. 2011 tax act (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. 2011 tax act ) Daily limit on luxury water travel. 2011 tax act   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. 2011 tax act   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. 2011 tax act 1 – Mar. 2011 tax act 31 $367 $734   Apr. 2011 tax act 1 – June 30 312 624   July 1 – Aug. 2011 tax act 31 310 620   Sept. 2011 tax act 1 – Sept. 2011 tax act 30 366 732   Oct. 2011 tax act 1 – Dec. 2011 tax act 31 374 748 Example. 2011 tax act Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. 2011 tax act Her expense for the 6-day cruise was $5,200. 2011 tax act Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). 2011 tax act Meals and entertainment. 2011 tax act   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. 2011 tax act For a discussion of the 50% Limit , see chapter 2. 2011 tax act Example. 2011 tax act In the previous example, Caroline's luxury water travel had a total cost of $5,200. 2011 tax act Of that amount, $3,700 was separately stated as meals and entertainment. 2011 tax act Caroline, who is self-employed, is not reimbursed for any of her travel expenses. 2011 tax act Caroline figures her deductible travel expenses as follows. 2011 tax act Meals and entertainment $3,700   50% limit × . 2011 tax act 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. 2011 tax act Not separately stated. 2011 tax act   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. 2011 tax act Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. 2011 tax act See Cruise Ships under Conventions. 2011 tax act Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. 2011 tax act You cannot deduct the travel expenses for your family. 2011 tax act If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. 2011 tax act Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. 2011 tax act You can deduct your travel expenses only if your attendance is connected to your own trade or business. 2011 tax act Convention agenda. 2011 tax act   The convention agenda or program generally shows the purpose of the convention. 2011 tax act You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. 2011 tax act The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. 2011 tax act Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. 2011 tax act See Reasonableness test , later. 2011 tax act If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . 2011 tax act North American area. 2011 tax act   The North American area includes the following locations. 2011 tax act American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. 2011 tax act S. 2011 tax act Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. 2011 tax act S. 2011 tax act islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. 2011 tax act Reasonableness test. 2011 tax act   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. 2011 tax act The purpose of the meeting and the activities taking place at the meeting. 2011 tax act The purposes and activities of the sponsoring organizations or groups. 2011 tax act The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. 2011 tax act Other relevant factors you may present. 2011 tax act Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. 2011 tax act All ships that sail are considered cruise ships. 2011 tax act You can deduct these expenses only if all of the following requirements are met. 2011 tax act The convention, seminar, or meeting is directly related to your trade or business. 2011 tax act The cruise ship is a vessel registered in the United States. 2011 tax act All of the cruise ship's ports of call are in the United States or in possessions of the United States. 2011 tax act You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. 2011 tax act You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. 2011 tax act Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Migration Data

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There is a delay in the release of  the 2010–2011 state and county level migration data. During the review process, we identified some discrepancies in the data. The data are being corrected and will be released as soon as possible. We apologize for any inconvenience this delay causes to users of the information.


U.S. Population Migration Data

Migration data for the United States are based on year-to-year address changes reported on individual income tax returns filed with the IRS. They present migration patterns by State or by county for the entire United States and are available for inflows—the number of new residents who moved to a State or county and where they migrated from, and outflows—the number of residents leaving a State or county and where they went. The data are available for Filing Years 1991 through 2010 and include:

  • Number of returns filed, which approximates the number of households that migrated
  • Number of personal exemptions claimed, which approximates the number of individuals
  • Total adjusted gross income, starting with Filing Year 1995.

Important: The data used to produce migration data products come from individual income tax returns filed prior to late September of each calendar year and represent between 95 and 98 percent of total annual filings. However, since returns filed after September are not included, totals shown in migration data tables will not match analogous totals reported in other IRS statistical data products. For more information, see U.S. Population Migration Data: Strengths and Limitations

Migration Data Users Guides


Migration Data 2005–2010

Migration Data 1990–2004

Migration data for years 1990 to 2004 are available as single Zip files containing all State Excel files. Both migration inflow and outflow files are included for each state. The files are compressed using the WinZip utility and must be downloaded and extracted before viewing or loading into any application. A free WinZip utility is available, if needed.

County-to-County Migration Data

1990 to 1991  1991 to 1992  1992 to 1993  1993 to 1994  1994 to 1995  1995 to 1996  1996 to 1997  1997 to 1998  1998 to 1999  1999 to 2000  2000 to 2001  2001 to 2002  2002 to 2003  2003 to 2004

State-to-State Migration Data

1990 to 1991  1991 to 1992  1992 to 1993  1993 to 1994  1994 to 1995  1995 to 1996  1996 to 1997  1997 to 1998  1998 to 1999  1999 to 2000  2000 to 2001  2001 to 2002  2002 to 2003  2003 to 2004

Follow these steps to extract files for the entire year (all States) or for an individual State.

To extract an entire year (all States) using WinZip:

  1. Double click the Zip file to open the WinZip utility.
  2. Double click the folder.
  3. Click and drag either the Inflow and/or Outflow folder to your desktop.

OR

  1. Double click the Zip file to open the WinZip utility (NOTE: SecureZIP users should follow the following steps).
  2. Click the ‘Extract’ button. Ensure that the radio button, ‘All Files in Archive Selected’, is selected.
  3. Select a destination folder.
  4. Click the ‘Extract’ button.

To extract an individual State using WinZip:

  1. Double click the Zip file to open the WinZip utility.
  2. Double click the folder.
  3. Double click either the Inflow or Outflow folder.
  4. Click and drag the desired Excel file(s) to your desktop.

OR

  1. Double click the Zip file to open the WinZip utility (NOTE: SecureZIP users should follow the following steps).
  2. Highlight the desired Excel file(s).
  3. Click the ‘Extract’ button. Ensure that radio button, ‘Selected Files/Folder’, is selected.
  4. Select a destination folder.
  5. Click the ‘Extract’ button.


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Page Last Reviewed or Updated: 18-Dec-2013

The 2011 Tax Act

2011 tax act 1. 2011 tax act   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. 2011 tax act When repayment contributions can be made. 2011 tax act No deduction. 2011 tax act Reserve component. 2011 tax act Figuring your IRA deduction. 2011 tax act Reporting the repayment. 2011 tax act Example. 2011 tax act General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. 2011 tax act Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. 2011 tax act Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. 2011 tax act Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. 2011 tax act 2013 Reporting. 2011 tax act Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. 2011 tax act One-time transfer. 2011 tax act Testing period rules apply. 2011 tax act More information. 2011 tax act Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. 2011 tax act  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. 2011 tax act If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. 2011 tax act For more information, see How Much Can Be Contributed? in this chapter. 2011 tax act Modified AGI limit for traditional IRA contributions increased. 2011 tax act  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 2011 tax act If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. 2011 tax act If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2011 tax act See How Much Can You Deduct? in this chapter. 2011 tax act Net Investment Income Tax. 2011 tax act  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). 2011 tax act However, these distributions are taken into account when determining the modified adjusted gross income threshold. 2011 tax act Distributions from a nonqualified retirement plan are included in net investment income. 2011 tax act See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. 2011 tax act What's New for 2014 Modified AGI limit for traditional IRA contributions increased. 2011 tax act  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 2011 tax act If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 2011 tax act If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. 2011 tax act Introduction This chapter discusses the original IRA. 2011 tax act In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. 2011 tax act ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. 2011 tax act The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. 2011 tax act Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. 2011 tax act Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. 2011 tax act You can have a traditional IRA whether or not you are covered by any other retirement plan. 2011 tax act However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. 2011 tax act See How Much Can You Deduct , later. 2011 tax act Both spouses have compensation. 2011 tax act   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. 2011 tax act You cannot both participate in the same IRA. 2011 tax act If you file a joint return, only one of you needs to have compensation. 2011 tax act What Is Compensation? Generally, compensation is what you earn from working. 2011 tax act For a summary of what compensation does and does not include, see Table 1-1. 2011 tax act Compensation includes all of the items discussed next (even if you have more than one type). 2011 tax act Wages, salaries, etc. 2011 tax act   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. 2011 tax act The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). 2011 tax act Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. 2011 tax act Commissions. 2011 tax act   An amount you receive that is a percentage of profits or sales price is compensation. 2011 tax act Self-employment income. 2011 tax act   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. 2011 tax act   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. 2011 tax act Self-employment loss. 2011 tax act   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. 2011 tax act Alimony and separate maintenance. 2011 tax act   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. 2011 tax act Nontaxable combat pay. 2011 tax act   If you were a member of the U. 2011 tax act S. 2011 tax act Armed Forces, compensation includes any nontaxable combat pay you received. 2011 tax act This amount should be reported in box 12 of your 2013 Form W-2 with code Q. 2011 tax act Table 1-1. 2011 tax act Compensation for Purposes of an IRA Includes . 2011 tax act . 2011 tax act . 2011 tax act Does not include . 2011 tax act . 2011 tax act . 2011 tax act   earnings and profits from property. 2011 tax act wages, salaries, etc. 2011 tax act     interest and dividend income. 2011 tax act commissions. 2011 tax act     pension or annuity income. 2011 tax act self-employment income. 2011 tax act     deferred compensation. 2011 tax act alimony and separate maintenance. 2011 tax act     income from certain  partnerships. 2011 tax act nontaxable combat pay. 2011 tax act     any amounts you exclude from income. 2011 tax act     What Is Not Compensation? Compensation does not include any of the following items. 2011 tax act Earnings and profits from property, such as rental income, interest income, and dividend income. 2011 tax act Pension or annuity income. 2011 tax act Deferred compensation received (compensation payments postponed from a past year). 2011 tax act Income from a partnership for which you do not provide services that are a material income-producing factor. 2011 tax act Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. 2011 tax act Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. 2011 tax act When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. 2011 tax act However, the time for making contributions for any year is limited. 2011 tax act See When Can Contributions Be Made , later. 2011 tax act How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. 2011 tax act You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. 2011 tax act You can also open an IRA through your stockbroker. 2011 tax act Any IRA must meet Internal Revenue Code requirements. 2011 tax act The requirements for the various arrangements are discussed below. 2011 tax act Kinds of traditional IRAs. 2011 tax act   Your traditional IRA can be an individual retirement account or annuity. 2011 tax act It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. 2011 tax act Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. 2011 tax act The account is created by a written document. 2011 tax act The document must show that the account meets all of the following requirements. 2011 tax act The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. 2011 tax act The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. 2011 tax act However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. 2011 tax act Contributions, except for rollover contributions, must be in cash. 2011 tax act See Rollovers , later. 2011 tax act You must have a nonforfeitable right to the amount at all times. 2011 tax act Money in your account cannot be used to buy a life insurance policy. 2011 tax act Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. 2011 tax act You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. 2011 tax act See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2011 tax act Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. 2011 tax act An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. 2011 tax act An individual retirement annuity must meet all the following requirements. 2011 tax act Your entire interest in the contract must be nonforfeitable. 2011 tax act The contract must provide that you cannot transfer any portion of it to any person other than the issuer. 2011 tax act There must be flexible premiums so that if your compensation changes, your payment can also change. 2011 tax act This provision applies to contracts issued after November 6, 1978. 2011 tax act The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. 2011 tax act Distributions must begin by April 1 of the year following the year in which you reach age 70½. 2011 tax act See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 2011 tax act Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. 2011 tax act The bonds have the following features. 2011 tax act They stop earning interest when you reach age 70½. 2011 tax act If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. 2011 tax act You cannot transfer the bonds. 2011 tax act If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. 2011 tax act See Age 59½ Rule under Early Distributions, later. 2011 tax act You can roll over redemption proceeds into IRAs. 2011 tax act Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. 2011 tax act Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. 2011 tax act See Publication 560 for more information about SEPs. 2011 tax act Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. 2011 tax act The requirements for individual retirement accounts apply to these traditional IRAs. 2011 tax act Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. 2011 tax act However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. 2011 tax act The disclosure statement must explain certain items in plain language. 2011 tax act For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. 2011 tax act This explanation must appear at the beginning of the disclosure statement. 2011 tax act If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. 2011 tax act The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. 2011 tax act These requirements apply to all sponsors. 2011 tax act How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. 2011 tax act These limits and rules are explained below. 2011 tax act Community property laws. 2011 tax act   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. 2011 tax act This is the rule even in states with community property laws. 2011 tax act Brokers' commissions. 2011 tax act   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. 2011 tax act For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. 2011 tax act Trustees' fees. 2011 tax act   Trustees' administrative fees are not subject to the contribution limit. 2011 tax act For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. 2011 tax act Qualified reservist repayments. 2011 tax act   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. 2011 tax act You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. 2011 tax act To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. 2011 tax act Limit. 2011 tax act   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. 2011 tax act When repayment contributions can be made. 2011 tax act   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. 2011 tax act No deduction. 2011 tax act   You cannot deduct qualified reservist repayments. 2011 tax act Reserve component. 2011 tax act   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. 2011 tax act Figuring your IRA deduction. 2011 tax act   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. 2011 tax act Reporting the repayment. 2011 tax act   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. 2011 tax act Example. 2011 tax act   In 2013, your IRA contribution limit is $5,500. 2011 tax act However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. 2011 tax act You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). 2011 tax act In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. 2011 tax act   For 2013, you can contribute a total of $8,500 to your IRA. 2011 tax act This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. 2011 tax act You contribute the maximum allowable for the year. 2011 tax act Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. 2011 tax act The qualified reservist repayment is not deductible. 2011 tax act Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. 2011 tax act See chapter 2 for information about Roth IRAs. 2011 tax act General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. 2011 tax act Note. 2011 tax act This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 2011 tax act This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. 2011 tax act (See Nondeductible Contributions , later. 2011 tax act ) Qualified reservist repayments do not affect this limit. 2011 tax act Examples. 2011 tax act George, who is 34 years old and single, earns $24,000 in 2013. 2011 tax act His IRA contributions for 2013 are limited to $5,500. 2011 tax act Danny, an unmarried college student working part time, earns $3,500 in 2013. 2011 tax act His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. 2011 tax act More than one IRA. 2011 tax act   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. 2011 tax act Annuity or endowment contracts. 2011 tax act   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. 2011 tax act If more than this amount is contributed, the annuity or endowment contract is disqualified. 2011 tax act Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. 2011 tax act Your spouse's IRA contribution for the year to a traditional IRA. 2011 tax act Any contributions for the year to a Roth IRA on behalf of your spouse. 2011 tax act This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). 2011 tax act Note. 2011 tax act This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 2011 tax act Example. 2011 tax act Kristin, a full-time student with no taxable compensation, marries Carl during the year. 2011 tax act Neither of them was age 50 by the end of 2013. 2011 tax act For the year, Carl has taxable compensation of $30,000. 2011 tax act He plans to contribute (and deduct) $5,500 to a traditional IRA. 2011 tax act If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. 2011 tax act This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. 2011 tax act In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). 2011 tax act Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. 2011 tax act However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. 2011 tax act See How Much Can You Deduct , later. 2011 tax act Example. 2011 tax act Tom and Darcy are married and both are 53. 2011 tax act They both work and each has a traditional IRA. 2011 tax act Tom earned $3,800 and Darcy earned $48,000 in 2013. 2011 tax act Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. 2011 tax act They can contribute up to $6,500 to Darcy's IRA. 2011 tax act If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. 2011 tax act Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. 2011 tax act Example. 2011 tax act Rafael, who is 40, earns $30,000 in 2013. 2011 tax act Although he can contribute up to $5,500 for 2013, he contributes only $3,000. 2011 tax act After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). 2011 tax act He cannot contribute $2,500 more than the limit for any later year. 2011 tax act More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. 2011 tax act However, a penalty or additional tax may apply. 2011 tax act See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. 2011 tax act When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). 2011 tax act Contributions must be in the form of money (cash, check, or money order). 2011 tax act Property cannot be contributed. 2011 tax act Although property cannot be contributed, your IRA may invest in certain property. 2011 tax act For example, your IRA may purchase shares of stock. 2011 tax act For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. 2011 tax act You may be able to transfer or roll over certain property from one retirement plan to another. 2011 tax act See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . 2011 tax act You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. 2011 tax act For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). 2011 tax act Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. 2011 tax act For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. 2011 tax act See Who Can Open a Traditional IRA , earlier. 2011 tax act Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. 2011 tax act Contributions can resume for any years that you qualify. 2011 tax act Contributions must be made by due date. 2011 tax act   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. 2011 tax act For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. 2011 tax act Age 70½ rule. 2011 tax act   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. 2011 tax act   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. 2011 tax act If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. 2011 tax act Designating year for which contribution is made. 2011 tax act   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. 2011 tax act If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). 2011 tax act Filing before a contribution is made. 2011 tax act    You can file your return claiming a traditional IRA contribution before the contribution is actually made. 2011 tax act Generally, the contribution must be made by the due date of your return, not including extensions. 2011 tax act Contributions not required. 2011 tax act   You do not have to contribute to your traditional IRA for every tax year, even if you can. 2011 tax act How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . 2011 tax act However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. 2011 tax act See Limit if Covered by Employer Plan , later. 2011 tax act You may be able to claim a credit for contributions to your traditional IRA. 2011 tax act For more information, see chapter 4. 2011 tax act Trustees' fees. 2011 tax act   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. 2011 tax act However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). 2011 tax act For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. 2011 tax act Brokers' commissions. 2011 tax act   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. 2011 tax act Full deduction. 2011 tax act   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. 2011 tax act   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. 2011 tax act Kay Bailey Hutchison Spousal IRA. 2011 tax act   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. 2011 tax act The IRA deduction for the year of the spouse with the greater compensation. 2011 tax act Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. 2011 tax act Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. 2011 tax act   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. 2011 tax act Note. 2011 tax act If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. 2011 tax act After a divorce or legal separation, you can deduct only the contributions to your own IRA. 2011 tax act Your deductions are subject to the rules for single individuals. 2011 tax act Covered by an employer retirement plan. 2011 tax act   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. 2011 tax act This is discussed later under Limit if Covered by Employer Plan . 2011 tax act Limits on the amount you can deduct do not affect the amount that can be contributed. 2011 tax act Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. 2011 tax act The “Retirement Plan” box should be checked if you were covered. 2011 tax act Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. 2011 tax act If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. 2011 tax act Federal judges. 2011 tax act   For purposes of the IRA deduction, federal judges are covered by an employer plan. 2011 tax act For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. 2011 tax act These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. 2011 tax act Tax year. 2011 tax act   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. 2011 tax act For almost all people, the tax year is the calendar year. 2011 tax act Defined contribution plan. 2011 tax act   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. 2011 tax act However, also see Situations in Which You Are Not Covered , later. 2011 tax act   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. 2011 tax act In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. 2011 tax act The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. 2011 tax act Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. 2011 tax act Example. 2011 tax act Company A has a money purchase pension plan. 2011 tax act Its plan year is from July 1 to June 30. 2011 tax act The plan provides that contributions must be allocated as of June 30. 2011 tax act Bob, an employee, leaves Company A on December 31, 2012. 2011 tax act The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. 2011 tax act Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. 2011 tax act   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. 2011 tax act If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. 2011 tax act If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. 2011 tax act Example. 2011 tax act Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. 2011 tax act The plan year runs from July 1 to June 30. 2011 tax act Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. 2011 tax act Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. 2011 tax act As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. 2011 tax act In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. 2011 tax act On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. 2011 tax act That contribution was made on February 15, 2014. 2011 tax act Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. 2011 tax act No vested interest. 2011 tax act   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. 2011 tax act Defined benefit plan. 2011 tax act   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. 2011 tax act This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. 2011 tax act   A defined benefit plan is any plan that is not a defined contribution plan. 2011 tax act In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. 2011 tax act The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. 2011 tax act Defined benefit plans include pension plans and annuity plans. 2011 tax act Example. 2011 tax act Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. 2011 tax act Nick leaves Company B on December 31, 2012. 2011 tax act Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. 2011 tax act No vested interest. 2011 tax act   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. 2011 tax act Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. 2011 tax act Social security or railroad retirement. 2011 tax act   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. 2011 tax act Benefits from previous employer's plan. 2011 tax act   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. 2011 tax act Reservists. 2011 tax act   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. 2011 tax act You are not covered by the plan if both of the following conditions are met. 2011 tax act The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 2011 tax act You did not serve more than 90 days on active duty during the year (not counting duty for training). 2011 tax act Volunteer firefighters. 2011 tax act   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. 2011 tax act You are not covered by the plan if both of the following conditions are met. 2011 tax act The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 2011 tax act Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. 2011 tax act Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. 2011 tax act Your deduction is also affected by how much income you had and by your filing status. 2011 tax act Your deduction may also be affected by social security benefits you received. 2011 tax act Reduced or no deduction. 2011 tax act   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. 2011 tax act   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. 2011 tax act These amounts vary depending on your filing status. 2011 tax act   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . 2011 tax act Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. 2011 tax act Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. 2011 tax act You received social security benefits. 2011 tax act You received taxable compensation. 2011 tax act Contributions were made to your traditional IRA. 2011 tax act You or your spouse was covered by an employer retirement plan. 2011 tax act Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. 2011 tax act Appendix B includes an example with filled-in worksheets to assist you. 2011 tax act Table 1-2. 2011 tax act Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 2011 tax act IF your filing status is . 2011 tax act . 2011 tax act . 2011 tax act AND your modified adjusted gross income (modified AGI) is . 2011 tax act . 2011 tax act . 2011 tax act THEN you can take . 2011 tax act . 2011 tax act . 2011 tax act single or head of household $59,000 or less a full deduction. 2011 tax act more than $59,000 but less than $69,000 a partial deduction. 2011 tax act $69,000 or more no deduction. 2011 tax act married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. 2011 tax act more than $95,000 but less than $115,000 a partial deduction. 2011 tax act $115,000 or more no deduction. 2011 tax act married filing separately2 less than $10,000 a partial deduction. 2011 tax act $10,000 or more no deduction. 2011 tax act 1 Modified AGI (adjusted gross income). 2011 tax act See Modified adjusted gross income (AGI) , later. 2011 tax act  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). 2011 tax act Table 1-3. 2011 tax act Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 2011 tax act IF your filing status is . 2011 tax act . 2011 tax act . 2011 tax act AND your modified adjusted gross income (modified AGI) is . 2011 tax act . 2011 tax act . 2011 tax act THEN you can take . 2011 tax act . 2011 tax act . 2011 tax act single, head of household, or qualifying widow(er) any amount a full deduction. 2011 tax act married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. 2011 tax act married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. 2011 tax act more than $178,000 but less than $188,000 a partial deduction. 2011 tax act $188,000 or more no deduction. 2011 tax act married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. 2011 tax act $10,000 or more no deduction. 2011 tax act 1 Modified AGI (adjusted gross income). 2011 tax act See Modified adjusted gross income (AGI) , later. 2011 tax act  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. 2011 tax act For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 2011 tax act If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. 2011 tax act Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. 2011 tax act Covered by a retirement plan. 2011 tax act   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. 2011 tax act For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. 2011 tax act If your spouse is covered. 2011 tax act   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. 2011 tax act Filing status. 2011 tax act   Your filing status depends primarily on your marital status. 2011 tax act For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. 2011 tax act If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 2011 tax act Lived apart from spouse. 2011 tax act   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. 2011 tax act Modified adjusted gross income (AGI). 2011 tax act   You can use Worksheet 1-1 to figure your modified AGI. 2011 tax act If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. 2011 tax act    Do not assume that your modified AGI is the same as your compensation. 2011 tax act Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. 2011 tax act Form 1040. 2011 tax act   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2011 tax act IRA deduction. 2011 tax act Student loan interest deduction. 2011 tax act Tuition and fees deduction. 2011 tax act Domestic production activities deduction. 2011 tax act Foreign earned income exclusion. 2011 tax act Foreign housing exclusion or deduction. 2011 tax act Exclusion of qualified savings bond interest shown on Form 8815. 2011 tax act Exclusion of employer-provided adoption benefits shown on Form 8839. 2011 tax act This is your modified AGI. 2011 tax act Form 1040A. 2011 tax act   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2011 tax act IRA deduction. 2011 tax act Student loan interest deduction. 2011 tax act Tuition and fees deduction. 2011 tax act Exclusion of qualified savings bond interest shown on Form 8815. 2011 tax act This is your modified AGI. 2011 tax act Form 1040NR. 2011 tax act   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 2011 tax act IRA deduction. 2011 tax act Student loan interest deduction. 2011 tax act Domestic production activities deduction. 2011 tax act Exclusion of qualified savings bond interest shown on Form 8815. 2011 tax act Exclusion of employer-provided adoption benefits shown on Form 8839. 2011 tax act This is your modified AGI. 2011 tax act Income from IRA distributions. 2011 tax act   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. 2011 tax act Both contributions for 2013 and distributions in 2013. 2011 tax act   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. 2011 tax act You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. 2011 tax act (See Nondeductible Contributions and Worksheet 1-2, later. 2011 tax act ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. 2011 tax act To do this, you can use Worksheet 1-5, later. 2011 tax act   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. 2011 tax act How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013. 2011 tax act The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. 2011 tax act If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. 2011 tax act Note. 2011 tax act If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2011 tax act Worksheet 1-1. 2011 tax act Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. 2011 tax act 1. 2011 tax act Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. 2011 tax act   2. 2011 tax act Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. 2011 tax act   3. 2011 tax act Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. 2011 tax act   4. 2011 tax act Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. 2011 tax act   5. 2011 tax act Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. 2011 tax act   6. 2011 tax act Enter any foreign housing deduction from Form 2555, line 50 6. 2011 tax act   7. 2011 tax act Enter any excludable savings bond interest from Form 8815, line 14 7. 2011 tax act   8. 2011 tax act Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. 2011 tax act   9. 2011 tax act Add lines 1 through 8. 2011 tax act This is your Modified AGI for traditional IRA purposes 9. 2011 tax act   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. 2011 tax act If you file Form 1040A, enter your IRA deduction on line 17 of that form. 2011 tax act If you file Form 1040NR, enter your IRA deduction on line 32 of that form. 2011 tax act You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. 2011 tax act Self-employed. 2011 tax act   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. 2011 tax act If you file Form 1040NR, enter your deduction on line 28 of that form. 2011 tax act Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. 2011 tax act The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. 2011 tax act Example. 2011 tax act Tony is 29 years old and single. 2011 tax act In 2013, he was covered by a retirement plan at work. 2011 tax act His salary is $62,000. 2011 tax act His modified AGI is $70,000. 2011 tax act Tony makes a $5,500 IRA contribution for 2013. 2011 tax act Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. 2011 tax act He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. 2011 tax act Repayment of reservist distributions. 2011 tax act   Nondeductible contributions may include repayments of qualified reservist distributions. 2011 tax act For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. 2011 tax act Form 8606. 2011 tax act   To designate contributions as nondeductible, you must file Form 8606. 2011 tax act (See the filled-in Forms 8606 in this chapter. 2011 tax act )   You do not have to designate a contribution as nondeductible until you file your tax return. 2011 tax act When you file, you can even designate otherwise deductible contributions as nondeductible contributions. 2011 tax act   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. 2011 tax act    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. 2011 tax act In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. 2011 tax act See Form 8606 under Distributions Fully or Partly Taxable, later. 2011 tax act Failure to report nondeductible contributions. 2011 tax act   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. 2011 tax act All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 2011 tax act Penalty for overstatement. 2011 tax act   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. 2011 tax act Penalty for failure to file Form 8606. 2011 tax act   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. 2011 tax act Tax on earnings on nondeductible contributions. 2011 tax act   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. 2011 tax act Cost basis. 2011 tax act   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. 2011 tax act Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. 2011 tax act    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. 2011 tax act See Are Distributions Taxable, later, for more information. 2011 tax act Recordkeeping. 2011 tax act There is a recordkeeping worksheet, Appendix A. 2011 tax act Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. 2011 tax act Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. 2011 tax act Example 1. 2011 tax act For 2013, Tom and Betty file a joint return on Form 1040. 2011 tax act They are both 39 years old. 2011 tax act They are both employed and Tom is covered by his employer's retirement plan. 2011 tax act Tom's salary is $59,000 and Betty's is $32,555. 2011 tax act They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. 2011 tax act Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 2011 tax act For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. 2011 tax act Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. 2011 tax act Tom can take a deduction of only $5,080. 2011 tax act He can choose to treat the $5,080 as either deductible or nondeductible contributions. 2011 tax act He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2011 tax act He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. 2011 tax act Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. 2011 tax act Betty figures her IRA deduction as follows. 2011 tax act Betty can treat all or part of her contributions as either deductible or nondeductible. 2011 tax act This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 2011 tax act She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. 2011 tax act Betty decides to treat her $5,500 IRA contributions as deductible. 2011 tax act The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. 2011 tax act Example 2. 2011 tax act For 2013, Ed and Sue file a joint return on Form 1040. 2011 tax act They are both 39 years old. 2011 tax act Ed is covered by his employer's retirement plan. 2011 tax act Ed's salary is $45,000. 2011 tax act Sue had no compensation for the year and did not contribute to an IRA. 2011 tax act Sue is not covered by an employer plan. 2011 tax act Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). 2011 tax act Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. 2011 tax act Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. 2011 tax act He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 2011 tax act Sue figures her IRA deduction as shown on Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. 2011 tax act Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2011 tax act ) Note. 2011 tax act If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2011 tax act IF you . 2011 tax act . 2011 tax act . 2011 tax act AND your  filing status is . 2011 tax act . 2011 tax act . 2011 tax act AND your modified AGI is over . 2011 tax act . 2011 tax act . 2011 tax act THEN enter on  line 1 below . 2011 tax act . 2011 tax act . 2011 tax act       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2011 tax act Enter applicable amount from table above 1. 2011 tax act   2. 2011 tax act Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2011 tax act     Note. 2011 tax act If line 2 is equal to or more than the amount on line 1, stop here. 2011 tax act  Your IRA contributions are not deductible. 2011 tax act See Nondeductible Contributions , earlier. 2011 tax act     3. 2011 tax act Subtract line 2 from line 1. 2011 tax act If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2011 tax act You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2011 tax act   4. 2011 tax act Multiply line 3 by the percentage below that applies to you. 2011 tax act If the result is not a multiple of $10, round it to the next highest multiple of $10. 2011 tax act (For example, $611. 2011 tax act 40 is rounded to $620. 2011 tax act ) However, if the result is less than $200, enter $200. 2011 tax act         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2011 tax act 5% (. 2011 tax act 275) (by 32. 2011 tax act 5% (. 2011 tax act 325) if you are age 50 or older). 2011 tax act All others, multiply line 3 by 55% (. 2011 tax act 55) (by 65% (. 2011 tax act 65) if you are age 50 or older). 2011 tax act 4. 2011 tax act   5. 2011 tax act Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2011 tax act If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2011 tax act If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2011 tax act   6. 2011 tax act Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2011 tax act If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2011 tax act 6. 2011 tax act   7. 2011 tax act IRA deduction. 2011 tax act Compare lines 4, 5, and 6. 2011 tax act Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2011 tax act If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2011 tax act   8. 2011 tax act Nondeductible contribution. 2011 tax act Subtract line 7 from line 5 or 6, whichever is smaller. 2011 tax act  Enter the result here and on line 1 of your Form 8606 8. 2011 tax act   Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2011 tax act ) Note. 2011 tax act If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2011 tax act IF you . 2011 tax act . 2011 tax act . 2011 tax act AND your  filing status is . 2011 tax act . 2011 tax act . 2011 tax act AND your modified AGI is over . 2011 tax act . 2011 tax act . 2011 tax act THEN enter on  line 1 below . 2011 tax act . 2011 tax act . 2011 tax act       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2011 tax act Enter applicable amount from table above 1. 2011 tax act 115,000 2. 2011 tax act Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2011 tax act 96,555   Note. 2011 tax act If line 2 is equal to or more than the amount on line 1, stop here. 2011 tax act  Your IRA contributions are not deductible. 2011 tax act See Nondeductible Contributions , earlier. 2011 tax act     3. 2011 tax act Subtract line 2 from line 1. 2011 tax act If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2011 tax act You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2011 tax act 18,445 4. 2011 tax act Multiply line 3 by the percentage below that applies to you. 2011 tax act If the result is not a multiple of $10, round it to the next highest multiple of $10. 2011 tax act (For example, $611. 2011 tax act 40 is rounded to $620. 2011 tax act ) However, if the result is less than $200, enter $200. 2011 tax act         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2011 tax act 5% (. 2011 tax act 275) (by 32. 2011 tax act 5% (. 2011 tax act 325) if you are age 50 or older). 2011 tax act All others, multiply line 3 by 55% (. 2011 tax act 55) (by 65% (. 2011 tax act 65) if you are age 50 or older). 2011 tax act 4. 2011 tax act 5,080 5. 2011 tax act Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2011 tax act If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2011 tax act If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2011 tax act 59,000 6. 2011 tax act Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2011 tax act If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2011 tax act 6. 2011 tax act 5,500 7. 2011 tax act IRA deduction. 2011 tax act Compare lines 4, 5, and 6. 2011 tax act Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2011 tax act If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2011 tax act 5,080 8. 2011 tax act Nondeductible contribution. 2011 tax act Subtract line 7 from line 5 or 6, whichever is smaller. 2011 tax act  Enter the result here and on line 1 of your Form 8606 8. 2011 tax act 420 Worksheet 1-2. 2011 tax act Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 2011 tax act ) Note. 2011 tax act If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 2011 tax act IF you . 2011 tax act . 2011 tax act . 2011 tax act AND your  filing status is . 2011 tax act . 2011 tax act . 2011 tax act AND your modified AGI is over . 2011 tax act . 2011 tax act . 2011 tax act THEN enter on  line 1 below . 2011 tax act . 2011 tax act . 2011 tax act       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 2011 tax act Enter applicable amount from table above 1. 2011 tax act 188,000 2. 2011 tax act Enter your modified AGI (that of both spouses, if married filing jointly) 2. 2011 tax act 180,555   Note. 2011 tax act If line 2 is equal to or more than the amount on line 1, stop here. 2011 tax act  Your IRA contributions are not deductible. 2011 tax act See Nondeductible Contributions , earlier. 2011 tax act     3. 2011 tax act Subtract line 2 from line 1. 2011 tax act If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 2011 tax act You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 2011 tax act 7,445 4. 2011 tax act Multiply line 3 by the percentage below that applies to you. 2011 tax act If the result is not a multiple of $10, round it to the next highest multiple of $10. 2011 tax act (For example, $611. 2011 tax act 40 is rounded to $620. 2011 tax act ) However, if the result is less than $200, enter $200. 2011 tax act         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 2011 tax act 5% (. 2011 tax act 275) (by 32. 2011 tax act 5% (. 2011 tax act 325) if you are age 50 or older). 2011 tax act All others, multiply line 3 by 55% (. 2011 tax act 55) (by 65% (. 2011 tax act 65) if you are age 50 or older). 2011 tax act 4. 2011 tax act 4,100 5. 2011 tax act Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 2011 tax act If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 2011 tax act If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 2011 tax act 39,500 6. 2011 tax act Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 2011 tax act If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 2011 tax act 6. 2011 tax act 5,500 7. 2011 tax act IRA deduction. 2011 tax act Compare lines 4, 5, and 6. 2011 tax act Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 2011 tax act If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 2011 tax act 4,100 8. 2011 tax act Nondeductible contribution. 2011 tax act Subtract line 7 from line 5 or 6, whichever is smaller. 2011 tax act  Enter the result here and on line 1 of your Form 8606 8. 2011 tax act 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. 2011 tax act A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. 2011 tax act Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. 2011 tax act Inherited from spouse. 2011 tax act   If you inherit a traditional IRA from your spouse, you generally have the following three choices. 2011 tax act You can: Treat it as your own IRA by designating yourself as the account owner. 2011 tax act Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s