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Amended taxes 12. Amended taxes   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Amended taxes Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Amended taxes  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Amended taxes 5 cents per mile. Amended taxes For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Amended taxes Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Amended taxes To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Amended taxes What is the tax benefit of taking a business deduction for work-related education. Amended taxes   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Amended taxes Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Amended taxes An itemized deduction reduces the amount of your income subject to tax. Amended taxes   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Amended taxes This reduces the amount of your income subject to both income tax and self-employment tax. Amended taxes   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Amended taxes You may qualify for these other benefits even if you do not meet the requirements listed above. Amended taxes   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Amended taxes Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Amended taxes Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Amended taxes This is education that meets at least one of the following two tests. Amended taxes The education is required by your employer or the law to keep your present salary, status, or job. Amended taxes The required education must serve a bona fide business purpose of your employer. Amended taxes The education maintains or improves skills needed in your present work. Amended taxes However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Amended taxes You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Amended taxes Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Amended taxes Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Amended taxes This additional education is qualifying work-related education if all three of the following requirements are met. Amended taxes It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Amended taxes When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Amended taxes See Education To Maintain or Improve Skills , later. Amended taxes Example. Amended taxes You are a teacher who has satisfied the minimum requirements for teaching. Amended taxes Your employer requires you to take an additional college course each year to keep your teaching job. Amended taxes If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Amended taxes This image is too large to be displayed in the current screen. Amended taxes Please click the link to view the image. Amended taxes Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Amended taxes This could include refresher courses, courses on current developments, and academic or vocational courses. Amended taxes Example. Amended taxes You repair televisions, radios, and stereo systems for XYZ Store. Amended taxes To keep up with the latest changes, you take special courses in radio and stereo service. Amended taxes These courses maintain and improve skills required in your work. Amended taxes Maintaining skills vs. Amended taxes qualifying for new job. Amended taxes   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Amended taxes Education during temporary absence. Amended taxes   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Amended taxes Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Amended taxes Example. Amended taxes You quit your biology research job to become a full-time biology graduate student for 1 year. Amended taxes If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Amended taxes Education during indefinite absence. Amended taxes   If you stop work for more than a year, your absence from your job is considered indefinite. Amended taxes Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Amended taxes Therefore, it is not qualifying work-related education. Amended taxes Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Amended taxes The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Amended taxes Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Amended taxes This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Amended taxes You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Amended taxes Example 1. Amended taxes You are a full-time engineering student. Amended taxes Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Amended taxes Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Amended taxes The education is not qualifying work-related education. Amended taxes Example 2. Amended taxes You are an accountant and you have met the minimum educational requirements of your employer. Amended taxes Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Amended taxes These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Amended taxes Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Amended taxes The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Amended taxes If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Amended taxes The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Amended taxes You generally will be considered a faculty member when one or more of the following occurs. Amended taxes You have tenure. Amended taxes Your years of service count toward obtaining tenure. Amended taxes You have a vote in faculty decisions. Amended taxes Your school makes contributions for you to a retirement plan other than social security or a similar program. Amended taxes Example 1. Amended taxes The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Amended taxes In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Amended taxes If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Amended taxes However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Amended taxes Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Amended taxes If you have all the required education except the fifth year, you have met the minimum educational requirements. Amended taxes The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Amended taxes Example 2. Amended taxes Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Amended taxes The additional four education courses can be qualifying work-related education. Amended taxes Although you do not have all the required courses, you have already met the minimum educational requirements. Amended taxes Example 3. Amended taxes Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Amended taxes The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Amended taxes They are needed to meet the minimum educational requirements for employment as a teacher. Amended taxes Example 4. Amended taxes You have a bachelor's degree and you work as a temporary instructor at a university. Amended taxes At the same time, you take graduate courses toward an advanced degree. Amended taxes The rules of the university state that you can become a faculty member only if you get a graduate degree. Amended taxes Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Amended taxes You have not met the minimum educational requirements to qualify you as a faculty member. Amended taxes The graduate courses are not qualifying work-related education. Amended taxes Certification in a new state. Amended taxes   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Amended taxes This is true even if you must get additional education to be certified in another state. Amended taxes Any additional education you need is qualifying work-related education. Amended taxes You have already met the minimum requirements for teaching. Amended taxes Teaching in another state is not a new trade or business. Amended taxes Example. Amended taxes You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Amended taxes You move to State B and are promptly hired as a teacher. Amended taxes You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Amended taxes These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Amended taxes Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Amended taxes This is true even if you do not plan to enter that trade or business. Amended taxes If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Amended taxes Example 1. Amended taxes You are an accountant. Amended taxes Your employer requires you to get a law degree at your own expense. Amended taxes You register at a law school for the regular curriculum that leads to a law degree. Amended taxes Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Amended taxes Example 2. Amended taxes You are a general practitioner of medicine. Amended taxes You take a 2-week course to review developments in several specialized fields of medicine. Amended taxes The course does not qualify you for a new profession. Amended taxes It is qualifying work- related education because it maintains or improves skills required in your present profession. Amended taxes Example 3. Amended taxes While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Amended taxes The program will lead to qualifying you to practice psychoanalysis. Amended taxes The psychoanalytic training does not qualify you for a new profession. Amended taxes It is qualifying work-related education because it maintains or improves skills required in your present profession. Amended taxes Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Amended taxes They are part of a program of study that can qualify you for a new profession. Amended taxes Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Amended taxes A change in duties in any of the following ways is not considered a change to a new business. Amended taxes Elementary school teacher to secondary school teacher. Amended taxes Teacher of one subject, such as biology, to teacher of another subject, such as art. Amended taxes Classroom teacher to guidance counselor. Amended taxes Classroom teacher to school administrator. Amended taxes What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Amended taxes If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Amended taxes You cannot deduct expenses related to tax-exempt and excluded income. Amended taxes Deductible expenses. Amended taxes   The following education expenses can be deducted. Amended taxes Tuition, books, supplies, lab fees, and similar items. Amended taxes Certain transportation and travel costs. Amended taxes Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Amended taxes Nondeductible expenses. Amended taxes   You cannot deduct personal or capital expenses. Amended taxes For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Amended taxes This amount is a personal expense. Amended taxes Unclaimed reimbursement. Amended taxes   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Amended taxes Example. Amended taxes Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Amended taxes You do not file a voucher and you do not get reimbursed. Amended taxes Because you did not file a voucher, you cannot deduct the expenses on your tax return. Amended taxes Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Amended taxes If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Amended taxes Temporary basis. Amended taxes   You go to school on a temporary basis if either of the following situations applies to you. Amended taxes Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Amended taxes Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Amended taxes Your attendance is temporary up to the date you determine it will last more than 1 year. Amended taxes If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Amended taxes Attendance not on a temporary basis. Amended taxes   You do not go to school on a temporary basis if either of the following situations apply to you. Amended taxes Your attendance at school is realistically expected to last more than 1 year. Amended taxes It does not matter how long you actually attend. Amended taxes Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Amended taxes Your attendance is not temporary after the date you determine it will last more than 1 year. Amended taxes Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Amended taxes This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Amended taxes Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Amended taxes Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Amended taxes Example 1. Amended taxes You regularly work in a nearby town, and go directly from work to home. Amended taxes You also attend school every work night for 3 months to take a course that improves your job skills. Amended taxes Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Amended taxes This is true regardless of the distance traveled. Amended taxes Example 2. Amended taxes Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Amended taxes You can deduct your transportation expenses from your regular work site to school and then home. Amended taxes Example 3. Amended taxes Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Amended taxes Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Amended taxes Example 4. Amended taxes Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Amended taxes Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Amended taxes If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Amended taxes If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Amended taxes Using your car. Amended taxes    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Amended taxes The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Amended taxes 5 cents per mile. Amended taxes Whichever method you use, you can also deduct parking fees and tolls. Amended taxes See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Amended taxes Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Amended taxes Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Amended taxes For more information, see chapter 1 of Publication 463. Amended taxes You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Amended taxes Mainly personal travel. Amended taxes   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Amended taxes You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Amended taxes   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Amended taxes An important factor is the comparison of time spent on personal activities with time spent on educational activities. Amended taxes If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Amended taxes Example 1. Amended taxes John works in Newark, New Jersey. Amended taxes He traveled to Chicago to take a deductible 1-week course at the request of his employer. Amended taxes His main reason for going to Chicago was to take the course. Amended taxes While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Amended taxes Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Amended taxes He cannot deduct his transportation expenses of going to Pleasantville. Amended taxes He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Amended taxes Example 2. Amended taxes Sue works in Boston. Amended taxes She went to a university in Michigan to take a course for work. Amended taxes The course is qualifying work-related education. Amended taxes She took one course, which is one-fourth of a full course load of study. Amended taxes She spent the rest of the time on personal activities. Amended taxes Her reasons for taking the course in Michigan were all personal. Amended taxes Sue's trip is mainly personal because three-fourths of her time is considered personal time. Amended taxes She cannot deduct the cost of her round-trip train ticket to Michigan. Amended taxes She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Amended taxes Example 3. Amended taxes Dave works in Nashville and recently traveled to California to take a 2-week seminar. Amended taxes The seminar is qualifying work-related education. Amended taxes While there, he spent an extra 8 weeks on personal activities. Amended taxes The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Amended taxes Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Amended taxes He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Amended taxes Cruises and conventions. Amended taxes   Certain cruises and conventions offer seminars or courses as part of their itinerary. Amended taxes Even if the seminars or courses are work related, your deduction for travel may be limited. Amended taxes This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Amended taxes   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Amended taxes 50% limit on meals. Amended taxes   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Amended taxes If you were reimbursed for the meals, see How To Treat Reimbursements , later. Amended taxes   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Amended taxes Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Amended taxes Example. Amended taxes You are a French language teacher. Amended taxes While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Amended taxes You chose your itinerary and most of your activities to improve your French language skills. Amended taxes You cannot deduct your travel expenses as education expenses. Amended taxes This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Amended taxes No Double Benefit Allowed You cannot do either of the following. Amended taxes Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Amended taxes Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Amended taxes See Adjustments to Qualifying Work-Related Education Expenses, next. Amended taxes Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Amended taxes You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Amended taxes Tax-free educational assistance. Amended taxes   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Amended taxes Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Amended taxes Amounts that do not reduce qualifying work-related education expenses. Amended taxes   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Amended taxes Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Amended taxes How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Amended taxes There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Amended taxes You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Amended taxes Note. Amended taxes The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Amended taxes Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Amended taxes Your expenses must have a business connection. Amended taxes This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Amended taxes You must adequately account to your employer for your expenses within a reasonable period of time. Amended taxes You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Amended taxes If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Amended taxes If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Amended taxes Accountable plan rules not met. Amended taxes   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Amended taxes Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Amended taxes Expenses equal reimbursement. Amended taxes   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Amended taxes Because your expenses and reimbursements are equal, you do not have a deduction. Amended taxes Excess expenses. Amended taxes   If your expenses are more than your reimbursement, you can deduct your excess expenses. Amended taxes This is discussed later, under Deducting Business Expenses . Amended taxes Allocating your reimbursements for meals. Amended taxes   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Amended taxes If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Amended taxes Make the allocation as follows. Amended taxes Divide your meal expenses by your total expenses. Amended taxes Multiply your total reimbursement by the result from (1). Amended taxes This is the allocated reimbursement for your meal expenses. Amended taxes Subtract the amount figured in (2) from your total reimbursement. Amended taxes The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Amended taxes Example. Amended taxes Your employer paid you an expense allowance of $2,000 under an accountable plan. Amended taxes The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Amended taxes There was no indication of how much of the reimbursement was for each type of expense. Amended taxes Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Amended taxes Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Amended taxes   1. Amended taxes $425 meal expenses  $2,500 total expenses = . Amended taxes 17   2. Amended taxes $2,000 (reimbursement)×. Amended taxes 17     =$340 (allocated reimbursement for meal expenses)   3. Amended taxes $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Amended taxes After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Amended taxes Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. Amended taxes You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Amended taxes This is discussed later under Deducting Business Expenses . Amended taxes An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Amended taxes Reimbursements for nondeductible expenses. Amended taxes   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Amended taxes You must include them in your income. Amended taxes For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Amended taxes   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Amended taxes Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Amended taxes The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Amended taxes Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Amended taxes If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Amended taxes See the instructions for the form you file for information on how to complete it. Amended taxes Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Amended taxes If either (1) or (2) applies, you can deduct the total qualifying cost. Amended taxes If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Amended taxes In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Amended taxes (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Amended taxes ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Amended taxes Form 2106 or 2106-EZ. Amended taxes   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Amended taxes Form not required. Amended taxes   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Amended taxes   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Amended taxes (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Amended taxes ) Using Form 2106-EZ. Amended taxes   This form is shorter and easier to use than Form 2106. Amended taxes Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Amended taxes   If you do not meet both of these requirements, use Form 2106. Amended taxes Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Amended taxes Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Amended taxes You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Amended taxes You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Amended taxes For more information on qualified performing artists, see chapter 6 of Publication 463. Amended taxes Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Amended taxes They are not subject to the 2%-of-adjusted-gross-income limit. Amended taxes To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Amended taxes For more information on impairment-related work expenses, see chapter 6 of Publication 463. Amended taxes Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Amended taxes Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Amended taxes If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Amended taxes However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Amended taxes Examples of records to keep. Amended taxes   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Amended taxes You should keep adequate records or have sufficient evidence that will support your expenses. Amended taxes Estimates or approximations do not qualify as proof of an expense. Amended taxes Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Amended taxes , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Amended taxes Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Amended taxes Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Amended taxes Complete information about any scholarship or fellowship grants, including amounts you received during the year. Amended taxes Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Amended taxes He was selected to attend a 3-week math seminar at a university in California. Amended taxes The seminar will improve his skills in his current job and is qualifying work-related education. Amended taxes He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Amended taxes Victor will file Form 1040. Amended taxes His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Amended taxes He shows his expenses for the seminar in Part I of the form. Amended taxes He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Amended taxes He enters $400 on line 4 for his tuition and books. Amended taxes On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Amended taxes He multiplies that amount by 50% and enters the result, $263, on line 5. Amended taxes On line 6, Victor totals the amounts from lines 3 through 5. Amended taxes He carries the total, $2,313, to Schedule A (Form 1040), line 21. Amended taxes Since he does not claim any vehicle expenses, Victor leaves Part II blank. Amended taxes His filled-in form is shown on the next page. Amended taxes This image is too large to be displayed in the current screen. Amended taxes Please click the link to view the image. Amended taxes Form 2106-EZ for V. Amended taxes Jones Prev  Up  Next   Home   More Online Publications
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The Amended Taxes

Amended taxes 14. Amended taxes   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. Amended taxes Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). Amended taxes Custom application of fertilizer and pesticide. Amended taxes Fuel not used for farming. Amended taxes Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. Amended taxes Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. Amended taxes You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. Amended taxes Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. Amended taxes The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. Amended taxes Use on a farm for farming purposes. Amended taxes Off-highway business use. Amended taxes Uses other than as a fuel in a propulsion engine, such as home use. Amended taxes Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. Amended taxes See Publication 510, Excise Taxes, for more information. Amended taxes Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. Amended taxes Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. Amended taxes See Table 14-1 for a list of available fuel tax credits and refunds. Amended taxes Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Amended taxes Farm. Amended taxes   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. Amended taxes It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. Amended taxes A fish farm is an area where fish are grown or raised and not merely caught or harvested. Amended taxes Table 14-1. Amended taxes Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. Amended taxes Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. Amended taxes 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. Amended taxes See Reg. Amended taxes 48. Amended taxes 6427-10 (b)(1) for the definition of a blocked pump. Amended taxes 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. Amended taxes It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. Amended taxes Farming purposes. Amended taxes   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. Amended taxes To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Amended taxes To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Amended taxes To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Amended taxes To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Amended taxes For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Amended taxes The more-than-one-half test applies separately to each commodity. Amended taxes Commodity means a single raw product. Amended taxes For example, apples and peaches are two separate commodities. Amended taxes To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. Amended taxes Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. Amended taxes   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. Amended taxes Therefore, you can still claim the credit or refund for the fuel so used. Amended taxes However, see Custom application of fertilizer and pesticide, later. Amended taxes If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. Amended taxes Buyer of fuel, including undyed diesel fuel or undyed kerosene. Amended taxes   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. Amended taxes For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. Amended taxes Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). Amended taxes   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. Amended taxes However, see Custom application of fertilizer and pesticide, next. Amended taxes Also see Dyed Diesel Fuel and Dyed Kerosene, later. Amended taxes Example. Amended taxes Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. Amended taxes Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. Amended taxes In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. Amended taxes Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. Amended taxes Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. Amended taxes No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. Amended taxes In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. Amended taxes Custom application of fertilizer and pesticide. Amended taxes   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. Amended taxes Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Amended taxes For applicators using highway vehicles, only the fuel used on the farm is exempt. Amended taxes Fuel used traveling on the highway to and from the farm is taxable. Amended taxes Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. Amended taxes For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Amended taxes For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. Amended taxes A sample waiver is included as Model Waiver L in the appendix of Publication 510. Amended taxes A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. Amended taxes To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. Amended taxes However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. Amended taxes Fuel not used for farming. Amended taxes   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. Amended taxes Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. Amended taxes For personal use, such as lawn mowing. Amended taxes In processing, packaging, freezing, or canning operations. Amended taxes In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Amended taxes All-terrain vehicles (ATVs). Amended taxes   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. Amended taxes Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. Amended taxes If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. Amended taxes Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. Amended taxes For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. Amended taxes Excise tax applies to the fuel used by the truck on the highways. Amended taxes In this situation, undyed (taxed) fuel should be purchased for the truck. Amended taxes You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. Amended taxes You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. Amended taxes Penalty. Amended taxes   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. Amended taxes The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Amended taxes After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Amended taxes For more information on this penalty, see Publication 510. Amended taxes Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. Amended taxes Off-highway business use. Amended taxes   This is any use of fuel in a trade or business or in an income-producing activity. Amended taxes The use must not be in a highway vehicle registered or required to be registered for use on public highways. Amended taxes Off-highway business use generally does not include any use in a recreational motorboat. Amended taxes Examples. Amended taxes   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. Amended taxes In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. Amended taxes   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Amended taxes For more information, see Publication 510. Amended taxes Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. Amended taxes This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. Amended taxes Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. Amended taxes How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. Amended taxes The basic rules for claiming credits and refunds are listed in Table 14-2 . Amended taxes Table 14-2. Amended taxes Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. Amended taxes   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. Amended taxes Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Amended taxes You do not have to use any special form, but the records should establish the following information. Amended taxes The total number of gallons bought and used during the period covered by your claim. Amended taxes The dates of the purchases. Amended taxes The names and addresses of suppliers and amounts bought from each during the period covered by your claim. Amended taxes The nontaxable use for which you used the fuel. Amended taxes The number of gallons used for each nontaxable use. Amended taxes It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. Amended taxes For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. Amended taxes Credit or refund. Amended taxes   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. Amended taxes If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. Amended taxes Credit only. Amended taxes   You can claim the following taxes only as a credit on your income tax return. Amended taxes Tax on gasoline and aviation gasoline you used on a farm for farming purposes. Amended taxes Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. Amended taxes Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. Amended taxes Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. Amended taxes Do not claim a credit for any excise tax for which you have filed a refund claim. Amended taxes How to claim a credit. Amended taxes   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. Amended taxes Individuals. Amended taxes   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. Amended taxes If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Amended taxes Partnership. Amended taxes   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amended taxes , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. Amended taxes Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. Amended taxes An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. Amended taxes S. Amended taxes Return of Income for Electing Large Partnerships. Amended taxes Other entities. Amended taxes   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. Amended taxes When to claim a credit. Amended taxes   You can claim a fuel tax credit on your income tax return for the year you used the fuel. Amended taxes You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Amended taxes A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. Amended taxes Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. Amended taxes Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). Amended taxes The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Amended taxes If you file Form 720, you can use its Schedule C for your refund claims for the quarter. Amended taxes See the Instructions for Form 720. Amended taxes Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. Amended taxes You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. Amended taxes This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. Amended taxes If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. Amended taxes If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. Amended taxes Only one claim can be filed for a quarter. Amended taxes You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. Amended taxes You must claim a credit on your income tax return for the tax. Amended taxes How to file a quarterly claim. Amended taxes   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. Amended taxes Send it to the address shown in the instructions. Amended taxes If you file Form 720, you can use its Schedule C for your refund claims. Amended taxes See the Instructions for Form 720. Amended taxes When to file a quarterly claim. Amended taxes   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. Amended taxes If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. Amended taxes    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. Amended taxes 001 per gallon is generally not subject to credit or refund. Amended taxes Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. Amended taxes Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. Amended taxes Cash method. Amended taxes   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. Amended taxes If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. Amended taxes If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. Amended taxes Example. Amended taxes Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. Amended taxes On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. Amended taxes Then, on Form 4136, she claimed the $110 as a credit. Amended taxes Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. Amended taxes Accrual method. Amended taxes   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. Amended taxes It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. Amended taxes Example. Amended taxes Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. Amended taxes On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. Amended taxes On Form 4136, Patty claims the $155 as a credit. Amended taxes She reports the $155 as other income on line 8b of her 2012 Schedule F. Amended taxes Prev  Up  Next   Home   More Online Publications